Rama Krishna Sangem
US President Donald Trump’s 25 per cent tariffs blow on India is expected to damage the just growing MSME (Micro, small and medium enterprises) in the country. Banks are not willing to lend money to them and their shipments are likely to be stopped en route or may not happen at all. The new tariffs will come into force from August 7, Thursday.
One good thing is that SMEs exports are doing better than the larger firms’ exports in the last few years and their credit demand too is much more than that of the industry – which is in fact, declining for the last 2-3 years. The credit demand of SMEs is showing a healthy 12-14 per cent, as per the official sources.
These MSMEs are now asking PM Modi led central government to roll out a series of measures including an exports subsidy, cut in taxes and some production promotion support. The SMEs are also asking the government to find ways to export their products to other countries in the world.
Total exports of MSMEs from India are around Rs 12.50 lakh crore, three fold jump from Rs 4 lakh crore just five years ago. A majority – around 35-40 per cent of these exports are going to the US. After Trump’s tariffs, our products may not be competitive to other rivals – especially in Asia. So, our SMEs need urgent help from the government.
Status of our MSMEs?
The Micro Small & Medium Enterprises (MSME) Sector has over the years significantly contributed in the process of nation building by way of producing a wide array of goods for domestic as well as global consumption and also in the form of generating large-scale employment opportunities at comparatively lower capital cost than large- scale industries which is a critical requirement for sustainable economic growth and social development.
The NSS 73rd Round Survey (2015-2016) had estimated the existence of 6.34 crores unincorporated non-agricultural MSMEs (excluding construction sector) in the country engaged in different economic activities with estimated employment of about 11.13 crores workers (including part-time workers).
In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified as here.A a micro enterprise – where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees.
A small enterprise, where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; and a medium enterprise, where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.
6.31 crore enterprises
Out of the total 6.34 crores enterprises, 31% enterprises were engaged in manufacturing36.3% enterprises were involved in trading activities (230.35 lakh enterprises) and remaining 32.7% enterprises were in ‘other services’ sector.
Of the total 11.13 crore workers in MSME Sector as estimated under NSS 73rd Round Survey (2015-2016), 35% workers totaling to 387.18 lakh workers were engaged in trading activities sector with more workers concentrated in urban sector vis-à-vis rural, according to the official data from the central government.
