The Report of the Working Group on Micro, Small & Medium Enterprises (MSMEs) Growth for 12th Five Year Plan (2012-2017) has made some important recommendations to make MSME sector a vital part in the country’s growth story. The sector is a blend of tradition and modern, with informal sector enterprises at the bottom of ‘MSME Pyramid’. The process of liberalization and global market integration has opened up wide opportunities for the sector, as also new challenges. The new ambitious National Manufacturing Policy, which aims to make India a manufacturing hub and increase the sectoral share of manufacturing in GDP to 25 per cent in the next decade from the present level of 15-16 per cent, requires substantial support from MSME sector and quantum jump in the growth rate of MSME sector from the existing level of 12-13 % per annum. This necessitates convergence of efforts and resources.

The key issue is of capacity building of Small Business Service providers to become efficient and pro-active agents of change. This requires convergence of Sound Macro-economic policies, Seamless Institutional Structures, Outcome based performance indicators, Performance based funding, Good Governance - Transparency and Accountability Systems, Independent Monitoring and Evaluation, Effective participation by target beneficiaries.

The Working Group has pointed out the following issues that obstruct rapid growth of MSMEs: Regulation, Technology, Credit & Finance, Orthodox Marketing, Skills, Dated Institutional Framework, Advocacy and Empowerment, Transparency.

The Group recommends that during the 12th Plan period, modular industrial estates with plug and play facilities in the respective areas may be launched as pilot projects.

For providing starting capital, globally angel/venture fund are the prime source of funds to the Start Ups. While these funds finance a project on the basis of their own risk analysis and valuation, the Groups opines that Government can provide some comfort which could be in the form of a guarantee or by co-investment through a Government promoted venture fund. The venture capital fund launched by SIDBI can play major role in this regard.

Towards protecting the Intellectual Properties generated by the Start Ups, Government may assist in filing of patents or alternative IP protection mechanisms. The IP Facilitation Centres set up under the IPR component of NMCP may be the nodal points in guiding, handholding and subsidising the Start Up entrepreneurs in protecting their IPRs.

According to the Group, instead of launching a separate scheme for the start-ups, it may be appropriate to address the above issues under the respective verticals. Setting up of the modular estates has been taken up under the Infrastructure vertical and financing mechanism under the Credit & Finance vertical. As mentioned, IPR related issues are to be taken up by the IP facilitation centres which may be appropriately funded under NMCP component of Technology vertical. However, a Cell in the office of DC (MSME) may be formed to function as a single window for the start ups.

The Working Group recommends following broad allocations during 12th Plan Period for all proposed interventions under major verticals as well as in KVI and Coir Sector.