Recommendations for Medium Enterprises: Revenue-Based Financing and Emergency Credit Lines Propose by Niti Aayog
The policy think-tank NITI Aayog has outlined a series of initiatives to bolster the country's medium enterprises, capitalizing on their potential to propel India's industrial competitiveness, exports, and innovation.
According to a recent report by the Administrative Staff College of India (ASCI) for Niti Aayog, medium enterprises require access to working capital and liquidity, prompting the suggestion of revenue-based financing and the establishment of emergency credit lines. To meet this need, the report recommends a turnover-linked working capital financing scheme and a Rs 5 crore credit card facility at market rates.
Moreover, NITI Aayog has proposed emergency credit lines to help medium enterprises navigate liquidity crises and maintain business continuity, and has suggested involving retail banks for faster disbursement of funds.
Recognizing the vital role of technological integration and Industry 4.0 practices, the report strongly recommends structural support for technology adoption by medium enterprises. This includes facilitating their integration into global supply chains through technological upgrades.
The report also emphasizes the necessity of strengthening the Research and Development (R&D) and innovation ecosystem specifically for medium enterprises. This could involve the creation of dedicated funding and governance frameworks to promote R&D activities in this sector.
Another key area of focus is skill development. The report underscores the need for customized programs that cater to the specific requirements of medium enterprises, aligning with technological advancements. It also suggests skill mapping initiatives and expanding existing skill development schemes to cater to this segment.
Lastly, the report proposes the development of a centralized digital portal to serve as a comprehensive resource for medium enterprises, improving their awareness and accessibility to various government schemes and initiatives.
The report acknowledges the Government of India's initiatives such as the Self-Reliant India (SRI) Fund and the establishment of technology centers and extension centers under "Establishment of New Technology Centres Extension Centres." However, it notes the absence of a dedicated scheme for addressing the working capital needs of medium enterprises.
These recommendations aim to address the unique challenges faced by medium enterprises and unlock their potential as key drivers of India’s economic growth and global competitiveness.
- To improve technological adoption by medium enterprises and propel India's industrial competitiveness, NITI Aayog recommends structural support and facilitation for their integration into global supply chains through technological upgrades.
- In line with the need for prompt access to working capital and liquidity, the report proposes the establishment of a turnover-linked working capital financing scheme and a Rs 5 crore credit card facility at market rates for medium enterprises.
- To strengthen the Research and Development (R&D) and innovation ecosystem for medium enterprises, the report advocates for the creation of dedicated funding and governance frameworks to promote R&D activities, acknowledging their potential role in India's economic growth and global competitiveness.
