What are the Problems and Solutions of MSME in India?

1. What are the Problems and Solutions of MSME in India? Micro, smaller and medium enterprise is considered to be the second largest employment sector in India and currently is in need of radical reforms. The main issue revolves around some of its pressing problems. The radical reforms help to utilize its potential to the fullest. As per the latest “Development Report” on MSME, there have been some findings on the issues that smaller and micro businesses are facing these days. The Business Credit Report pointed out some of the emerging challenges of the sector, mainly revolving around “jobless growth,” which India is facing at a massive rate these days. All the MSME associations have actually come up with issues, relating to taxation and finance as well, working on Credit Report and more. Union Government, at present, came up with new turnover definition of MSME, which according to the associations, is considered to be an inroad right into constituency by some of the large players. RBI and its note: On the other hand, you have RBI, taking serious note of some of the issues relating to taxation, finance and MSME CIBIL. The apex body has actually set up one expert committee for identifying causes and propose some of the long-term solutions. Even though the mainstream is actually debating on the MSME issues confining to the limited areas of finance, start-up venture and technology, the impact of some of the external major influences like failure of policy remains unanswered. During such hard scenarios, on the B2B ground, some of those piece meal-based solutions may not prove to be that effective. One report by the RBI clarified that the Credit Information Report and credit growth for MSME has actually declined in a significant manner. It got to a negative stretch from November 2016 to February 2017. Recent studies have indicated that the credit growth has recovered after February 2017 and reached to an average percentage of 8.5%. The credit share as extended to MSME in complete bank credit has declined to around 14% from its original 17%. Moreover, within the credit zone to industrial sector, the medium enterprises’ share has dropped as well, when compared to smaller and micro enterprises. The CIBIL or the credit growths of the MSME exports have even taken a turn for the worst case scenarios. Working on the entitlement approach: It is from ISED that an “entitlement approach” came into action. It now has the potential to compel all the related stake holders to the work on one common agenda of nation. It works on solutions under one scientific structured framework. Such kind of approach will always demand identification and even analyze major security threats to MSMEs and even working with the entrepreneurs from the starting level. Keeping a track of Business CIBIL is vital. Problems MSME face in India: Indian MSME have been facing various kinds of issues. Most of the time, these issues remain controllable but others won’t get resolved that easily. Depending on the data analysis and studying the related MSME issues, some of the points are chalked down below.

2. • High competition from the multinational firms: In current globalization, MSMEs are now facing great from the international form of manufacturing firms, providing promising goods within lower rates. So, it becomes really very difficult to actually compete with some of the multinational firms in here. • Lack of financial credit from banks: Right now, MSME face challenges of MSME Credit Report from banks. These financial institutions are not able to provide enough loans to the MSME. The bank’s loan providing procedure is formal and pretty long. The MSME owners now have to produce various documents to prove their worth and get loans, to avoid falling as MSME defaulters later. On an average, the banks are providing 50% total capital as employed under fixed assets. Moreover, the credit cost is pretty high these days. • Unavailability of the inputs along with raw materials: MSME is in need of raw material, skilled work force along with some of the other inputs. But, unfortunately, they fail to get the same from the market. As these firms fail to get the basic necessities from the market, it becomes pretty difficult to produce the items within the affordable rates. So, even when the firms don’t want it, they fail to set and achieve high production benchmarks. • Poorer form of infrastructure: Even though MSME is developing currently, the infrastructure still remains pretty poor. Due to such poor infrastructure, the production capacity is always towards the lower side. On the other hand, the production cost remains towards the higher side always. So, chances of business turning defaulters are pretty high while running a micro or small business. Some improvements along the way: As per the annual reports and some studies on MSME, there are some solutions which you might want to venture out. Check these possible solutions which might help in this regard as well. 1. available for the current MSME sector as developed in multiple sectors. Even though each MSME has its share of weakness and strength, it is mutually viable if the already existing technologies are made available. Listing out those technologies beforehand can help you avoid B2B Defaulters for sure. Technologies and their mutual supplies: There are various appropriate technologies 2. appointed. Their main function would be to help the MSME, located within their locality, with effective use of the available technologies. The panel of consultants should not have any owner of MSME. For technical advancements and guidance, a panel of consultants and experts should be 3. It helps in preparing for the right arrangements for fulfilling the current needs of MSME. You will come to learn more about it from MSME CIR from the ministry. There needs to be a detailed survey for accessing financial and technical needs of MSME. 4. to a great extent. There needs to be relaxation of red tape and labor law. It helps in avoiding inconvenience 5. mechanism such as Report Business Credit Defaulter by CreditQ should be in place. It helps In order to save MSME from falling prey to defaulters who hold their payments, a

3. MSME to report defaulters thus proving to be beneficial for all to be beware of such businesses squeeze MSME forcing them to run out of funds. Make sure to catch up with the solutions first before introducing one for your MSME growth. Following these norms will help you improve Credit Report for MSME and not face financial issues ever again.