Tag: Report on “Enhancing Competitiveness of MSMEs in India”

UPSC DAILY CURRENT AFFAIRS (3rd May,2025) Strengthening Entrepreneurship Ecosystems in India Syllabus: GS3/Economy; Employment; Growth & Development Context The Global Alliance for Mass Entrepreneurship (GAME) and NITI Aayog have announced a strategic partnership aimed at fostering vibrant entrepreneurship ecosystems across multiple states in India. About Mass Entrepreneurship It refers to the widespread creation of small and medium-sized enterprises (SMEs) that generate jobs, economic growth, and social impact. It emphasizes inclusive business creation, enabling millions of individuals to become job creators rather than job seekers, unlike traditional entrepreneurship, which often focuses on high-growth startups. Key Principles of Mass Entrepreneurship Encouraging Local Business Growth: Supports small-scale entrepreneurs in diverse sectors, including manufacturing, retail, and services. Focuses on regional economic development by fostering community-driven enterprises. Job Creation and Economic Inclusion: Aims to generate employment at scale, particularly in rural and underserved areas. Empowers women, youth, and marginalized communities to participate in the economy. Policy and Ecosystem Support: Requires government policies, financial access, and mentorship programs to thrive. Encourages collaboration between businesses, educational institutions, and policymakers. Objectives of the Partnership Between GAME & NITI Aayog Empowering Local Entrepreneurs: The initiative aims to bring together government agencies, corporates, educational institutions, financial bodies, and community organizations to support entrepreneurs. GAME and NITI Aayog aim to transform entrepreneurship into a movement that drives economic growth and job creation, by creating localized solutions tailored to regional challenges. Implementing Proven Methodologies: The pilot sites (Nagpur, Visakhapatnam, and Uttar Pradesh) aim to adopt GAME’s established frameworks, focusing on: Access to finance for startups and small businesses. Capacity-building programs to enhance entrepreneurial skills. Policy advocacy to create a favorable business environment. Community-driven initiatives to foster collaboration among entrepreneurs. Creating Self-Sustaining Ecosystems: The ultimate goal is to develop entrepreneurial hubs that generate widespread employment opportunities and contribute to India’s economic resilience. GAME has assisted 300,000+ entrepreneurs through various interventions enabling access to credit, access to market and place-based interventions, since its inception. Other Key Government Initiatives Supporting Entrepreneurship Startup India Initiative (2016): It aims to simplify regulations, provide funding support, and promote innovation. Over 17.28 lakh jobs have been created by startups under this initiative. Atal Innovation Mission (AIM): It focuses on building innovation infrastructure, supporting Atal Tinkering Labs (ATL) and Atal Incubation Centers (AIC). AIM 2.0, approved in 2024, aims to expand India’s innovation ecosystem with a budget of ₹2,750 crore. Startup India Seed Fund Scheme (SISFS): Provides early-stage funding to startups, supporting proof of concept, prototype development, and market entry. As of December 2024, 2,622 startups have benefited from ₹467.75 crore in funding. Fund of Funds for Startups (FFS) Scheme (2016): It aims to boost access to domestic capital for startups with a corpus of ₹10,000 crore. Challenges in Strengthening Entrepreneurship Ecosystems Access to Finance: Despite government support, many startups struggle with funding gaps, particularly in Tier II and III cities. Regulatory Complexity: Entrepreneurs face challenges in compliance, taxation, and licensing, which can slow down business growth. Limited Market Access: Startups need stronger industry linkages and global market exposure to scale effectively. Recommendations for Strengthening the Ecosystem Expanding Financial Support: Increasing venture capital funding and credit access for startups in emerging sectors. Simplifying Regulations: Streamlining compliance processes and reducing bureaucratic hurdles for entrepreneurs. Enhancing Market Linkages: Strengthening public-private partnerships to help startups access domestic and international markets. Port Economy to Drive India’s Growth Syllabus: GS3/ Economy Context PM Modi said that Coastal States and port cities will become key growth centres for a developed India, during the commissioning of the Vizhinjam International Seaport in Kerala. What is the Port Economy? The port