Startling findings unearthed from survey of MSMEs

15 Dec '08

6 min read

With regards to financing, small businesses may have needed to wait months to secure financial capital, while larger businesses may have gotten financing within a matter of days. Additionally, some respondents claimed that to come up with the money required to bribe bank officials to speed up the paperwork was a large burden for their business to handle.

By standardizing the opportunities available to MSMEs, the government could have the power to equalize the threshold, and cause commerce to prosper at all levels of the value chain.

Awareness of Govt. Initiatives:
Not one initiative scored above 65%. The top performers were the apex industry associations like FICCI, and CII. Respondents said of the apex bodies that, generally, they kept members informed of events and exhibitions, but were not successfully able to communicate the concerns of MSMEs towards the government.

The lowest performer was MSME-DO, organizer of tool rooms and technology institutes designed to help manufacturing units with technology upgradation and training on machinery. Respondents said that this initiative had very low awareness, and the training offerings needed to improve. Most of the respondents are businesses who were interested in acquiring benefits of the various government initiatives.

Yet, this chart shows that a significant portion of MSMEs simply is not aware of the schemes. Tiny and hard-to-notice government advertisements in the papers are not effectively informing MSME entrepreneurs the benefits of valuable initiatives like EDPs, NCEUS, and MSME-DO.

Suggestions for improving efficacy of Government Initiatives:
In general, there were seven suggestions for change, overall, with respect to government interaction:

1. Improve infrastructure:
a. Build better, longer-lasting roads
b. Set up of a stable power grid
c. Organize SEZ for businesses in manufacturing

2. Corruption:
a. Make it impossible to evade penalties
b. Stricter action against Corrupt Government officials at all levels of the Government

3. On Taxation:
a. Consider setting up Tax structures that favour MSMEs
b. Ensure that tax evasion through bribery is made impossible at all levels
c. Continue to offer tax benefits to export oriented businesses
d. Reduction of import duties causing rise of material costs
e. Provide tax benefits to Manufacturing MSMEs

4. On Loans and Financing:
a. Improve CLCSS scheme by offering better interest rates to MSMEs looking at technology upgrades
b. Standardize, protect and speed up the process
c. Lower lending rates promote self financing or approaching loan sharks

5. On Rising material costs:
a. Set up nationwide initiatives to seek to provide cheaper raw materials
b. Government deals with overseas economies for material acquisitions in large quantity

6. OnLabour laws:

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