MSME ministry to network with PE players for capital infusion

NEW DELHI: The Micro, Small and Medium Enterprises ( MSME) Ministry will network with major private equity players to encourage capital infusion in small and medium units, the backbone of the Indian industry.

MSME Secretary Uday Kumar Varma said he would hold informal meetings with private equity players in this regard.

Private equity firms are averse to investing in the sector due to the risk involved.

"I am proposing to hold a very informal meeting with them (private equity players) and find a way in this regard," Varma told PTI, adding, "There is a lack of understanding of this sector, so we have to fill the knowledge gaps."

The units face problems in raising capital as they have to fulfill many conditions to get timely credit from banks and financial institutions.

Last month, Department of Industrial Policy and Promotion (DIPP) Secretary R P Singh said the government plans to provide incentives to venture capitalists who invest in small and medium-size enterprises.

The current level of venture capital funding in Indian SMEs is negligible.

The MSME sector contributes 45 per cent of the country's total manufacturing output and 40 per cent of exports, but more than 94 per cent of these enterprises are unorganised.

Under the organised sector, there are 26 million MSME units, which employ almost 60 million people in the country.