economy refers to the economic activities and value generated through the functioning and development of ports, which serve as vital nodes in global trade and logistics networks. Ports facilitate the movement of goods and people, enable export-import operations, and support shipbuilding and repair. History of India’s Port Economy In ancient India, ports like Lothal (Gujarat), Muziris (Kerala), and Arikamedu (Tamil Nadu) served as vibrant centers of Indo-Roman, Indo-Greek, and Southeast Asian trade. During the medieval period, ports like Surat, Calicut, and Masulipatnam emerged as key hubs for trade with Arabs, Persians, Chinese, and Europeans. However, with the advent of colonialism the focus turned toward resource extraction, rather than national development. Status of port development in India India has a vast coastline with 13 major ports and over 200 non-major ports. Together, they handle around 95% of India’s foreign trade by volume and 70% by value. As of 2024–25, India ranks among the top 20 countries in global shipbuilding. Two Indian ports, Jawaharlal Nehru Port Authority (JNPA) and Mundra Port, are among the top 30 globally. As per the World Bank’s Logistics Performance Index (LPI), 2023 India moved up to 22nd Rank in the Global Ranking in International Shipments category and the overall 38th Rank in Logistics Performance Index score. The Vizhinjam Seaport is India’s first dedicated transshipment port, aimed at reducing dependence on foreign ports as 75% of India’s transshipment occurs abroad currently. A shipbuilding and repair cluster is being developed in Kochi under the Sagarmala initiative. Benefits of a Robust Port Economy Geostrategic Value: Ports enhance India’s maritime influence and support initiatives like SAGAR (Security and Growth for All in the Region) and Project Mausam. Regional Development: Port-led industrial zones catalyze infrastructure growth and attract private investment in hinterland regions. Environmental Efficiency: Well-managed ports reduce carbon emissions by improving turnaround times and facilitating modal shift to railways/inland waterways. Turnaround time is the time a ship spends at port from arrival to departure. Inland Water Transport (IWT) emits 50% less CO₂ per tonne-km than road transport. Employment Generation: Ports directly and indirectly support millions of jobs in logistics, warehousing, and ancillary sectors. Challenges High Logistics Costs: India’s logistics cost is about 13-14% of GDP, compared to 8-9% in developed economies. Dependency on Foreign Ports: Major transshipment activities rely on Colombo, Singapore, and Port Klang due to lack of domestic deepwater capacity. Port Congestion, procedural inefficiencies and lack of digitization lead to delays, reducing global competitiveness. Environmental Concerns: Port construction and dredging damage coastal ecosystems and marine biodiversity. Government Initiatives Sagarmala Programme: It aims to reduce logistics costs by port modernization, port-led industrialization, and improved hinterland connectivity. The Maritime India Vision 2030 aims to enhance India’s maritime capabilities with a targeted investment of ₹3 lakh crore, aiming to boost cargo handling capacity to over 2,500 million metric tonnes. National Logistics Portal (Marine) is being developed as a one stop digital platform where all maritime stakeholders are being integrated for easier and speedier services. Establishment of the ₹25,000 crore Maritime Development Fund (MDF): The fund aims to support long-term investments in the sector, with the government contributing 49% and the remaining 51% mobilised from ports and private sector investments. PM Gati Shakti Plan integrates infrastructure planning across sectors to improve multi-modal logistics efficiency. Way Ahead Develop Green Ports: Invest in shore power, LNG bunkering, and sustainable dredging to minimize environmental impact. Private Sector Participation: Public-Private Partnerships (PPP) can expedite infrastructure upgrades and improve service quality. Leverage Strategic Geography: India should maximize its location near major global trade routes to become a global transshipment and logistics hub. Report on “Enhancing Competitiveness of MSMEs in India” Syllabus :GS 3/Economy In News NITI Aayog released a report on improving Micro, Small, and Medium Enterprises (MSMEs) competitiveness in India. About the Report – It was prepared by NITI Aayog in collaboration with the Institute for Competitiveness (IFC).– The aim is to unlock the potential of India’s MSMEs through systemic reforms in financing, skilling, innovation, and market access.