There is no doubt that the MSME policy for the 12th Five-Year Plan (2012-17) period needs to look at broader issues rather than staying myopic and concentrating on issues like cluster development, micro-finance, and venture capital. Till today, all policies and programmes pertaining to the sector were nothing but short-term and 'stop-gap arrangements'.
Despite the immense potential of the sector, I see no programmes or policies that can provide an impetus to innovation which is imperative for the sector. It is usually seen that we wait for a crisis to grow before taking crisis mitigation policies that are aimed at short-term corrections. Long-term polices still elude the sector. Also missing is the eagerness of financial institutions and banks to invest in entrepreneurship.
The policy should also dwell on issues of better infrastructure, enhanced productivity, cost competitiveness and improved quality to create products for domestic and overseas markets. So far, a concerted effort or a platform wherein MSMEs can share information with suppliers, buyers, workers and other stakeholders for overall growth of the sector and subsequently of the economy is interestingly missing.
What's sad is the fact that both development and sustainable growth of the sector is being hampered due to obsolete technology usage. Most players in the sector are still unaware of the global technological advances in their respective area of operation. The MSME policy should look at helping the sector in improving product quality, efficiency in raw material consumption, and improvement in individual skills to be able to compete with global players.
Today, the MSME sector in the country contributes about 40 percent to the GDP with an estimated value of goods and services worth Rs 20 lakh crore, employing six crore workers in 2.6 crore units across the country. The question is 'Can we ignore this sector any longer?"