Reasons, Why MSME Sector Is Feeling Neglected In India

1. Reasons, Why MSME Sector Is Feeling Neglected In India Even though MSME or Micro Smaller and Medium business is on the rise in India, you can’t just state it to be the most flourishing sector of all. Unfortunate enough, MSME is stated to be one of the most neglected sectors, especially when the matter is involving public policy. That’s why these companies end up with Credit Information Report towards lower count. However, this sector has its potential all set in their right places. MSME is stated to be the backbone of the current industrial economy. Most of the transformations have happened right back of the robust industrial sector. MSME is known to play one critical role in such transformations. You can check out the ministry based CIR for the same. Manufacturing sector in India: In this third world country India, the manufacturing sector seems to be lagging behind and the government has now envisaged “Make in India” program for getting this sector its much-deserved boost. This program won’t provide positive result without MSME sector performing well. Even the Credit Report of the manufacturing units are hitting hard, forcing banks to not work with them because of the lower MSME CIBIL score. As the businesses are getting the tag of MSME Defaulters, that is actually hitting the Business Credit Report hard. MSME sector is actually known to provide a roughly employment of one in 15 Indians and responsible for around 45% of India’s exports. Even after holding such a strong point in the field of B2B, this sector is always under troubled notion. Issues that force MSME to lag behind: MSME is facing major issues in India. Among the lot, the most important point is that around 95% of the enterprises are still working unregistered, which hit the CIBIL score hard. It means that the enterprises are just outside ambit of the formal schemes and even programs of government. For that, the government came up with Udyog Aadhar Scheme to improve Credit Report for MSME in longer run. It helps in registering the unregistered firms and presents them with policies and government schemes. Lack of national and international reach: Another reason for the worst MSME Credit Report is because of the unorganized working nature of the firms under this sector. So, it’s hard to find good marketing support for these firms on international or even national level. It lacks integration in the globalized value chains. So, the local services and goods are restricted to the local markets only. It results in revenue loss to people, as employed in value chain of the entire market. It results in worst Business CIBIL for sure. Because of unauthorized MSME performance, more and more business defaulters add up to the list. If the companies become defaulters, that will hit their credit score hard and the companies won’t receive the loan from bank for future expansion. On the other hand, if MSME gets cheated by a defaulter who has been holding their payment, then they can even report defaulters. There is a lack of trust between the enterprises and even between an organization and government. It results in B2B Defaulters, which in turn, degrade the working condition of the firm. Be sure to check out the MSME CIR for some more details.