Mains Practice Questions

Access to credit

• 90% of the MSMEs are dependent on informal sources for funding
• Lack of sufficient collateral and high working capital needs

• Launch of the 59 minute loan portal to enable easy access to credit for MSMEs.
• 2 percent interest subvention for all GST registered MSMEs, on fresh or incremental loans.
• Trade Receivables e-Discounting System (TReDS) to enable access to credit from banks, based on their upcoming trade receivables from corporate and other buyers.

Access to Markets

• Low outreach and non availability of new markets.
• Lack of skilled manpower and ineffective marketing strategy.
• Difficult for MSMEs to sell products to government agencies.

• The Union government announced the launch of an e-commerce platform on the lines of private e-commerce companies to sell products from MSMEs.
• Public sector companies now compulsorily procure 25%, instead of 20% of their total purchases, from MSMEs.
• Government e-Marketplace (GeM) portal: It provides transparency in procurement and facilitates MSMEs to directly reach out to the buyers.

Technology Access

• Limited human resources and weak financial standing.
• MSMEs, particularly in the unorganised sector, show lower adaptability of new technology and innovation.

• 20 hubs and 100 spokes in the form of tool rooms will be established across the country. This will facilitate product design and easy access to latest technology to MSMEs.
• Financial assistance is provided for implementation of lean manufacturing techniques to enhance the manufacturing competitiveness of MSMEs.

Quality and Export Issues

• Low quality products impact export competitiveness.
• Inadequate access to quality raw materials.
• Use of traditional machines causes low productivity.

• Financial support to MSMEs in ZED(Zero Defect Zero Effect) certification to improve quality of products.
• Government provides subsidies towards the expenditure incurred by enterprises to obtain the product certification licenses from national and international bodies.

E- Governance

• Issues such as online access to credit
• Online resolution of disputes
• Access to robust IT infrastructure

• Udyami Mitra Portal : launched by SIDBI to improve accessibility of credit and handholding services to MSMEs.
• MSME Sambandh : To monitor the implementation of the public procurement from MSMEs by Central Public Sector Enterprises.
• MSME Samadhaan- MSME Delayed Payment Portal— will empower Micro and Small entrepreneurs across the country to directly register their cases relating to delayed payments by Central Ministries/Departments/CPSEs/State Governments.
• Digital MSME Scheme : It involves usage of Cloud Computing where MSMEs use the internet to access common as well as tailor-made IT infrastructure

Ease of Doing Business

• Cumbersome government procedures and rules for establishing new units.
• Red Tapism
• Poor litigation system in the country.

• The return under 8 labour laws and 10 Union regulations now to be filed only once a year.
• Computerised random allotment for inspector visits to the establishment.
• Environmental Clearance under air pollution and water pollution laws, have been merged into one. Also, the return to be accepted through self-certification.
• For minor violations under the Companies Act, enabling the entrepreneur to litigate through simplification of government procedures and instilling confidence among entrepreneurs.

• Lack of buoyancy to adjust to reforms such as ‘demonetisation’ and GST.

• Creation of a corpus of ?5,000 crore distressed asset fund for MSMEs as suggested by a RBI Committee
• Doubling the cap on collateral-free loans to Rs 20 lakh from the current Rs 10 lakh extended to borrowers falling under the Mudra scheme, self-help groups, and MSMEs.