In a bid to promote the growth and development of the countrys MSME sector, a major contributor to Indias GDP, the Government of India (GoI) in association with the Reserve Bank of India (RBI) has been continuously undertaking various initiatives. In August 2005, GoI had announced a Policy Package for Stepping up Credit to Small and Medium Enterprises (SMEs), according to which the nationalised banks would have to provide funds and credit facilities to MSMEs in order to post 20% growth every year.
GoI also enacted the MSMEs Development Act, 2006, which became effective from October 2, 2006. The objective of the Act is to increase competitiveness among the MSMEs, thereby helping the sector to scale greater heights.
According to Ashok Sehgal, proprietor of Blue Seas, a small-sized garment export company in Mumbai, It is very important for SMEs to keep themselves updated about the upcoming technologies and market trends in order to gain prominence in the market by launching new products and services. Keeping this in mind, in February 2007, GoI launched the Package for Promotion of Micro and Small Enterprises to help the sector to upgrade technology, improve marketing strategies and thereby earn higher profit.
Step-up in credit availability
The MSME sector was severely affected by the global financial crunch and is yet to recover from their losses, says Nirmal Pandey, proprietor of Asian Exporters, a small-sized garment export company in Chennai. In order to help the SMEs to avail more credit, the Credit Guarantee Scheme has been launched, which has extended the loan limit for MSMEs from Rs 50 lakh to Rs 1 crore
These schemes have aided most MSMEs to avail greater credit from nationalised banks, which has risen from Rs 1,51,137 crore at the end of March 2008 to Rs 1,91,307 crore in the same period this year.
by: David Parks
About the Author:
David Parks is a well known author and has written articles on Business Directory and Construction & Real Estate, suppliers, Manufactures and many other subjects.