MSMEs want offset clause in infra projects

Federation of Indian Micro, Small & Medium Enterprises (FISME) has urged the government to adopt the offset policy as it readies projects as part of its 100 lakh crore investment in the infrastructure sector.

New Delhi:Missing on guaranteed business as many (Public Sector Units) PSUs bid out projects to private parties, micro, small and medium enterprises (MSMEs) want the government to insert an offset clause in each infrastructure project for smaller firms.

Federation of Indian Micro, Small & Medium Enterprises (FISME) has urged the government to adopt the offset policy as it readies projects as part of its 100 lakh crore investment in the infrastructure sector.

"Many government agencies, for instance, NHAI bids out road projects to private developers. Once a project goes to a private firm, they are not required to mandatorily source part of their supplies from MSMEs. So, we have proposed to adopt offset policy for infrastructure projects," said FISME Secretary General Anil Bhardwaj.

As per the current policy, every central ministry, department and PSUs are required to mandatorily procure 25 per cent of their supplies annually from the MSME sector. Industry sources said while some of the agencies achieve their annual target, many PSUs fail to reach the goal.

The MSME sector has argued that adoption of offset clause would have multiplier effect on the economy. The offset clause would require private infrastructure companies to make a commitment for sourcing part of their inputs from MSMEs for being eligible to get a project.

Given that Nitin Gadkari is Minister for both the road transport and the MSMEs, the proposal is likely to be considered and taken forward. He has already underlined the role of MSMEs in the country's economic growth and job creation.

Gadkari recently said the contribution of MSMEs to GDP could be taken to 50 per cent from 29 per cent now. Moreover, it alone can create 5 crore jobs in the next five years.

The MSME sector is considered a key growth engine accounting for about 90 per cent of businesses and more than 50 per cent of employment.

"We will take up the issue of offset with the MSME Ministry next week," an industry executive said.