Govt underlines need to step up SME funding

Financial Chronicle,

New Delhi Painting a grim picture on loan availability to small and medium enterprises (SMEs), the government on Wednesday underlined the need for stepping up finances to the sector, which accounts for 45 per cent of the manufacturing output.

The sector faced a shortfall of Rs 50,000 crore, secretary in the ministry of micro, small and medium enterprises, UK Varma, said. The SME sector got only Rs 1,75,000 crore in 2009-2010, which needed to be substantially increased, he said.

SMEs contributed 40 per cent of the country’s export and employed 50 million people in 26 million units that produce over 6,000 products, he said, emphasising that the country cannot afford to starve the sector of financial resources.

Verma said the ministry has asked the Planning Commission to allocate Rs 2,500 crore for a technology upgradation fund for SMEs.

Speaking at a seminar on cluster development in SMEs, he said there was a need for better infrastructure along with better marketing and skill development for cluster development.

“There is immense scope and potential for technology-oriented MSME clusters across the country,” Varma said, adding that an investment of Rs 1 crore in a micro enterprise generates 36 jobs.

Meanwhile, IndiaMART CEO Dinesh Agarwal told Financial Chronicle that taxation for SMEs needed to simplified besides getting rid of multiplicity of taxes and complex filing of tax returns.

Introduction of GST would help a great deal in this regard, he said.

Assocham’s SME national council chairperson P K Jain said public private partnership needed to be encouraged in cluster development for SMEs.

There were about 6,500 SME clusters in the country of which only about 350 are recognised, he said.