– It highlights challenges in financing, skilling, innovation, and market access across key sectors like textiles, chemicals, automotive, and food processing. India’s MSME sector It is a key driver of India’s industrial economy, with 5.93 crore registered enterprises employing over 25 crore people. In 2023-24, MSME-related products contributed 45.73% to India’s total exports. In recent years, the MSME sector has displayed remarkable resilience, with its share in the country’s Gross Value Added (GVA) increasing from 27.3% in 2020-21 to 29.6% in 2021-22 and 30.1% in 2022-23, highlighting its growing role in national economic output. The Union Budget 2025-26 includes measures to strengthen the MSME sector, such as enhanced credit access, support for first-time entrepreneurs, and promotion of labour-intensive industries. The classification criteria for MSMEs have been revised, increasing investment and turnover limits by 2.5 times and 2 times, respectively. This is expected to boost efficiency, technological adoption, and employment generation. Challenges Highlighted in recent report Although, between 2020 and 2024, MSME access to formal credit improved (micro and small enterprises from 14% to 20%, medium enterprises from 4% to 9%), however, 81% of MSME credit demand remains unmet, with an estimated ₹80 lakh crore gap. Credit Guarantee Fund (CGTMSE) has expanded but still faces limitations. Many MSME workers lack formal vocational or technical training, hindering productivity and scalability. A significant portion of MSMEs also underinvests in research and development, quality improvement, and innovation. MSMEs face challenges in adopting modern technologies due to unreliable electricity, weak internet connectivity, and high implementation costs. State government schemes supporting technological advancements are often inaccessible due to low awareness. Despite several MSME support policies, their effectiveness is limited by low awareness and poor implementation. Suggestions and Way Forward India’s MSMEs can become a key driver of sustainable economic growth by focusing on targeted interventions, building stronger institutional collaborations and enhancing global competitiveness. The report calls for enhanced support for MSMEs through digital marketing training, partnerships with logistics providers and creating platforms for direct market linkages, especially in regions with high growth potential, such as India’s northeastern and eastern belts. It calls for a robust, adaptive and cluster-based policy framework at the state level that fosters innovation, enhances competitiveness and enables MSMEs to drive inclusive economic transformation. Terror Financing Syllabus: GS3/ Security In News India has intensified its efforts to combat terror financing and actively engage with international financial institutions to curb the misuse of such funds in supporting terrorist activities. More about the News India is urging institutions like the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB) to review their financial aid to Pakistan to ensure that development funds are not diverted towards financing terrorism. India is advocating for Pakistan’s re-entry into the Financial Action Task Force (FATF) grey list, emphasizing the need for stringent monitoring of its financial systems to prevent terror financing. Terror Financing Definition: Terror financing involves the provision of funds or financial support to individual terrorists or terrorist organizations. These funds can originate from both legitimate and illegitimate sources and are used to sustain terrorist operations, including recruitment, training, and execution of attacks. Major Sources of Terror Financing: Hawala Transactions: An informal method of transferring money without physical movement, often exploited to fund terrorist activities. Fake Currency: Circulation of counterfeit currency undermines the economy and provides untraceable funds for terrorist operations. Drug Trafficking: Illicit drug trade serves as a significant revenue stream for terrorist groups. Extortion and Kidnappings: Terrorist organizations engage in extortion and abductions to extract funds from individuals and businesses. Charitable Organizations and NGOs: Some entities are misused as fronts to collect and channel funds towards terrorist activities. Challenges in Combating Terror Financing Complex Financial Networks: Terrorist groups utilize sophisticated and decentralized financial systems, making detection and disruption challenging. Lack of International Cooperation: Inadequate collaboration among nations hampers the global