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September 24, 2026
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Merchant discount rate on UPI merchant payments may be treated as a taxable payment settlement service with input credit availability.
GST treatment of MDR charged on UPI merchant payments above Rs 2,000 is to be considered by the GST Council. The MDR framework imposes a merchant-borne charge for payment processing and settlement. As these activities are services, MDR may attract GST at 18 per cent, subject to the Council's view. Merchants paying GST on MDR may claim input tax credit, potentially reducing their net tax burden.
September 24, 2026
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Fiscal responsibility limits frame cautions on new projects as budgetary discipline rather than financial crisis.
Finance-department advice treats fiscal indicators as grounds for restraint in approving additional expenditure rather than as evidence that funds are unavailable. Funding new projects may be difficult until additional resources are mobilised or allocations already approved are reallocated. Project proposals lacking budgetary provision or earmarked funding may create cash-flow pressures and fiscal-management challenges, requiring deferment until resources are finalised.
September 24, 2026
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Corporate document forgery allegations trigger investigation into unauthorised insolvency consortium participation and disputed share transfers.
An FIR concerns alleged cheating, forgery, criminal conspiracy, corporate-document misuse, and unauthorised financial liabilities arising from participation in a corporate insolvency resolution process. Allegations include entering a consortium arrangement without the Parekh Group's knowledge or authorisation, reliance on a fabricated and unapproved board resolution, and unauthorised transfer of shares to a group-controlled entity. Investigation covers disputed-record authenticity, alleged digital-signature misuse, and financial transaction trails.
September 24, 2026
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Energy security shapes continued Russian crude sourcing as alternative suppliers replace shortfalls amid potential sanctions-related restrictions.
Russian crude imports are operating near 1.8 million barrels daily in September, with refinery maintenance, stronger Chinese buying, and disruptions to Russian export infrastructure constraining availability. Middle Eastern supply, especially from Iraq and Saudi Arabia, has offset reduced Russian volumes. Potential tougher restrictions on countries purchasing Russian oil could complicate procurement, but energy security and tight physical oil markets make a significant near-term reduction in Russian crude purchases unlikely. Replacement remains technically possible but may raise procurement costs and competition for medium-grade crude.
September 24, 2026
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Direct tax payment gateway integration enables nationwide payments through digital options, branch channels, and customers' respective internet-banking services.
IDFC FIRST Bank's payment-gateway integration for Central Board of Direct Taxes collections enables Direct Tax payments through UPI, credit cards, debit cards, Retail and Corporate Internet Banking, and branch-based cheque, demand draft, or cash payments. Customers of other banks may use their own internet-banking facilities through the gateway. Taxpayers create a challan on the Income Tax e-Filing Portal, select Payment Gateway and IDFC FIRST Bank, choose a payment mode, complete payment, and download or print the paid challan. Payment confirmations are also accessible.
September 24, 2026
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Insurance distribution controls target commissions, expenses and loan-linked sales, reshaping bancassurance arrangements and intermediary remuneration structures.
IRDAI's consultation proposals for insurance distribution contemplate lower Expenses of Management limits, tighter commission controls, and greater control over loan-linked insurance practices. The prospective framework concerns insurer and intermediary remuneration, distribution expenses, and bancassurance fee structures. Reported concerns centre on potential effects on insurer earnings, intermediary economics, and lending-linked distribution arrangements; the measures are not described as final operative obligations or enforcement action.
September 24, 2026
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Personal loan eligibility and repayment planning: loan variants and digital applications remain subject to assessment, verification, and applicable terms.
