The government has taken several measures to solve the problems faced by micro, small and medium enterprises and enable them to play an effective role in the country's economy. These measures may be broadly classified into:

• Protective Measures, which are designed to protect small scale industries from the competition of large firms.
• Promotional Measures, which have been undertaken to promote the growth of the small scale sector in the country.
• Institutional Measures, which have been taken by the government in the form of setting up of several institutions or agencies to provide liberal and manifold assistance to small scale industries.

Recently, major initiatives have been taken by the government to revitalize the MSME sector. They include:

• Implementation of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
• A "Package for Promotion of Micro and Small Enterprises" was announced in February 2007. This includes measures addressing concerns of credit, fiscal support, cluster-based development, infrastructure, technology, and marketing.
• To make the Credit Guarantee Scheme more attractive, the following modifications have been made: (a) enhancing eligible loan limit from Rs. 25 lakh to Rs. 50 lakh; (b) raising the extent of guarantee cover from 75 per cent to 80 per cent for (1) micro enterprises for loans up to Rs. 5 lakh, (2) MSEs operated or owned by women and (3) all loans in the North-East Region; and (c) reducing one-time guarantee fee from 1.5 per cent to 0.75 per cent for all loans in the North-East Region.
• The phased deletion of products from the list of items reserved for exclusive manufacture by micro and small enterprises is being continued. 125 items were de-reserved on March 13, 2007, reducing the number of items reserved for exclusive manufacture in micro and small enterprise sector to 114. Further, 79 items were de-reserved on February 5, 2008, 14 items in October 2008, followed by a revision in July 2010. Click here to view the current list of items reserved.

Some other suggestions generally put forward are:

• Arrangements may be made by the government to ensure the supply of trained and professional managers for the small scale sector.
• It would be necessary to consider policy initiatives to incentivise MSMEs to achieve economies of scale by expanding production.
• To facilitate the MSME sector to garner resources, it is imperative that a separate trading exchange be set up exclusively for the MSMEs.
• Provide special incentives for encouraging larger flow of Venture Capital & Private Equity funds into the sector.
• There is an urgent need to devise measures to tackle the problem of loss of fiscal benefits when the micro and small-scale units graduate into larger units, etc.

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