Prime Minister of India - Dr. Manmohan Singh

PM's address at the Presentation of National Awards to Micro, Small & Medium Enterprises

"It gives me immense pleasure to join you in this National Award Function for Micro, Small and Medium Enterprises (MSMEs). I should begin by congratulating all the winners of the very prestigious National Awards. I am sure that these awards would inspire other entrepreneurs in this important sector of our economy to contribute even more vigorously to the economic development and industrialization of our country. I compliment my colleague Shri Mahabir Prasadji and his Ministry for their continuous efforts for the sustained development of this important segment of our economy.

MSMEs have a very important role to play in ensuring that processes of economic growth in our country are inclusive, employment-friendly and they contribute to greater regional balance in levels of development. The National Common Minimum Programme (NMCP) underscores this important fact. I am, therefore, very happy to say that in the last four years we have accomplished much in keeping with our commitments to our people. We have been able to address longstanding issues through major institutional reform measures. The enactment of the Micro, Small and Medium Enterprises Development Act, amendments to the Khadi and Village Industries Commission Act, announcement of a comprehensive Package for Promotion of Micro and Small Enterprises and setting up of a National Commission for Enterprises in the Unorganized Sector have all helped in strengthening this important sector and creating the national awareness about its growing importance in our national economic life. The National Manufacturing Competitiveness Programme has contributed to the graduation of tiny and small scale units in micro and medium enterprises and in the process strengthened the industrial base of our economy.

The very positive contribution that this sector makes to employment is of utmost importance to our vision of shared and equitable growth. This sector provides employment to over 42 million people. It contributes about 45% of the total manufacturing output and nearly 40% of India's exports. It is the capacity of this sector to generate economic activity at the local level that prompted Gandhiji to give the pride of place to Khadi. He dreamt of an India comprising of self contained villages using local raw materials, local skills, serving local markets and providing employment to people locally near the places where they live. "Khadi' as a component of Swadeshi was important to Mahatma Gandhi as a symbol of employment that could be generated locally. It is, therefore, gratifying to note that the Khadi and Village Industries which constitute an integral component of the MSME sector are now finding and experiencing a revival in a world that is becoming increasingly sensitive to organically produced materials and goods. Our innovative entrepreneurs and designers are taking Khadi to its rightful place as a fabric of enlightened choice.

I understand that the Ministry of MSME is conducting a number of programmes for skill development through its National level Entrepreneurship Development Institutes, MSME-Development Institutes, Tool Rooms and Training Centres. These impart training in the skills to nearly two lakh persons annually but we need to scale up this effort in a big way. I have been told that free training is being provided to the marginalized sections of the society including SC/ST, women and the physically challenged. To provide handholding support to the trained persons in setting up their own enterprises, the Ministry has also launched a new scheme, namely, Rajiv Gandhi Udyami Mitra Yojana. All of these are commendable steps which need to increase in scale in years to come.

In addition to its role in employment creation, the MSME sector also provides vital components and accessories to the large manufacturing sector. In this way it contributes significantly to the process of rapid industrialization. This sector has shown continued dynamism in terms of growth in the number of enterprises, production, and the capacity to contribute to manufacturing output and exports. There were apprehensions about the impact of liberalization on the growth of this sector. However, experience during the past decade has amply demonstrated that this sector can not only survive competition, but can also grow faster than the overall manufacturing sector. This demonstrates the high degree of resilience, entrepreneurial skills and the capacity for adaptation of people operating in this important sector. I wish to congratulate entrepreneurs of this sector for making the opening up of the economy a challenge and also an opportunity to exhibit and display their inherent dynamism. I am sure this sector will continue to do well in the future also.

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 has broadened the definition as well as coverage of the micro and small enterprises. They now include service enterprises which account for as much as 55 per cent of India's Gross Domestic Product. The Act has also for the first time defined medium enterprises. To capture comprehensive data for the sector, our Government has launched the 4th Census of MSME sector. This Census would collect detailed information on all relevant parameters pertaining to this sector, including khadi and village industries and coir industries. I am hopeful that the insights gained through this exercise will help us in formulating fresh policy initiatives and improving implementation of the existing policies and programmes.

Last year, I had mentioned on this function about the government's new strategy based on Cluster Development that offers a holistic and integrated approach to the promotion and development of the MSME sector. I am happy to say that several Ministries and agencies have moved ahead in this matter. The Government has also identified six centers - two each for handlooms, powerlooms and handicrafts - for development as Mega Clusters. Through these initiatives, we intend to significantly scale up the production of MSMEs located in these Clusters for both domestic and global markets.

Affordablity and timely credit to the MSME sector is of critical importance for their sustained development. The target we set in 2005 was to double the flow of bank credit to this sector in five years. I am happy to note that the credit flow has more than doubled from Rs.67,000 crore to Rs. 1,48,000 crore since 2005. I understand that the Public Sector Banks which have excelled in making credit available to the micro and small enterprise sector have been felicitated today and I congratulate them for this outstanding performance. I congratulate them while urging the other Banks to emulate them in ensuring higher flow of funds to this sector. It is noteworthy to mention that more than 1 lakh proposals have been approved under the Credit Guarantee Scheme by the Credit Guarantee Fund for Micro and Small Enterprises. The Risk Capital Fund of Rs.2000 crore with Small Industries Development Bank of India announced in the budget of 2008-09 will facilitate flow of enhanced equity support and venture capital to MSMEs. I would urge MSME units to take full advantage of these many initiatives of the government.

On this day when we celebrate the vitality of India's smaller companies, it is the latent potential of our youth that should also engage our attention. With one of the youngest populations in the world, India is estimated to have the capacity to create 500 million skilled and trained technicians by the year 2020 and claim a fourth of the global workforce. Education and skill development can be India's global opportunity. Our government has made education the core of the 11th Five Year Plan. In our National Action for Skill Development, we would like to set for the country the ambitious goal of 500 million trained people by 2020 in keeping with Smt. Sonia Gandhi's vision of Rozgar Badhao. We need to work towards realizing this bold vision through coordinated action in which government and industries and training institutions must be co-partners. Governments at the Central and State levels, industry, and society, financial institutions and society at large will all have important role to play in this mission of skill development.

There are many simple measures which can help to accelerate the pace of skill development in our economy. I have recently written to Chief Ministers to consider opening up the public stock of buildings of educational institutions of the High School level and above after class hours for those agencies and groups who are engaged in skill development for our youth. I hope Chief Ministers will respond positively and agencies that promote skill development in the private and public sector will be able to utilize these new opportunities. I urge the members of the banking community here to think of innovative ways to make skill acquisition by the youth a bankable proposition.

In conclusion, I once again congratulate all the award winners. I am sure that the MSME sector will continue to contribute handsomely to the balanced economic and social development of our country. My very best wishes for the success of all the entrepreneurs who are engaged in this creative activity which means so much to the processes of growth and development of our economy."