Industry experts were unanimous in their views on the varied incentives needed to scale up MSMEs to a level that can make them more visible and relevant.
Speaking at an ETRise Dialogues panel discussion recently held in Bangalore on ‘overcoming challenges regarding land, labour and capital’, industry stakeholders lined up some of the pressing issues that are derailing growth for the MSME sector.
Outlining how skilling and reskilling are extremely important for MSMEs to sustain themselves, Neeti Sharma, Senior Vice President, TeamLease Services said the significant question is how to get people on board who are skilled at the technology adopted in the organisation and also about training them in a manner leading to better productivity. “It is about the technological edge that we have to build. One can’t afford to change the entire lot in the organisation, neither can one afford to stay untrained or unskilled in the new environment,” she said.
Sharma added that a lot of ways such as e-learning and many government schemes that ask companies to nominate people for upskilling exist which could, in fact, be looked at as a means to train the current workforce.
Responding to the Economic Survey 2019 which highlighted how job creation suffers from policies that foster dwarfs, which are small firms that never grow, instead of infant firms that have the potential to grow rapidly, Sharma said that states can do a lot more now to enable companies to grow. “If, for instance, you look at the minimum wages and formal employment at the entry level, approximately 48% of the salary is paid back in terms of some form of taxation or deductions. How do you expect anyone to survive, it is not sustainable. Deciding whether those deductions should be made or not should be flexible to the employer and employee instead of mandating it,” she added.
Revamping of employment exchanges, flexible policies, preparing people for long term employment and creating an overall enabling environment, she said, would be significant measures that could help address some of the challenges of labour for the sector.
Land allocation and data availability
The panel also discussed issues of land acquisition and allocation that prove to be a challenge for small businesses. Amit Kumar, Founder & CEO of MSMEx, a micro-advisory platform for MSMEs said a repository that can detail aspects related to land availability could be hugely beneficial to small entrepreneurs. “The large companies have better lobbies of officials as well as the government system and hence they get to know about projects beforehand. A simple entrepreneur doesn’t get to know that. So a central system of any kind of such allocation which everyone can see and access will come in handy. But this repository should be at a central place. Every micro entrepreneur is available on the internet and would be able to access such land information easily,” he said.
Kumar also made some key observations on land allocation and specialised hubs. “If you apply for a 200 square metre land or a 20 acre land, the price is the same for both. It should be subsidised, the way it is for electricity. So for a smaller plot, the price should be lesser too. Flexibility of payment should also be there which isn’t the case presently,” he added.
Rooting for specialised hubs and single window clearance, Kumar gave a simple rationale to substantiate his point, “For a large company, they can hire a consultant who can then take care of all the permissions. But for a small entrepreneur, he is the most capable one in his team. And if he is busy running around to get all those permissions for six months, who will really manage his business?” he asserted.
ETRISE Dialogues has Union Bank of India as the Presenting Partner, MIDC, Caspian Debt and Cogoport as the Associate Sponsors and CARE Ratings as the Assessment Partner. KASSIA was the Associate Partner for the Bengaluru session.
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