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Punjab Government Partnering with Private Firms to Accelerate MSMEs

Addressing pain points of a small business, Punjab government has decided to render financial accessibility to MSMEs; The government has lately collaborated with HDFC Bank to offer loans to nearly 700 MSME beneficiaries, totaling to INR 1,100 crore, according to the press statement.
BY Jaspreet Kaur
Feature Writer, BusinessEx
Dec 07,2019

India’s northernmost state, Punjab is presently focusing on surging micro small and medium enterprises (MSMEs) for its industrial growth. Vini Mahajan, Additional Chief Secretary Industry & Invest Punjab, lately proclaimed that the state (Punjab) government was committed to transforming the Micro, Small & Medium Enterprises into industrial giants in the coming years.

In the latest event, Progressive Punjab Investors Summit, Mahajan referred to the various measures taken by the Punjab government to reinforce the MSME sector in the province. 

To provide ease to MSMEs, the state government has joined hands with various private institutions and entrepreneurial bodies.  

Partnering with Business Entities 

Addressing the pain points of a small business, the Punjab government has decided to render financial accessibility to MSMEs. The government has lately collaborated with HDFC Bank to offer loans to nearly 700 MSME beneficiaries, totaling to INR 1,100 crore, according to the press statement. 

Under their MoU (Memorandum of Understanding), the Bank is offering special pricing for business loans to all industries in the state, Mahajan added.

In the recent event, the state government inked MoUs with two renowned e-commerce companies, Flipkart and Amazon.   

According to the press statement, Punjab Industries, and Commerce Minister, Sunder Sham Arora signed MoUs with key e-commerce giants Amazon and Flipkart to enable access to new markets for the Punjab-based MSMEs.  

“The Government had signed the MoU with Amazon to enable B2B linkages with key international markets, including US, Canada, and key markets in Europe, while, with Flipkart, the government had signed the MoU to facilitate access for MSMEs to new domestic markets, as well as Flipkart Samarth, to give impetus to the growth of handloom weavers and small enterprises in the State,” Arora said. 

The state government has focused on upgrading infrastructure development and thus, infused nearly INR 200. 

In the press statement, Mahajan referred that recent cabinet decisions, including approval for Right to Business Act for MSMEs, amendments to the Industrial Disputes Act, Factories Act, etc, and the decision to allow Panchayats to partner the state’s industrial development through the creation of industrial parks on Shamlat land.

Akhil Bansal, Deputy CEO of KPMG moderated this event and other participants of the event were Sachid Madan Chief Executive Fresh F&V and Frozen Food at ITC Ltd, Dr Ren Van Berkel, Representative at UNIDO, Jayant Davar, Co-Chairman and MD, Sandhar Technologies Ltd, Bhawna Bhatia, South Asia Regional Program Coordinator at the World Bank, Sarvjit Singh Samra, Managing Director at Capital Small Finance Bank Limited.

The event’s participants acclaimed the state government’s initiative and said that it was the right time to give impetus to MSMEs in Punjab, which has a strong presence in light engineering, knitwear, clothing, sports good, pharmacy, automobiles, hand tools, leather industry, and other sectors. 

“MSME sector is the backbone of the Punjab industry and accounts for nearly 60 per cent of the total output and around 80 per cent of the total employment in industry in the State,” Dr. Guruprasad Mohapatra, Secretary at the Department for Promotion of Industry and Internal Trade (DPIIT) said. 

Current Situation of MSME Sector

At present, rising non-performing assets in the MSME sector has affected the financial accessibility of small businesses. Consequently, the Indian banking sector is facing an enormous problem, in turn, shows skepticism to MSMEs’ financial security and desurged credit to small enterprises over the years.

In the previous week, M.K. Jain, deputy governor of the Reserve Bank of India (RBI) raised concerns about the increasing NPAs in Mudra loans, which is the Modi government’s credit programme for MSME enterprises, reported Mint.

According to CIBIL’s report, Credit exposure to MSMEs increased by 12 per cent to INR 15.7 trillion in June 2019. However, accelerating growth is not able to meet the aggregate credit demands of the industry. 

 

In essence, MSMEs are the firms that are valued at less than INR 10 crore. These small enterprises give employment to a large portion of demographic and in turn, deemed a growth accelerator for the country. However, the sector has presently become stagnant as economic policies-- demonetization and GST-- have shaken it and gradually transitioned it into cash hungry niche. 

According to the Ministry of Statistics & Programme Implementation’s report, during the period 2015-16, there were 633.88 lakh unincorporated non-agriculture MSMEs in the country engaged in different economic activities (196.64 lakh in Manufacturing, 230.35 lakh in Trade and 206.84 lakh in Other Services and 0.03 lakh in Non-captive Electricity Generation and Transmission,) excluding the MSMEs registered under (a) Sections 2m(i) and 2m(ii) of the Factories Act, 1948, (b) Companies Act, 1956 and (c) Construction activities falling under Section F of National Industrial Classification (NIC) 2008. 

The report also shows that the micro sector with 630.52 lakh estimated enterprises accounts for more than 99 per cent of the total estimated number of MSMEs. The small sector with 3.31 lakh and Medium sector with 0.05 lakh estimated MSMEs accounts for 0.52 per cent and 0.01 per cent of total estimated MSMEs, respectively. 

 

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