For any developing country, most jobs are generated by micro, small and medium enterprises (MSMEs). And yet, the policy and institutional framework often is very weak. The reasons are not far to seek.
Given heterogeneity of resources, domains, financial conditions and other interests, a unified leadership seldom emerges. Within a region, sometimes there are many associations with multiple agenda. Government uses these divisions and diversity to legitimise their inertia and also inefficiency. I propose that we change our attitude to revitalise the MSME sector and give a boost economic growth by listening to MSMEs leaders and leveraging their strengths.
The first most important linkage, which can help MSMEs to modernise and improve their energy, economic, social and managerial efficiency is to connect with academia. While National Innovation Council (NIC) failed to achieve any breakthrough in this regard, Honey Bee Network and SRISTI have achieved significant results in collaboration with Gujarat Technical University (GTU).
Thousands of students have benchmarked the problems of around 10,000 MSMEs and worked on them as a part of their final year project. In many cases, entrepreneurs have already benefitted significantly. This GTU-SRISTI model can be immediately replicated all over the country. Punjab has taken concrete steps and Karnataka and Andhra Pradesh are also trying to catch up. Kerala has taken a lead in developing most entrepreneur friendly policy. One can see the projects pursued by students in collaboration with industry at http://techpedia.in/problems/idp.
Unless we create websites of all MSMEs, it will be difficult to harness their full potential in global markets. Even in advanced industrial clusters like Rajkot, two third of the MSME entrepreneurs are not yet on web. There are thousands of computer science students almost in every major city learning programming and website design as a part of their course. In a month, we can have digital presence of all MSMEs and thus, improve their global visibility. MSME Ministry has to shed its inertia and take a pro-active approach to bridge these gaps. Same applies to state governments.
We need to create a robust MSME exchange having the library of components, waste and recycling technologies, information to make one’s waste as input for other, directory of fabricators and testing facilities, etc. Commercial banks have complete data of economic health and capacity utilisation of millions of MSME. No bank currently tries to link their own customers in different domains across the country to pool their inventories, capacities and other resources to bid for global orders. Distributed manufacturing is a way to go and India can easily become a hub of high tech outsourcing by linking academia and enterprises through platforms like techpedia.in.
The MSMEs make a significant contribution to environmental pollution besides large corporations. Unless a national waste exchange is created to make sure that each cluster achieves zero effluent status, the condition of public health and hygiene is unlikely to improve.
So many rivers, irrigation channels and ground water in many places are polluted by large industries as well as small ones. This must stop. One has to provide a public pool of technologies to mitigate various kinds of problems. Industrial ecology approach using circular economy framework has to become a credo of every cluster. Public policies must incentivise creation of common facilities in every cluster for improving quality and reducing cost of manufacture.
Unfortunately, in many sectors importing assembled machines attracts less custom duty than local assembly. Every country tries to promote domestic manufacture. However, now even water guns, electrical lights and sky lanterns are imported from neighbouring countries.
It is time that one revisits lack of protection for cottage industry. The culture, craft and community spirit are linked. Geographical indications were introduced for that reason. We need to look at MSME sector afresh from this perspective.
The agricultural and food based enterprises are lacking systematic attention and support. The association of chartered accountants and company secretaries should mount a major public initiative to help rural youth and farmers to set up companies and enterprises for developing value added products.
Public media must allocate time every day for giving visibility to such products. The oil companies should provide low cost business centre facilities at their rural petrol pumps. It was tragic to see almost zero value addition in villages in agriculturally advanced state like Punjab during the recent shodhyatra.
Within a year, many of the measures suggested here can turn around the MSME sector. The new India Inclusive Innovation Fund must be restructured to invest at least 50 % of its resources in proof of concept technologies developed by MSME entrepreneurs, student innovators and other creative people at grassroots.
If the mandarins in MSME ministry do not wake up even now, the emerging polity will any way force a complete change in the attitude and responsiveness. Indian bureaucracy should not take patience of people for granted. I hope dedicated angel fund for students and entrepreneurs in agriculture, food processing, crafts and other less developed sectors will emerge soon.
The author is a professor at IIMA