Guwahati, Sept 26: A study conducted by the MSME Export Promotion Council (EPC) recently has recommended a five-pronged strategy to revive micro, small and medium (MSME) units that are struggling for survival in the Northeast.
According to the study conducted on the topic, “Revival and Development of MSMEs in the North East Region (NER) for Inclusive Growth”, the MSME EPC stated that while there are around 74,000 micro, small and medium units in the Northeast, which is far below the potential, a large number (over 25 percent) of them are in crisis, primarily owing to lack of timely availability of affordable finance, fast changing technology and inadequate infrastructure.
The five-point strategy includes (i) setting up of high-power committees by the respective state governments to resolve on priority the problems faced by the MSMEs, (ii) creating short, medium and long-term roadmap to for a conducive environment for tapping the untapped potential, (iii) focusing on skilling the manpower, (iv) opening show-rooms at different locations for the products produced by the MSMEs and (v) developing a mechanism to connect the units with research and development centres and global marketing agencies.
The study also emphasised the need for designing new architecture of development financing revolving around three critical players – Ministry of DoNER, multilateral and bilateral institutions and private players.
Releasing the study, MSME EPC chairman D.S Rawat said while many start-ups have come up and helped the region in employment generation, some of them are in deep crisis in the absence of hand holding by either large units or institutions.
Notably, the Northeastern states have less than one per cent of the total MSMEs in India. Currently, there are 73,889 registered MSME units across the eight states of the region.
In order to improve industry attractiveness, there is an urgent need for an environment that fosters entrepreneurship and drives the economy towards growth and sustainability, the study suggested.
In this regard, Rawat said a single window system could easily be implemented at a low cost, which will help MSMEs in the state and attract private investment.
The major challenges identified by the study are geographical, inaccessible hilly terrain, underdeveloped transport, low participation of private sector, poor financial and infrastructure facilities such as roads, railways, health, educational institutions and technology.
Moreover, the MSME clusters are inadequately equipped especially in tool rooms, innovation centres and testing facilities. Therefore, the possibility of collaboration could be explored with companies having innovative infrastructure, research and development institutions, and universities that specialise in specific industry or knowledge areas, it recommended.
In terms of funding, private sector contributions should be encouraged through debt instruments like bonds and CDs (certificates of deposits) with tax incentives through SIDBI, it suggested.
The government should also build networks of development service providers that could extend customised solutions to the MSMEs in the areas of technology, product development and marketing techniques, the study said.