SPEECH BY HER EXCELLENCY THE PRESIDENT OF INDIA, SHRIMATI PRATIBHA DEVISINGH PATIL ON THE OCCASION OF PRESENTATION OF NATIONAL AWARDS INSTITUTED BY THE MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

New Delhi, 31st August 2010

Ladies and Gentlemen,

I am happy to participate in the National Awards function of the Ministry of Micro, Small and Medium Enterprises (MSMEs). First of all, I congratulate all the winners of the National Awards and I am confident that this will encourage them, as well as other MSME enterprises to scale new frontiers.

The contribution of MSMEs to the economic growth of countries is recognized worldwide. In India, these enterprises account for almost 45 percent of manufacturing output, 95 percent of the number of industrial units and 40 percent of exports. Clearly they are engines of growth. Besides, the sector provides employment to almost 60 million people, making it the largest source of employment after the agriculture sector. Moreover, many from the vulnerable and marginalized sectors of society, as well as a large number of women workers are engaged in MSMEs. This imparts to this sector an important role in the national endeavour for inclusive growth. MSMEs are highly heterogeneous in terms of the size of the enterprises, the variety of products produced and level of technology involved, but it is noteworthy that 94 percent of them are in the informal, unorganized sector, which indicates their wide coverage. I mention these figures to draw attention to the multi-faceted and substantial contribution of MSMEs, as well as to emphasize their critical role in India's future.

Another aspect of MSMEs is that 54 percent of them are located in rural areas. This sector, therefore, has the capacity to generate economic activity in rural areas, by using local raw materials, local skills and providing people employment close to where they live. I have always believed that our rural economy must not be isolated, but rather integrated with other sectors of the economy, for bringing rural prosperity in our country. MSMEs can play a very important role in this regard. I call on MSMEs to become that vital link between our rural economy and our industrial sector, so that through forward and backward linkages, the benefits of growth flow widely and deeply in our country. Any talk of the MSME sector cannot be complete without a mention of the Khadi and Village Industries. Gandhiji had dreamt of an India comprising of self contained villages, and "Khadi" as a component of Swadeshi was important to him. It is, therefore, gratifying to note that the Khadi and Village Industries are now finding and experiencing a revival in a world that is becoming increasingly sensitive to organically produced materials and goods. MSMEs working in the traditional sectors are also preservers of our indigenous knowledge and of our cultural heritage. They must be encouraged.

I would urge MSMEs to constantly look at ways and means to be more productive, as also adopt better quality controls. In this context, I believe that it is important to address the concerns and constraints of the sector through a constructive approach, so as to realize their robust growth and development, a vision that traces its legacy to the Father of the Nation and our first Prime Minister.

I call on all stakeholders of the MSME sector including State Governments and industry leaders to synergize their efforts, so that MSMEs can be supported in a co-ordinated manner to enable them to grow. I was pleased that a call centre of the Ministry of MSME - 'Udyami Helpline' was launched recently. This is a single point facility to provide information to enterprises on various schemes of the Government for promoting MSMEs, including guidance on how to set up an enterprise and access loans. Such outreach facilities are important for a sector that has a wide dispersal across the country. Similarly, the cluster development initiative with the creation of common facilities, offers opportunities for an integrated development of enterprises in this sector.

I believe that technology, marketing, credit and skills development should be major areas of focus for a sustainable and a stronger growth of the sector. The MSMEs, especially of the traditional sector are not cost effective, which escalates the price of their products facing stiff competition from other sectors. Therefore, efforts have to be made for cost effective technologies, especially in sectors like the coir industry, which employs about 5.5 lakh persons, many of whom are women in the coconut growing states of the country. Focused attention will have to be given to R&D, to evolve modern production infrastructure, thereby making them technologically competent to meet competition. It is undeniable that technology and innovations are game changers, being the key determinants of increasing productivity through improvement in skills, better capital equipment and better systems. The MSME sector is a nursery of entrepreneurship, often driven by individual creativity and innovation, and consequently also described as a nursery for new ideas of innovative products and processes. I would encourage MSME enterprises look at themselves as not only producers, but also innovators.

Secondly, availability of adequate credit is paramount to the success of the micro and small enterprises. It must be kept in mind that it is the vulnerable unorganized enterprises which are still perceived as risky by financial institutions, and suffer the greatest constraint in access to credit, because of the very nature of operations, especially of the traditional cottage industries. Timely financial support is absolutely essential for their survival, failing which they face the threat of extinction. I urge banks to give special attention to this aspect.

Thirdly, marketing is vital for the long-term sustainability of any enterprise. The market access of MSMEs can be facilitated through participation in domestic, as well as international trade fairs. In today's era of Internet, e-commerce has become a good option for marketing of products. I understand that a B2B Web portal has been launched. These are good initiatives, but need to be multiplied to be able to meet the needs of this large sector.

India's young demographic profile has been mentioned as a favourable factor in terms of manpower availability, but this requires building their skills, so that they become productive workers or providers of employment. Given the nature of MSMEs, these provide an appropriate platform for young people to launch their businesses. The Ministry of MSME has been conducting various Entrepreneurship and Skill Development Programmes for prospective entrepreneurs, through its network of field offices across the country. But the number of trained persons is relatively small when seen from the perspective of our country's need for trained manpower. To meet Government's target of creating 500 million skilled personnel by the year 2022, our skill development initiatives need to be up-scaled substantially. It should be our endeavour to ensure at the same time that the quality of trainers, trainees and the training being imparted are of global standards.

In the end, I would once again emphasize that all stakeholders must work together. State Governments have been closely associated in implementation and a fruitful partnership has emerged between the Central and the State Governments. There is a need to further strengthen this partnership, by putting in place appropriate and suitable mechanisms, so that obstacles in the growth and development of the sector are removed.

I once again congratulate all the awardees and extend my good wishes to all the MSME entrepreneurs for success in their future endeavours. Your efforts are important for the promotion and strengthening of the economy. I am confident that under the dynamic leadership of Shri Dinsha Patel, Minister of State, his Ministry will continue its work for the promotion and development of this very important sector.

Thank you.

Jai Hind!