Eligible customers may seek collateral-free personal loans within stated amount, tenure and interest-rate ranges. Loan amount, interest rate and tenure determine the EMI and total interest payable, while calculator results are estimates rather than final repayment obligations. Eligibility includes nationality, age, employment and credit-score conditions, but approval, final pricing and loan amount remain subject to lender assessment, document verification and applicable terms. Online applications require personal, financial and employment details and KYC verification.
September 24, 2026
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Nidhi company deposits lack insurance protection, requiring verification of government declaration before relying on high-return promises.
Each company seeking to function as a Nidhi must file Form NDH-4 for declaration or updated Nidhi status and comply with the Companies Act, 2013 and applicable Nidhi Rules. Nidhi companies may accept deposits and grant loans only to members. Public investors should verify declared Nidhi status rather than rely on unusually high-return promises, agent representations, or informal assurances. Deposits with Nidhi companies are not insured by the Deposit Insurance and Credit Guarantee Corporation, and recovery may be difficult where a company fails or fraud occurs.
September 24, 2026
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FCNR(B) liquidity deployment remains within banks' discretion, guided by credit pipelines, asset-liability positions, and prudent underwriting standards.
Banks retain full discretion to deploy liquidity mobilised through FCNR(B) deposits, based on their credit pipeline, lending proposals, liquidity outlook and asset-liability position. No sector-specific direction applies to use of these funds. FCNR(B) deposits are fixed-term foreign-currency deposits in which principal and interest are repayable in the same foreign currency, protecting non-resident depositors from direct rupee exchange-rate risk. Continued prudent credit appraisal and underwriting standards are expected.
September 24, 2026
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Compulsory Muslim marriage registration shifts registration to registrars under a statewide procedural framework, with local officials authorised when needed.
Compulsory registration of Muslim marriages will operate under the Assam Muslim Marriage Registration (Compulsory) Rules, 2026, framed under the Assam Compulsory Registration of Muslim Marriage and Divorces Act, 2024. Registration will be undertaken by registrars, with panchayat-level officials potentially authorised where application volumes require additional capacity. The framework addresses the registration forum after kazis were barred from registering Muslim marriages.
September 24, 2026
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Macroeconomic resilience supports fiscal consolidation, financial-sector stability, and orderly foreign-exchange management through persistent global and market shocks.
Policy management emphasises clear communication, policy certainty, macroeconomic and financial-sector stability, efficient use of buffers, and sustained structural reform. Fiscal prudence is treated as necessary to avoid unsustainable stimulus and preserve long-term stability. External-sector resilience rests on services exports and remittances, while oil and gold shocks and weaker capital inflows have created temporary balance-of-payments pressure. Further improvement is linked to lower oil dependence, export diversification, trade agreements, capital inflows and orderly foreign-exchange market management.
September 24, 2026
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Software export growth strengthens IT ecosystem as campus expansion supports startup activity, infrastructure development, and skilled employment.
Software export revenue generated by Technopark reached Rs 17,092 crore in FY 2025-26, reflecting year-on-year growth of approximately 17.3 per cent. Growth is attributed to IT infrastructure, a skilled talent base, and company performance. Technopark also operates as an IT and ITeS hub and startup ecosystem centre, with ongoing campus development intended to expand its position among major IT hubs.
September 24, 2026
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Artificial intelligence centre of excellence partnership advances industry-aligned training, supervised internships, startup mentorship, and applied research collaboration.
IIEST Shibpur and Tata Consultancy Services have entered into a Memorandum of Understanding to establish an Artificial Intelligence Centre of Excellence at the Electrical Engineering Department's high-performance computing laboratory. The collaboration supports industry-aligned training, professional certifications, practical projects, supervised internships, startup mentorship, curriculum benchmarking, and applied research in natural language processing, computer vision, image processing, and advanced data analytics.
September 24, 2026
