Sustainability of MSME in the Northeast

 Micro, Small, and Medium Enterprises (MSME) have great significance for North-eastern states where hilly terrain and a dearth of government land pose impediments to the growth of large industries. Incentives for attracting investment for large industries to the region under industrial policies of the Central Government as well as state industrial policies have failed to trigger the desired industrial growth even after trade facilitation like single-window clearance. Incentives and financial assistance for MSMEs, on the other hand, have spurred the growth of entrepreneurial ventures in the region, which has also created new jobs and livelihood avenues for farm families. Reducing the dependence of more family members on a household’s farmland by way of migration to alternative livelihood options and employment is critical to the sustainability of agriculture as the primary source of income for farm families. It is heartening to see Assam leading the region in the growth of MSMEs. Official data shows that not just the increase in the number of MSME units but also the increased credit flow to these units are key indicators of this growth. These units becoming self-sustaining after initial handholding support by the central and state governments is essential to keeping up the momentum. Identifying the problems faced by the MSMEs in respect of supply of raw materials, marketing, electricity, fund flow, and payments by purchasers and addressing those, therefore, must remain the key focus in the course of monitoring and evaluating government assistance and the overall ecosystem. Several measures have led to an increase in the flow of credit to MSMEs. These include directing scheduled commercial banks not to seek collateral security for loans up to Rs 10 lakh. The computation of the working capital requirement of MSE units is to be done by banks on the basis of the simplified method of a minimum of 20% of the projected annual turnover of the unit for borrower limits up to Rs. 5 crore. The credit limit for Guarantee Coverage under the Credit Guarantee Scheme for MSME has been enhanced from Rs. 5 crore to Rs. 2 crore, and the annual guarantee fees have been reduced by 50% with effect from April this year. Besides, under the revised guidelines of the Prime Minister’s Employment Generation Programme, the project costs for Manufacturing and Services have been increased to Rs. 50 lakh and Rs. 20 lakh, respectively. Under its Raw Material Assistance (RMA) Scheme, National Small Industries Corporation Limited (NSIC) facilitates MSMEs meeting their specific raw material requirements by making arrangements with bulk manufacturers for procuring the materials and supplying them to MSMEs. NSIC also provides financial assistance to MSMEs under this scheme against a bank guarantee for payment to the suppliers. MSMEs registered on the Udaym Registration portal are eligible to apply for assistance under this scheme. Udyam portal data shows that more than 2.71 lakh MSME units in Assam have registered on the portal since its inception in 2020, and credit outstanding to the MSME sector by Scheduled Commercial Banks during the last three years has increased in the state to Rs 24,120 crore. The figures are indicative of the MSMEs having a favourable ecosystem and little push and awareness among the owners about various incentives and support. More than 72,000 of the MSMEs in the state are owned by women. This is indicative of the significant role women in Assam have started playing in the growth of MSMEs, increasing household income, and generating employment. Women in Assam and other states in the northeast region are traditionally skilled in weaving, which, when combined with their enterprise and marketing skills, starts spinning entrepreneurial success stories. Inclusion of retail and wholesale traders as MSMEs; non-tax benefits extended for 3 years in case of an upward change in status of MSMEs; and the launch of the Udyam Assist Platform to bring informal micro enterprises under the formal ambit for availing the benefit under Priority Sector Lending have added to the ease of doing business. In order to improve market competitiveness, MSMEs need to gradually modernise their manufacturing processes, reduce wastage, and focus on innovative technology adoption. Information about government assistance, incentives, and the credit flow system must reach all MSME owners in the region so that their units can avail themselves of such assistance to become self-sustainable. Digital technology is a great enabler for MSMEs, particularly those in the landlocked northeast region, to reach out to potential buyers as well as raw material suppliers easily. The digital payment ecosystem has contributed to the growth of MSMEs in the region and has also raised the confidence of new entrepreneurs to unlock their organic ideas as commercial ventures. As most of the MSMEs are located in rural areas, connectivity, infrastructure, and financial inclusion play crucial roles in their sustainability as entrepreneurial ventures. The silent revolution of MSME in the region can address growing unemployment in the agriculture sector, which has become over-employed and non-remunerative due to growing population pressure and rising input costs, provided these units become sustainable ventures.