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Structural changes alone can revitalize MSMEs: Report

India must focus on consolidation and strengthening of decentralised manufacturing system to tide over the crisis

June 29, 2020

Against the dramatic slowdown of the Indian economy triggered by Covid 19 pandemic and the border disputes with China having far reaching consequences on trade and investments, the best and possibly the only, option available to India today, is to consolidate and strengthen the decentralized manufacturing system of the country, says the India Micro, Small and Medium Enterprise Report.

The new report 2020 (MSMER-2020) was prepared by the ISED Small Enterprise Observatory (ISED-SEO) and brought out by the Institute of Small Enterprises and Development (ISED), based here.

The report dwells on critical areas of concern at the global level, as also in India, such as, fourth industrial revolution, labour market trends under Covid 19, livelihoods and enterprise security, credit delivery, and rural entrepreneurship crisis.

The report also underlines the strategy failures regarding MSME development in the past, both at the national level and in the states.

Entrepreneurship, both in policy and through government schemes, is considered as an employment issue, rather than as a vocation vital for wealth creation and sustainable development. It is more of a game of numbers, rather than a serious exercise in industrialization. Naturally, the MSMEs do not get the respect they deserve in the economy, and in the policy platforms.

P.M. Mathew, director of ISED who edited the report said, hard decisions would be required for rebuilding the MSME system of the country.

“The need of the hour is for an alternative strategic approach focused on entrepreneurship, as a critical national resource besides setting up of a permanent ‘National Small Enterprise Commission’, mandated with vital roles such as inter-Ministerial co-ordination of knowledge, strategy development and policy co-ordination is required,” said Mathew.

MSMER 2020 concludes that, the Keynesian model of solutions under a recessionary situation, as advocated by many, may be useful for the economy as a whole, but not much for the MSMEs.

A selective strategy is more appropriate for them where its components are tailored according to the structure of the industrial system, consisting of various categories such as, vendor units, service enterprises, hard core manufacturing units, and tiny (bottom of the pyramid) enterprises.

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