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Money-laundering searches prompt protests over alleged political misuse while operations continue at public development offices and residences.
Enforcement Directorate search and survey operations connected with a money-laundering investigation continued at development authority offices and premises linked with housing administration, a realty company, and private residences. AAP workers protested against the searches, alleging political and administrative pressure through central investigative agencies. The party further alleged that the operations could disrupt the development authority's functioning and impede Punjab government welfare schemes.
September 24, 2026
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Money-laundering investigation procedure raises allegations over FIR registration, conflict concerns, and the choice between police, vigilance, or federal inquiry.
A police inquiry, rather than a Vigilance inquiry, was directed following an Enforcement Directorate communication seeking registration of an FIR for cognizable offences. It was contended that FIR registration should be dealt with by the police and that governmental or ministerial intervention would raise concerns where a person facing allegations is involved in deciding the investigative course. A transfer to a federal investigative agency was sought on grounds of investigative independence and perceived conflict of interest.
September 24, 2026
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Trade truce extension maintains tariff pauses and export-restriction rollbacks while negotiations continue on broader economic commitments.
United States-China trade relations may remain governed by the Busan Agreement through January 10 under a stated two-month extension, though Chinese official confirmation is pending. The arrangement maintains pauses on elevated tariffs and prior rollbacks of restrictions affecting critical minerals and high-technology exports. Negotiations may produce a broader economic package or further continuation of existing terms, while implementation of agreed commitments is under review. The parties have also proposed reciprocal alerts on AI-related hacking incidents involving national-security concerns.
September 24, 2026
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Gold Smuggling Enforcement: Concealed foreign-origin gold recovered from vehicles and a traveller, with arrests under customs law.
Gold-smuggling enforcement involved the seizure of approximately 21 kg of foreign-origin gold in two operations and the arrest of five persons under the Customs Act, 1962. Gold bars were recovered from sophisticated vehicle-chassis cavities, while gold bars and cut pieces were recovered from a passenger's specially designed cotton waist belt. The operations concerned suspected cross-border gold movement and targeted organised smuggling networks using sophisticated concealment methods.
September 24, 2026
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Cross-border gold smuggling enforcement resulted in Customs Act seizures after coordinated recovery of foreign-origin gold from border locations and a passenger.
Cross-border smuggling of foreign-origin gold through the Bangladesh route led to coordinated recoveries and seizures under the Customs Act, 1962. Gold recovered near the India-Bangladesh border was taken over for customs proceedings, including a seizure under Section 110. Foreign-origin gold concealed by a train passenger was also recovered and seized, with investigation indicating its smuggling from Bangladesh.
September 24, 2026
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BRICS tax cooperation creates standing platforms for international taxation, revenue statistics, professional capacity building and peer learning.
India-led BRICS tax cooperation established standing Working Groups on International Taxation and Transfer Pricing and Revenue Statistics, providing institutional platforms extending beyond individual Chairships. It also institutionalised an annual Young Tax Professionals Capacity Building Programme, launched the BRICS Tax Cross-Learning Lab for peer learning on client-centric administration and human-resources practices, and approved the Terms of Reference for the BRICS Tax Support Network.
September 24, 2026
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Wildlife trafficking enforcement applies protected-species safeguards to seized Tokay Geckos and enables further statutory action against suspected illegal trade.
Wildlife-trafficking enforcement led to interception of two persons and seizure of 86 live Tokay Geckos under the Wildlife (Protection) Act, 1972. Tokay Geckos receive Schedule I protection under that legislation and are listed in Appendix II of CITES, regulating international trade. The persons and recovered geckos were transferred to the Mariani Range Forest Office for further action.

