Policy for Medium Enterprises

Prelims: Public policy| Government Initiatives | Current events of national and international importance.

Why in news?

Recently, NITI Aayog released a report titled “Designing a Policy for Medium Enterprises”, to transform medium enterprises into future growth engines of India’s economy.

• MSME Sector – It plays a crucial role in manufacturing, exports, and employment.
  • It contributes 29% to India’s GDP.
  • It employs over 60% of the country’s workforce.
  • It accounts for approximately 40% of India’s total exports.
• Recently central government has revised the definition of MSME to expand their reach and strengthen their contribution to India’s economic growth.

• Distribution of MSME
  • 97% are micro enterprises.
  • 2.7% are small enterprises.
  • Only 0.3% are medium enterprises.
• Among these medium enterprises, are very small in number yet they show disproportionately high export contribution.
• Key Challenges for Medium Enterprises
  • Limited access to tailored financial products.
  • Low adoption of advanced technologies.
  • Inadequate support for Research & Development (R&D).
  • Absence of sectoral testing and certification facilities.
  • Mismatch between training programmes and enterprise needs.
• Medium Enterprises are vital to make India as a manufacturing hub and to overcome these challenges Niti Ayog made these recommended to form a separate policy for medium enterprises.

Key Interventions Recommended

• Tailored financial solutions – Launch of a working capital financing scheme linked to turnover with a provision of a ₹5 crore credit card facility at market rates.
• It also recommends faster fund disbursal via retail banks, under Ministry of MSME oversight.
• India SME 4.0 Competence Centers – Upgrading Technology Centers into India SME 4.0 Competence Centers for the promotion of sector-specific, regionally customized Industry 4.0 solutions.
• Skill Development – Integration of medium enterprise-specific modules into existing ESDP (Entrepreneurship and Skill Development Programmes).
• Research & development (R&D) support – Creation of a dedicated R&D cell in the Ministry of MSME.
• It recommends the use of Self-Reliant India Fund for cluster-based national projects.
• Cluster-based testing infrastructure – It recommends to setup sector-specific testing and certification facilities to improve product quality and regulatory compliance.
• Centralized digital portal – Launch of a dedicated sub-portal on the Udyam platform with compliance assistance, and AI-powered navigation for enterprises.

Reference

PIB| Designing a Policy for Medium Enterprises