Activities Round Up

Date : 16 Jul to 16 Jul 2012
Place : New Delhi
Organised by : FISME

FISME organises Roundtable on Revisiting MSME definition

 

With the demand for redefining Indian MSMEs gaining ground among various sections of the Indian MSME fraternity, FISME organised a Roundtable on “Revisiting MSME Definition” in New Delhi on July 16, 2012. The Roundtable was attended by, among others, Mr N.K. Maini, DMD, SIDBI, Dr J.S. Juneja, Chairman, MSME Task Force (PHDCCI), Ms Kanchan Zutshi, Secretary, MSME Task Force (PHDCCI), Dr Dinesh Awasthi, Director, Entrepreneurship Development Institute, and several representatives of industry bodies and banks. The Roundtable produced a rich exchange of views and ideas and FISME would soon collate the various views presented for further discussion before finalising its recommendations to the government on this subject.

 

In his opening remarks, the FISME President Mr V.K. Agarwal pointed out that there were major differences between corporates and small businesses and start-ups and therefore, there was a need to define such businesses such that they could be provided institutional support on different aspects of business starting from finance and funding to marketing and managerial support. He also highlighted the fact that only 6% of MSMEs were registered entities as reported by the 4th Census of MSMEs and if a way could be found to bring the remaining 94% within the ambit of legally registered units, it would make a big difference to their growth and survival as they will then become eligible for all kinds of institutional support now available to registered MSMEs.

 

The Roundtable discussions were flagged off by Mr Anil Bharadwaj, Secretary General of FISME who provided a comprehensive overview of the subject including the issues involved. Some of the major themes that emerged from the discussion were:


v      There was a need for changing the definition with changing times especially because of inflation over the last six years as also other emerging factors in the business environment and this issue could be best addressed if change in definition could be made through an executive  order rather than through amendments to the MSMED Act, 2006,


v      That investment caps were the best way to define MSMEs rather than using other criteria such as employment or turnover,


v      That a sectoral approach should be adopted for defining MSMEs as different sectors needed different levels of investment at the start-up stage and what could be the minimum investment required for any one sector could very well be the investment level of a much larger sized unit in other sectors,


v      That the services sector, especially IT sector, needed to be treated differently and IPR assets should be valued and included in any definition of assets of an MSME IT company,


v       That at present, it would seem the question of redefining MSMEs was irrelevant mainly because only a very small percentage of MSMEs were registered entities, that the problems involved in registering businesses as MSMEs often posed insurmountable problems, that the rules and regulations governing MSME registration were either too stringent or so anomalous that they discouraged businesses to become registered entities and that urban development and land use regulatory framework discouraged registration of businesses laws,


v      That whatever the definition of MSMEs, it were the tiny or “survivalist” start-ups and enterprises that most needed support and handholding and that any redefinition of MSMEs must ensure that it is these enterprises that get the maximum support and benefits


v      That the question of redefining MSMEs was also irrelevant because the benefits of being defines and registered as an MSME were too few compared to the costs of getting so defined and registered.

 

 

Apart from those already mentioned, some of the others who participated in the deliberations included Mr B.R. Bhatia, Chairman, SME Panel, Faridabad Industries Association, Mr Umesh Gupta, President, Network of ICT Entrepreneurs & Enterprises (NITEE), Mr J.P. Malhotra, President, DLF Industries Association, Mr S. Suresh, GM, Electric Lamp and Component Manufacturers Association of India (ELCOMA), Mr M. Gupta, VP, All India Rubber Industries Association (AIRIA), Mr R.N. Grover, Delhi Factory Owners’ Federation (DFOF),  Mr R.K. Aggarwal, All India Plastic Manufacturers’ Association (AIPMA), Mr Iqbal Singh Bhagat, Chairman, SME Panel, Faridabad Industries’ Association, Mr Amit Kumar, Sr. Technical Expert, GIZ, Mr G.P. Malhotra, Sr. ED, EEPC India, Mr Rana Roy, Additional Executive Director, EEPC India, Mr S. Nehraa, Additional Director, ELCINA, Mr. S.K. Khanna, DGM, Bank of Baroda, and Mr R.S. Alag, DGM, Punjab National Bank.

 

Several members of FISME’s Central Executive Committee also attended the proceedings.