Innovation is the key factor, given the current global scenario, the only way that Indian MSMEs can remain competitive is by adopting innovation as a key business strategy.The Ministry of Micro, Small and Medium Enterprises has taken several initiatives to encourage MSMEs to continuously innovate in terms of creation of new products, new processes and new services.
The ‘National Innovation Council’ was constituted by the Prime Minister to encourage and promote innovation in every sector of the economy. MSME sector got special emphasis under this Innovation Council and a Sectoral Council was constituted under the Chairmanship of Secretary (MSME) to evolve an enabling framework that would help transform novel innovative ideas to successful business ventures.
National Manufacturing Competitiveness Programme
The MSME Ministry is implementing the National Manufacturing Competitiveness Programme (NMCP), the nodal programme of the Government to develop global competitiveness among Indian MSMEs. There are ten components under NMCP targeted at enhancing the entire value chain of MSME sector. It includes programmes like establishment of new Tool Rooms, enhancing of product and process quality, cost reduction through lean manufacturing techniques, design clinic, etc. Out of these 10 components, one component i.e. incubator scheme, especially caters to the need of supporting innovative ideas. So far the Ministry has already identified 76 institutions and has helped them financially for incubating innovative ideas. This is an on-going scheme and more and more innovative ideas would be incubated to become successful commercial ventures.
Prime Minister Employment Generation Programme
To encourage innovation and entrepreneurship at the grass root level, a flagship programme i.e. Prime Minister Employment Generation Programme (PMEGP) is being implemented by the Ministry. Under this programme, margin money assistance, upto 35% of the project cost, is provided to entrepreneurs desirous of setting up an enterprise. The Ministry also implements the Rajiv Gandhi Udhyami Mitra Yojana (RGUMY) whereby handholding support and assistance is provided to potential first generation entrepreneurs.
Entrepreneurship Development Institutes
The National Knowledge Commission had identified that the most important external barrier to innovation, as perceived by the MSMEs, is skill shortage.
The three national level Entrepreneurship Development Institutes under the Ministry, NIESBUD, Noida, NIMSME, Hyderabad and IIE Guwahati alongwith the MSME Development Institutes and Training Centres spread across the country organize comprehensive training programmes to upgrade existing skills and to create new skills in workers and technicians of existing units as well as unemployed youth. Specific tailor made programmes are also being organized for the skill development of socially disadvantaged groups like OBC, SC, ST, minorities and women.
Web Portal on ‘International SME Development’
In this globalised era, proper understanding of the international markets is essential for MSMEs to remain competitive globally as well as domestically. The Ministry, through various schemes, facilitates the participation of Indian MSMEs in international exhibitions & fairs for getting the much required exposure to the world markets. This helps not only in increasing the exports from this sector but also helps the MSMEs to acquire latest technologies and understand international best management practices. National Small Industries Corporation Ltd. (NSIC), a public sector undertaking under the Ministry, is maintaining a dedicated web portal on ‘International SME Development’ which facilitates information and sustainable collaborations amongst SMEs of 28 countries.
Adoption of innovative practices may entail additional investment by the entrepreneurs. In order to facilitate technology upgradation of Small Enterprises to meet international competition, the ministry provides capital subsidy on investment for technology upgradation through Credit Guarantee Fund Trust for Micro & Small Enterprise (CGFTMSE). Under the scheme, credit facilities extended to micro and small enterprises are guaranteed upto 75% of the amount in the event of a default.
The Performance & Credit Rating Scheme of the Ministry is a very unique way of empowering the small enterprises to face internal and global competition.
Under this Scheme, financial assistance to the extent of 75% is provided for rating of MSMEs by a third party national or international rating agency. This rating benefits the units in many ways like establishing their creditworthiness which helps them in accessing quicker and cheaper credit. It also certifies their performance ability which would help procuring orders from foreign and other bulk buyers and. It also helps the entrepreneur in analyzing the strengths and weaknesses of unit and may prompt him in bringing changes to improve upon their operating performance.
The Ministry has also taken several other initiatives to promote innovation in the MSME sector. With a view of recognizing the efforts and achievements of MSMEs, National Awards are given annually to selected entrepreneurs and enterprises. The awards are given for various categories in Research & Development Efforts, Entrepreneurship & Quality Products. The MSMEs are also encouraged and financially assisted through various schemes to adopt ISO certification, Bar Coding, Patents, better designs etc.
(Based on the Speech of the Minister of MSME,Shri Virbhadra Singh at the Global Summit on MSMEs 2011 )