CICU strongly demands similar fund for MSME like startups to obtain finance at low cost

Ludhiana, September 24, 2018: Chamber of Industrial and Commercial Undertakings (CICU) has urged the Prime Minister to set up a corpus where industry can get fund for manufacturing, marketing, technology upgrading, new product development at 3% per annum for 5 years it will give high boost to the economy and India GDP can jump upto 2%.

Few months back Narendra Modi, Prime Minister, had announced funds to promote startup – CICU strongly demanded similar funds for development of MSME in country which is struggling for survival. The heart of Indian Industrial Sector is MSME hire 40% work force, contribute 8% of country GDP, 45% of Industrial Output & 45% of exports.

CICU urged Prime Minister to set up corpus fund where MSME can get finance for development @ 3% interest, GDP can jump to 2%. Small scale industries play a vital role in the economic development of our country. Small scale industries are not in a position to play their role effectively due to various constraints. The various problems faced by small scale industries are as under.

Upkar Singh Ahuja, President, CICU emphasized that the MSMEs passing through crucial times 40% MSME are at verge of sickness and there is a long list for challenges for MSME, Like Cost of capital is very high in tune of 9% to 12%, where is other countries like Japan it just 3%, even in China its 5%. Which is major bottleneck for technology upgrading for MSME, Raw Material MSME gets at higher prices because of weak buying power because of less volume and long payment terms, and Credit is one of the key challenge for MSME. A Survey conducted in January 2018 highlights that MSME Sector receive 17.4 credit out of total, Human Resources : White Collared and Grey Collared is also a challenge for MSME it is not able to retain talent is MSME value like Brand, Financial Package and Status is lower than large corporate sector. Employees prefer to work in large sector MSME has to struggle hard to get the manpower in the month of April, May and June. MSME production suffer badly due to shortage of manpower and has to beat high cost of premium freight and business and long loss which is customer dissatisfaction.

Pankaj Sharma, General Secretary, CICU said that if we speak about export MSMEs has bigger fluctuations, Currency Fluctuations, Credit Cost, Alignment with GST, timely supplies, Quality Control, new Product Development, selling to wholesaler which leads to low value addition & slow growth of MSME, Industry need to develop its own supply chain like warehouse, showroom in prominent countries to sell its products at good price and can earn more profit and grow faster. Most of the small-scale units are working below potentials or there is gross underutilization of capacities. Large scale units are working for 24 hours a day i.e. in three shifts of 8 hours each and are thus making possible use of their machinery. On the other hand small scale units only 40 to 50 percent of their installed capacities. Various reasons attributed to this gross under-utilization of capacities are problems of finance, Raw Material, Power and underdeveloped for their products.

MSMEs are mostly owned by one or two members of family works hard for survive and grow. Average work 10 hours a day and competent enough to compete with any manufacturer worldwide.