Enhancing Competitiveness of Indian MSMEs
The NITI Aayog report emphasizes the need for reforms in the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to improve the competitiveness of Indian MSMEs through various fiscal, technological, and infrastructural interventions.
Key Recommendations
- Regulatory Oversight
- The CGTMSE fund management lacks regulatory authority and oversight, resulting in governance and operational inefficiencies.
- Proposed to bring the Trust under a regulatory authority to ensure balanced fund availability and financial discipline.
- Support for Women-led Units
- Recommendation to increase guarantee coverage to 100% for women-led enterprises to boost women entrepreneurship.
- Premium Rates
- Suggested reduction in premium rates to promote wider adoption by micro and small enterprises.
Background
The Credit Guarantee Fund Scheme for Micro and Small Enterprises was initiated by the government in 2000 to provide collateral-free credit. CGTMSE, managed by the MSME ministry and SIDBI, oversees this fund.
Beyond Credit Access
- The competitiveness of MSMEs is not solely about credit access but includes the entire credit utilization process.
- Emphasis on recognizing and enhancing credit-related services, ensuring resource efficiency across enterprise, government, and institutional levels.
- The report highlights the importance of an enabling environment that supports financial decision-making and risk mitigation.
Technological Advancements
The report advocates for the support of MSMEs in adopting technological advancements, including AI, both technologically and fiscally, supported by findings from a Nasscom-Meta study.