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Micro, Small and Medium Enterprises: Challenges and Way Forward (Shri Shaktikanta Das, Governor, Reserve Bank of India - March 6, 2020 - at the 15th ASSOCHAM Annual Banking Summit)

March 6, 2020

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At the outset, I wish to thank ASSOCHAM for inviting me to their 15th Annual Banking Summit. More so because this is ASSOCHAM’s centenary year. It is a remarkable accomplishment and I extend warm greetings to all those associated with ASSOCHAM. Over the years, ASSOCHAM has transformed itself into a forceful, proactive, forward-looking organisation to meet the aspirations of Indian business. I am certain that ASSOCHAM’s journey towards excellence will continue.

2. In a country like India with a population size of about 1.3 billion, the Micro, Small and Medium Enterprises (MSME) sector has a vital role in the economy. It fosters entrepreneurship and generates large employment opportunities. As MSMEs absorb the surplus agricultural labour, they help reduce the problem of disguised unemployment in rural areas. MSMEs are also complementary to large industries as ancillary units and also play an important role in the whole eco-system of the secondary and tertiary sector.

3. We all are aware that the MSME sector is passing through a challenging phase. The theme of today’s Summit - ‘Structural Reforms in MSME Funding’ - chosen by ASSOCHAM, therefore, could not be more apt and timely. In my address today, I would begin by underlining the importance of the MSMEs to the economy. I would then delve into some challenges faced by them and discuss some of the measures undertaken by the Reserve Bank. I shall also list out some issues as a way forward.

I. Importance to the Economy

4. Let me begin by highlighting a few stylised facts on the contribution of MSME sector in India. The MSME sector contributes in a significant way to the growth of the Indian economy with a vast network of about 6.3 crore units and a share of around 30 per cent in nominal GDP in 2016-171. The share of the sector in total manufacturing output was even higher at 45 per cent2. Taking cognisance of the wider set of benefits that the sector offers to the rest of the economy, the Government has envisioned to increase its contribution to GDP to over 50 per cent in next few years as the country aspires for a ₹ 5 trillion economy3.

5. As per the 73rd round of National Sample Survey (NSS) conducted during the period 2015-16, the estimated employment in MSME sector was around 11 crore. Within MSME sector, each of the three sub-sectors, namely, trade, manufacturing and other services accounted for about a third of total employment. Around 50 per cent of the total MSMEs operate in rural areas and provide 45 per cent of total employment. Interestingly, the micro enterprises account for 97 per cent of total employment in MSME sector4. This relates to the problem of what is called the missing middle5, which suggests that micro firms have failed to grow into smaller and medium firms and so on over time. This seems to have kept the micro sector bereft of enjoying economies of scale, investment into fixed assets, adoption of technology and innovation.

6. The share of MSME sector in India’s merchandise exports stood at around 48 per cent in 2018-196. This signifies that Indian MSMEs are becoming globally competitive and their products/services are being accepted overseas. In this background, special attention needs to be given to improve the competitiveness and technology up-gradation endeavours. Various schemes and programmes of the Government, therefore, should be continued and effectively implemented.

II. Challenges in the MSME sector

7. Despite the MSME sector contributing significantly to the economy, it continues to face several challenges. The major challenges include physical infrastructure bottlenecks; absence of formalisation; inertia to technology adoption; capacity building; backward and forward linkages; lack of access to credit and risk capital; and the perennial problem of delayed payments, among others. Let me now elaborate on some of these issues.

Infrastructure bottlenecks and Competition

8. Notwithstanding various efforts to upgrade the infrastructure, the MSME clusters, particularly the micro enterprises, are inadequately equipped with necessary support systems which not only impede their day-to-day business operations but also their future growth prospects. While infrastructure constraint is only one side of the story, I believe that MSMEs also need to do their bit to improve competitiveness. They need to shed their inhibition to adopt new technologies; accept e-payments; and foster in-house innovation which will help them manage their businesses digitally and compete globally. Given the current scenario of global trade, the age-old methods of operating business with low levels of technology adoption deprives them of potential economies of scale. Lack of expertise in product development, designing, packaging and marketing strategy due to their small size add up to the pressure of adapting to the changing environment around them. The strategy for MSMEs should be to gradually expand in size and reduce the dependence on the incentive structure provided by the Government. Their aim should be eventually to compete on a global scale.

Access to Credit and Formalisation

9. Credit plays a vital role in development of MSME sector as funds at a reasonable cost can increase their competitiveness. Credit disbursal to this sector has, however, remained sluggish in recent periods. At an aggregate level, the total credit outstanding from banks and NBFCs to the MSME sector was approximately ₹ 16.6 lakh crore as at end of September, 2019. Scheduled commercial banks account for 90 per cent of the share of total credit outstanding.

10. As many MSMEs mainly operate in the informal space, assessing their creditworthiness can be difficult due to information asymmetry, particularly with respect to the financial performance of their businesses. In the absence of collateral, under-writing the customer often entails higher operating cost. Furthermore, due to their small-scale operations, MSMEs are not able to raise risk capital. They are also unable to take advantage of most of the Government schemes which are mostly based on digital infrastructure and require beneficiaries to have some form of digital identify and presence. With the implementation of structural reforms like GST and JAM trinity, the informal units are, however, getting integrated with the mainstream in recent years.

