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Structural changes required to revitalise MSME sector, says report

V Sajeev Kumar Kochi | Updated on June 29, 2020 Published on June 29, 2020

The MSMER report demands an alternative strategic approach focussed on entrepreneurship as a critical national resource

The Institute of Small Enterprises and Development (ISED) has suggested consolidating and strengthening the country’s decentralised manufacturing system to revitalise the MSME sector.

Against the dramatic slowdown of the economy and border disputes with China having far-reaching consequences on trade and investments, such a step is possibly the only option available to India today, said India Micro, Small and Medium Enterprise Report 2020 (MSMER-2020), prepared by the ISED Small Enterprise Observatory (ISED-SEO), and brought out by ISED.

The report, twenty-third in an annual Series, was release on Sunday in Kochi as part of the celebrations on the ‘UN Micro, Small and Medium-sized Enterprises Day’ at the Institute.

Making a review of the Covid-19 impact on the industrial system and labour market in India, the report examines the various counter-strategies followed at the international level; ie., relief packages (helicopter money) and “keep the lights on” strategy. While the latter strategy of keeping the MSMEs insulated through measures like a wage subsidy would have been more appropriate to the context of India, the compulsions of the country’s democratic system did not make it possible.

‘Enterprise security’

There has been a significant number of permanent closures of units across the country recently. However, the pandemic gives good lessons in terms of looking at ‘enterprise security’ as a critical issue that requires constant review and monitoring.

“Hard decisions would be required for rebuilding the MSME system of the country,” said PM Mathew, Editor of both the series and of the latest report. It demands an alternative strategic approach focussed on entrepreneurship as a critical national resource. It also demands the setting up of a permanent ‘National Small Enterprise Commission’, mandated with vital roles such as inter-Ministerial coordination of knowledge, strategy development and policy coordination.

Published on June 29, 2020
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