Q.What measures has the government taken to solve the problem of finance and marketing in the small scale sector?

Finance and marketing are the two areas where MSMEs are weakest, so government support — including the framing of the MSMED Act, 2006 — has been directed specifically at easing credit access and reducing dependence on exploitative middlemen. …

Why finance and marketing need government support

• Finance is one of the severest MSME problems: a small capital base, low creditworthiness in capital markets, dependence on exploitative moneylenders, shortage of working capital, and banks' insistence on collateral, guarantees and margin money that many units cannot provide.
• Marketing is a weak area: over-dependence on middlemen who force low prices and delay payments, and little infrastructure for direct marketing.

Direction of government measures

Recognising this, the government has long treated MSME promotion as part of its industrial strategy, and framed the MSMED Act, 2006 specifically to address credit, marketing and technology upgradation. In broad terms government action is aimed at:

• On finance — improving the flow of institutional credit, easing the collateral/margin-money burden, and reducing reliance on local moneylenders so units can obtain adequate working and fixed capital.
• On marketing — helping units reach buyers more directly, reducing dependence on exploitative middlemen, and building marketing support so that small producers can realise fair value for their goods. …