UK Sinha Committee Report – Free PDF Download

IMPORTANCE OF MSME’S

• Engines of growth of India.
• The MSME sector employs about 111 million people.
• It accounts for more than 80% of the total industrial enterprises.
• They account for 28% of GDP.
• About 45% of total manufacturing output and 40% of the total exports.

COMMITTEE

• In January 2019, the RBI appointed an 8-member expert committee headed by former SEBI chairman U.K. Sinha to comprehensively review and propose long-term solutions for revival of the micro, small and medium enterprises (MSME) sector.

1. Ram Mohan Mishra
2. Pankaj Jain
3. P. K. Gupta
4. Anup Bagchi
5. Abhiman Das
6. Sharad Sharma
7. Bindu Ananth

TERMS OF REFERENCES

• Review the current institutional framework in place to support the MSME sector.
• Impact of the recent economic reforms.
• Identify the structural problems affecting its growth.
• To study the global best practices with respect to MSMEs and recommend its adoption in India.

NEED FOR THIS COMMITTEE?

• The MSME sector has been facing stress due to
• The demonetisation exercise
• Implementation of GST.
• The liquidity crunch triggered by a series of debt defaults by group companies of Infrastructure Leasing and Financial Services Ltd in 2018.

CHALLENGES IN MSME SECTOR

• Access to technology.
• IPR related issues.
• Low ICT usage.
• Wasteful usage of resources/manpower.
• Energy inefficiency and associated high cost.
• Poor competitiveness in the overall MSME sector.

RECOMMENDATIONS OF THE COMMITTEE

 Distressed Asset Fund

• To provide relief to small businesses hurt by demonetization, GST and an ongoing liquidity crunch.
• Creation of a Rs.5,000 crore distressed asset fund to assist units in clusters.

Fund of Funds

• A government-sponsored Fund of Funds of Rs. 10,000 crore.
• To support venture capital and private equity firms investing in MSMEs.

MSME Act

• The committee recommended an amendment to the MSME Development Act, 2006.
• Small industries face problems of delayed payments & legal provisions available under the act is weak.
• All MSMEs to mandatorily upload all their invoices above an amount to an information utility.

SIDBI (Small Industries Development Bank of India)

• It has recommended expanding the role of SIDBI.
• SIDBI must expand the credit markets for MSMEs in underserved districts and regions.
• Provide new sources of funding to MSMEs through development of additional instruments of debt & equity.

PSBLoansIn59Minutes.com

• The portal should also cater to new entrepreneurs who may not have info. like GSTIN, income-tax returns.
• A timeline of 7-10 days needs to be fixed for disposal of applications after in-principle approval.
• The threshold of loan should be enhanced up to ₹5 crore.

Loans under the MUDRA

• Doubling the limit on collateral-free loans to Rs 20 lakh.
• Shishu scheme– loans up to Rs 50,000.
• Kishor scheme– loans above Rs 50,000 and up to 5 lakh.
• Tarun scheme– loans above Rs 5 lakh and up to Rs 10 lakh.

Technology

• The committee made a case for greater adoption of technology-facilitated solutions to many of the problems encountered by the MSME sector.
• Technology Upgradation Fund Scheme in 1999. (ATUFS)
• SAATHI (Sustainable and Accelerated Adoption of efficient Textile technologies).

Other Recommendations

• Making it mandatory to source 25% of PSU needs from MSME units through GeM portal.
• Setting up an apex national and State-level council for MSMEs.
• Group policies for death and accident cover for MSME entrepreneurs. (significantly higher than the cover currently offered by the PMSBY and PMJJBM).

CONCLUSION

• Government agencies, NGOs, voluntary organisations, corporate sector, banks, regulators, MSME units and their forums will have to work in tandem to accelerate the pace of growth.
• Even in the midst of 50 years of the nationalised banking system, 86% of 63.38 million MSME units do not have access to bank credit.

Latest Burning Issues | Free PDF

Sharing is caring!