Delayed Payments

11. A large number of MSMEs are ancillary units catering to the needs of large industries, both in the public and private sector. They often face the problem of delayed payments, affecting their cash flow and working capital availability. Most of the time, delay in realisation of such receivables increases their operating cycle and reduces their ability to procure new orders or fulfil the existing ones. A primary survey conducted by Reserve Bank in December 2019 showed that 44 per cent of MSMEs engaged in manufacturing activities faced delay in payments. The ones not receiving timely payment mainly belonged to basic metal and metal products, engineering, construction and infrastructure related industries. On the other hand, delay in payments was lower at 27 per cent for services sector. Here transport operators mostly faced such situations. Although Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 contains provisions related to penalty in case of delayed payments by the buyers, weak bargaining power and the fear of losing the business prevents MSMEs to invoke this provision.

III. Expert Committee on MSMEs

12. In order to understand the structural bottlenecks and factors affecting the performance of the MSMEs, RBI had set up an Expert Committee on MSMEs under the Chairmanship of Shri U.K Sinha in January 2019. The Committee has undertaken comprehensive review of the sector and given several recommendations for the economic and financial sustainability of the MSME sector. These recommendations are wide-ranging and broadly relate to legislative changes; infrastructure development; capacity building; technological upgradation; improving backward and forward linkages; improving financial support from formal sources; newer technological interventions for robust underwriting practices; and credit delivery, among others. While some of the recommendations of the Committee have already been implemented, others are under consideration by the authorities concerned.

IV. Measures Undertaken by RBI

Measures to Improve the Credit Flow

13. The Reserve Bank has taken several measures in the recent period to improve the flow of credit to the MSME sector. Banks form the predominant source of formal credit to MSMEs with all such loans by banks qualifying for Priority Sector Lending classification. In August 2019, we have further incentivised banks to lend to MSMEs through the NBFC sector. Consequently, bank credit to registered NBFCs (other than Micro Finance Institutions) for on-lending to micro and small enterprises up to ₹ 20 lakh per borrower are eligible for classification as priority sector lending.

14. A scheme of one-time restructuring without an asset classification downgrade was permitted to GST registered MSME accounts that were in default but standard as on January 1, 2019. As the process of formalisation of the MSME sector has a positive impact on financial stability and this process is still underway, the scheme has been extended to accounts that are standard but in default as on January 1, 2020 and restructuring, wherever eligible, has to be implemented latest by December 31, 2020. This will enhance the scope of the scheme by benefitting the eligible MSME entities which could not be restructured under the provisions of the circular dated January 1, 2019 as also the MSME entities which have become stressed thereafter. So far, banks have restructured 6 lakh accounts out of 15 lakh eligible accounts under the scheme. Our primary survey suggested lack of awareness about the scheme among the MSMEs.

15. We have announced last month that incremental loans to MSMEs along with retail loans for automobiles and residential housing will be exempted from CRR from fortnight ending January 31, 2020 up to fortnight ending July 31, 2020.

16. Subsequent to the introduction of an external benchmark system in October 2019, the monetary policy transmission has improved where new floating rate loans to the micro and small entrepreneurs were linked to the external benchmark. With a view to further strengthening monetary policy transmission, all new floating rate loans to medium enterprises extended by banks from April 01, 2020 will also be linked to the external benchmarks.

Addressing Delayed Payments

17. As I have mentioned earlier, delay in getting payments is one the perennial problems faced by MSMEs. To address this issue, the Reserve Bank introduced the Trade Receivables Discounting System (TReDS) in 2014. TReDS is an electronic platform where receivables of MSMEs drawn against buyers (large corporates, PSUs, Government departments) are financed through multiple financiers at competitive rates. This is done through an auction-based mechanism. To widen the scope of TReDS and to incentivise more players to be part of this platform, banks’ exposure through this platform were brought under priority sector lending in 2016. Presently, three entities [viz., Receivables Exchange of India Ltd. (RXIL), A. TReDS, and Mynd Solutions] licensed by the Reserve Bank are operating the platform for more than two years. Further, the Reserve Bank recently allowed ‘on tap’ authorization to entities desirous to provide platforms for TReDS. Hence, in coming years, competition in receivables discounting space is bound to increase with the entry of new players. This requires the corporates, both in the public and private sector, to join the TReDS platform and make the system more efficient.

