The contribution of micro, small and medium enterprises (MSME) in India’s total exports in the 12th Five Year Plan (2012-17) is expected to grow to 50 per cent from 36 per cent, according to Mr K H Muniyappa, Minister of State (Independent Charge) for MSME, Government of India. The growth is expected on back of increasing demand from the western and emerging markets. MSMEs contribute 8 per cent to India’s gross domestic product (GDP) and 45 per cent to its manufactured output. It provides employment to over 80 million people engaged in over 36 million units, producing more than 6,000 products.
Adequate credit is paramount to the success of micro and small units, said Mr Muniyappa. To ensure better flow of credit to MSMEs by minimising risk perception of banks/ financial institutions in lending without collateral security, the Government is implementing the Credit Guarantee Scheme, further added Mr Muniyappa. The scheme provides guarantee cover of up to 85 per cent on collateral free credit facility and is extended by lending institutions to new and existing units for loans up to Rs 10 million (US$ 179,663). Till April 2013, more than 1.1 million proposals have been approved under the scheme providing guarantee cover for total sanctioned amount of Rs 54,322 crore (US$ 9.76 billion), said Mr Muniyappa.