The year 2018 has been a mixed bag for MSMEs in India. “For a sector that employs over 100 million people and contributes 28.77 per cent to the nation's GDP, the proactive initiatives introduced by the Government are a step towards neutralising the MSMEs’ extraneous suffering. While initiatives like the launch of MSME outreach program and amendments brought to the Insolvency and Bankruptcy Code (IBC) show the Government’s commitment towards resolving the issues that plague the sector, there still remains a lot of scope for establishing a seamless operating environment. After enduring the storm of GST and Demonetization, MSMEs in India continue to grapple with issues of delayed payments, raw material procurement and lack of access to formal credit,” said R Narayan, Founder & CEO, Power2SME, on the year gone by, and his outlook on the MSME sector for 2019.

 

Out of the total 63.3 million MSMEs in the country, less than 5 million have access to formal credit and struggle to raise finance for even working capital requirement. “Hence, it is imperative to introduce amendments that would classify non-banking financial loans to the MSME Sector under Priority Sector Lending (PSL) and prevent them from turning into non- performing assets (NPAs),” he informed.

 

The aggregate funding requirement for MSME sector was pegged at Rs 45 lakh crore in 2018 and the demand-supply gap remains huge. Narayan stated, “The need of the hour is to create a structured, competitive, and dedicated lending window for MSME sector so that the small set ups do not suffer for lack of credit. As 2019 dawns upon us, the performance of India’s MSME sector will be critical in moulding the growth trajectory of the Indian economy and we should collectively move ahead on the path that has the potential to transform India into the next manufacturing hub.”