fight against terror financing. Legal and Regulatory Gaps: Variations in legal frameworks and enforcement capabilities across countries create loopholes exploited by terrorists. Misuse of Technology: The rise of cryptocurrencies and digital payment systems offers anonymity, facilitating untraceable transactions. India’s Measures to Counter Terror Financing Legislative Framework: Unlawful Activities (Prevention) Act (UAPA): Empowers authorities to designate individuals and organizations as terrorists and seize their assets. Prevention of Money Laundering Act (PMLA): Provides for the confiscation of property derived from or involved in money laundering. Institutional Mechanisms: Financial Intelligence Unit (FIU-IND): Analyzes suspicious financial transactions and disseminates information to enforcement agencies. National Investigation Agency (NIA): Investigates and prosecutes offenses related to terrorism and its financing. International Collaboration: Active participation in global forums like FATF and the “No Money for Terror” (NMFT) conference to enhance international cooperation. Technological Advancements: Implementation of the National Intelligence Grid (NATGRID) to facilitate real-time information sharing among security agencies. Brain-Computer Interface (BCI) to Enable Movement in People with Paralysis Syllabus: GS3/ Science and Technology Context Researchers from the University of California, have developed a new brain-computer interface that enables movement for people who are paralysed. What is a Brain-Computer Interface (BCI)? A Brain-Computer Interface is a direct communication pathway between the brain’s electrical activity and an external device. Typically, BCIs are used to assist, augment, or repair human cognitive or sensory-motor functions. In this case, the BCI records signals from the brain’s motor cortex—the area responsible for movement—and decodes them using artificial intelligence to operate robotic limbs. Types of BCIs Invasive BCI: The devices are surgically implanted into the brain to directly interact with the nervous system, enabling communication and control between the brain and external devices. It offers the most accurate signals; used in cases of paralysis or locked-in syndrome. Example: Neuralink’s Blindsight Partially Invasive BCI: The devices are implanted within the skull but rest outside the brain, typically on the dura mater, a membrane surrounding the brain. They are used to record electrical signals from the brain’s surface using techniques like electrocorticography (ECoG). Non-Invasive BCI: These are systems that allow users to interact with external devices (like computers or robots) using their thoughts, without the need for surgery. They typically use external sensors like EEG electrodes to detect brain signals, making them safer and more accessible than invasive BCIs. Applications of BCIs Medical and Rehabilitation: Assistive Devices: Control of wheelchairs, robotic arms, or computer cursors by people with paralysis. Neurorehabilitation: Post-stroke motor recovery by training brain pathways through BCIs. Prosthetic Control: Artificial limbs operated via brain signals. Education and Training: Attention Monitoring: In classrooms to track student engagement. Skill Development: Feedback on focus or brain activity while learning complex tasks. Industry and Automation: BCI in Human-Robot Interaction: Enhancing collaborative robots in factories. Hands-Free Control in Hazardous Work: For miners or chemical plant workers where hands are occupied. Concerns Associated with BCIs Privacy: There is a significant risk of misuse of neural data collected through BCIs, as these systems can potentially access sensitive thoughts, intentions, or emotions of individuals. Digital Divide: High costs and technological complexity of BCI systems could widen the digital divide, leaving marginalized groups without access to these life-changing innovations. Mental Autonomy: There are concerns that prolonged use of BCIs might alter brain function or reduce an individual’s sense of agency, raising questions about mental autonomy and identity. Way Ahead To ensure that BCIs benefit the masses, especially people with disabilities, it is essential to develop low-cost, scalable solutions. Public-private partnerships and startups can help translate lab innovations into real-world applications. Further establishing educational programs and professional certifications will help build a skilled workforce in this emerging field.

Tag: Report on “Enhancing Competitiveness of MSMEs in India”

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