The annual economic outlook survey by the Federation of Indian Chambers of Commerce and Industry (FICCI) stresses that the micro, small and medium enterprises (MSMEs) should be given a push to create more jobs. Economists believe that this can be achieved through a cluster development approach by the Government.
According to the report, smaller enterprises that function in a cluster will be able to develop economies of scale and achieve cost-efficiency, which in turn will improve productivity and competitiveness.
India’s GDP growth rate is pegged at approx. 7.5 per cent for the financial year 2020.
And it is the MSMEs that require strengthening and attention, because they are capable of generating maximum employment opportunities.
Economists suggest pushing other areas, such as agriculture, undertaking factor market reforms, and improving avenues for infrastructure financing.
With MSMEs expected to create approx. one crore jobs in the coming four to five years, the development of clusters becomes all the more important.
The MSMEs in the various spaces, such as artificial jewellery, sports goods, scientific instruments, metal utensils, textile machinery, electric fans, rubber, plastic, leather and related products, bicycle parts and auto components, textile, wood, paper, food, minerals, and so on are capable of creating an additional 75 lakh to one crore jobs in the near future, through partial substitution of imports.
What is required is strong and stable policies that will help Indian SMEs integrate with global value chains. It has already been suggested that an exclusive export facilitation centre be established for MSMEs, to improve their exports. Economists also feel the need to set up more technology and incubation centres for MSMEs across the country.
Also, if the cost of doing business is reduced, regulatory/labour reforms are also eased, special packages are designed for specific sectors, employement will definitely be generated in the manufacturing and services sector.
In the past four years, employment generation by MSMEs has grown 13.9 per cent, with micro-businesses creating the maximum jobs.