MSME Current Affairs - 2019
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The Cabinet Committee on Economic Affairs (CCEA) has approved a three-year extension of the Credit Linked Capital Subsidy and Technology Up-gradation Scheme (CLCS-TUS) for Micro, Small and Medium Enterprises (MSME) with a total outlay of 2,900 crores on 13th February 2019. This scheme will continue beyond the 12th Five Year Plan for three years from 2017-18 to 2019-20.
What is the CLCS-TUS Scheme?
- Under this scheme, an upfront capital subsidy of 15 per cent will be provided to the MSMEs on institutional finance of up to Rs 1 crore availed by them. This will be done to help the MSMEs in employing well-established and improved technology in the specified 51 sub-sectors/products approved.
- The scheme aims to improve the competitiveness of MSMEs by integrating various current schemes aimed at up-grading technology through Credit Linked Capital Subsidy, hand holding for zero defect zero effect manufacturing, increasing productivity through waste reduction, design intervention, cloud computing, facilitation of intellectual property and nurturing new ideas.
- It will also focus on improving the quality of products and enhancement in productivity. This will promote a culture of continuous development.
- The scheme also incorporates special provisions to increase entrepreneurship for SC/STs, women, hill states, island territories and the aspirational districts/ LWE (Left-wing extremism) districts.
The MSME sector has emerged as a highly vibrant and dynamic sector of the Indian economy. They not only provide employment in the rural areas but are also a prelude to industrialization. MSMEs are complementary to large industries as ancillary units and this sector contributes enormously to the socio-economic development of the country.
Tags: Cabinet Committee on Economic Affairs • CCEA • CLCS-TUS • Credit Linked Capital Subsidy • Credit Linked Capital Subsidy and Technology Up-gradation Scheme • Left Wing Extremism • MSME • zero defect zero effect
The India Micro, Small, and Medium Enterprises Report 2018 has been released Kochi based Institute of Small Enterprises and Development at the South India MSME Summit 2019 in Bengaluru.
Findings of the Report
The important findings of the report include:
- MSMEs need radical reforms to solve its pressing problems and to utilize its potential.
- Several studies on India’s MSMEs have brought out emerging challenges of the sector especially against the phenomenon of jobless growth. The government must act on the findings of these studies.
- There is a need to address the issues relating to finance and taxation which the MSME associations have brought before the government. The report notes that RBI has set up a committee to identify causes and propose long term solutions.
- The new definition of MSMEs brought about by union government is considered as an inroad into their constituency by large players.
- The mainstream debates on MSME problems are confined to the limited areas of technology, finance, and start-up support etc. The impact of more crucial external influences such as policy failures demonetization and GST implementation has remained unanswered. As a result, piece-meal solutions to MSME problems may not be effective.
- The report quotes RBI study which noted the share of credit extended to MSMEs in overall bank credit, declined steadily to around 14 per cent from about 17 per cent and within credit to the industrial sector and the share of medium enterprises has dropped significantly as compared to micro and small enterprises.
Recommendations of the Report
The report recommends an entitlement approach that can have the potential of compelling all related stakeholders to work on a common national agenda and solutions under a scientifically structured framework. This approach demands the identification and analysis of major security threats to the MSMEs, and entrepreneurship at the grass root level.