18. In 2018, the Government made it mandatory for all companies with a turnover greater than ₹ 500 crores to register with TReDS. As on February 2020, while 8211 MSME sellers were registered while only 1530 buyers were participating on the platforms. I would appeal to the ASSOCHAM to encourage and handhold all its members to participate in the TReDS platform.

19. In the Union Budget 2020-21, the Government has announced app-based invoice financing products to obviate the problem of delayed payments of MSME. The mechanism may prove complementary to the TReDS platform and would further alleviate the problem of delayed payments.

V. Way forward

20. As the MSME sector holds immense potential, the need is to have a right set of policies and enabling framework which guide and support MSMEs to effectively handle their existing problems and venture into new areas. While both the Government and the RBI have introduced a plethora of measures for improving access to finance and to promote growth of the sector, the small size of individual units and informal nature of the sector continue to pose challenges.

21. The traditional bank lending system by banks is based on financial statements and collateral of the borrower. With increased availability of data from several sources, including GSTN, income tax, credit bureaus, etc., it is now possible to appraise the MSME loan proposals expeditiously by doing due diligence online. Further, with the help of Account Aggregators (AA), lenders will have access to potential borrower’s financial information at a single point, of course, with his/her consent. Furthermore, emergence of FinTech companies has made it possible to assess credit worthiness of MSMEs by utilising unexplored data sources such as digital transaction trails, data generated through e-commerce sites, etc. Some lenders are collaborating with FinTech companies to take advantage of such surrogate data for speedier credit underwriting for extending loans to MSME sector. These new architectures would expand the reach of credit.

22. While the new models are beneficial for those units which are digitally active, a large segment of MSME units access credit through traditional lending models. While micro enterprises act as a starting stage of entrepreneurship that requires low investment in technology, units graduating to small and medium enterprises have to enhance their technical capacity and explore newer markets in order to stay competitive for sustainable growth. Recent policy efforts will provide an enabling environment and facilitate the MSME sector seize the new emerging opportunities. I must add that as a regulator, we in RBI have to safeguard financial stability while ensuring wider access to finance. Banks and other players on their part have to ensure prudent lending.

23. Besides, we in RBI have started launching cohorts under the Regulatory Sandbox. First such cohort was launched in November 2019 with the theme of ‘Retail Payments’ to spur innovation in digital payments space to design and test newer payment services for the unserved and underserved segments. In due course, we propose to run a regulatory sandbox for cohorts focussed on lending. This would promote innovation in MSME lending segment. The project on Public Credit Registry (PCR) will fundamentally address the information asymmetry that impedes access to credit for micro and small entrepreneurs. The PCR has been envisaged as a database of core credit information. The registry would play crucial role in reducing credit gap in the segment.

24. Given the fact that the MSME sector contributes significantly to exports, it is essential that they should be integrated with global value chains (GVC) to remain competitive as it offers unique opportunity to become technologically and digitally empowered. Being part of GVC would enable MSMEs to produce quality goods and services which will have greater acceptability in the global market. The major challenges for the sector to connect to the GVC are lack of information, knowledge of markets and quality standards. In this regard, I see a greater role for cooperation among all stakeholders.

25. Let me conclude by reiterating that industry bodies like the ASSOCHAM will need to extend their role and assist MSMEs embrace best business practices in line with the fast-changing business environment.

I wish this summit of ASSOCHAM all success in its centenary year.

Thank You.

--------

1 Annual Report, Ministry of MSME 2018-19.

2 Report of the Expert Committee on Micro, Small and Medium Enterprises (Chairman: U.K. Sinha), June 25, 2019.

3 Ministry of Micro, Small and Medium Enterprises, Government of India, September 24, 2019.

4 Annual Report Ministry of MSME 2018-19

5 Krueger, A. O. (2013). The missing middle. Economic reform in India: Challenges, prospects, and lessons, 299.

6 Ministry of Micro, Small and Medium Enterprises, Government of India, July 2019

 

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