The government is gearing up to improve the overall business environment in the country and give an impetus to the manufacturing sector in particular and entrepreneurship in general. As part of this process the ministry for medium small & micro enterprises will be focusing on enabling easy credit, mentoring and providing an easy exit to entrepreneurs, reports CNBC-TV18's Malvika Jain.
According to a World Bank study as many as 60 percent of Indian SMEs shut shop within 7 years of establishment, 35 percent remain stagnant and only 5 percent survive the challenge of doing business in India. Inadequate access to finance, skilled manpower, marketing platforms and high transaction costs are making Indian businesses uncompetitive in the domestic and international market.
RC Bhargava, Chairman, Maruti Suzuki , says, "If the total business environment is conducive to doing business, if the entrepreneur does not find that because he is becoming bigger he gets hassled by various tax inspectors and various other factory inspectors and excise guys and others and therefore he prefers to remain small then I think the business will grow much faster. It is the business environment which has to change. We cannot improve business environment through subsidies."
The government is keen that we "Make in India" and the contribution of manufacturing grows from 15 percent to 26 percent. For this easy availability of credit is being worked upon.
"The basic fund is going to come from the shortfalls which occur at the bank level in priority sector lending. A part of that money is going to be credited to the venture capital fund for the small and medium enterprises not only for start-ups but also for growth. We are in the process of discussions with the finance ministry and with institutions like SIDBI on how this fund should be structured and operated. It is a work in progress which we hope will be completed within a month or so. In addition we also have a new line entry as they call it in the ministry parlance for a Rs 200 crore fund for technology centre networks, innovation, entrepreneurship and agro industry", says Madhav Lal, Secretary, MSME.
Surendra Nath Tripathi, Joint Secretary, MSME, says, "We want to promote the credit scoring model which has been developed by Canara Bank in India and blessed by the Reserve Bank of India. Any industry, any new comer can rate himself on the banking parameter. If he finds that he is good enough to be assisted by the bank, let him go to the bank. If the bank refuses we will take care of such a problem."
To improve ease of doing business in India the government will also be coming up with a mentorship programme and new exit policy for entrepreneurs.
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