The Government has announced formulation of National Competitiveness Programme in 2005 with an objective to support the Small and Medium Enterprises (SMEs) in their endeavor to become competitive and adjust the competitive pressure caused by liberalization and moderation of tariff rates. Para 59 of the Budget Speech 2005 are as follow:-
"Worldwide, it is manufacturing that has driven growth. In order to revive the manufacturing sector, particularly small and medium enterprises, and to enable them to adjust to the competitive pressures caused by liberalization and moderation of tariff rates, I propose to launch a new scheme that will help them strengthen their operations and sharpen their competitiveness. The scheme will be called the "Manufacturing Competitiveness Programme". The design of the scheme will be worked out by the National Manufacturing Competitiveness Council (NMCC) in consultation with the industry".
Accordingly, the NMCC along with relevant stakeholders like the Ministry of MSME has conceptualized and finalized the components of the programme incorporating suitable inputs from the stakeholders in a meeting taken by Chairman, NMCC on 7.12.2005. The NMCP, as conceptualized by the NMCC was accepted by the Government and announced for implementation in the Budget 2006-07, para 68 of which state as under:-
The National Manufacturing Competitiveness Council (NMCC) has finalized a five-year National Manufacturing Programme. Ten schemes have been drawn up including schemes for promotion of ICT, mini tool room, design clinics and marketing support for SMEs. Implementation will be in the PPP model, and financing will be tied up during the course of the next year
The Small and Medium Industries form the backbone of manufacturing sector not only in this country but even in the developed countries. In India, the small scale sector contributes to 40% of manufacturing. The small industries sector also contributes substantially to the exports. In the past, the Small Scale Sector existed in a relatively sheltered environment. The levels of protection were high, several goods were reserved for production in the Small Scale Sector, special fiscal incentives were extended to the units in the sector and a number of support programmes were also drawn up to ensure the Small Industries survived.
In the post-reform era, starting from 1991, the situation for the Manufacturing Sector as a whole as well as for the Small Industries has undergone a dramatic change. The tariffs on imports have been reduced very substantially. India is gradually integrating with the world economy; new trade blocs are forming and many countries, including India, are entering into Preferential Trade Agreements, Free Trade Agreements or Comprehensive Economic Agreements to improve trade in areas of their comparative advantage. In this process the Indian economy is becoming more open and there is an urgent need for the Industry to adjust to the new situation. The Indian Industry will have to become competitive by cutting down overall costs to that extent to survive and grow. The situation confronting the Small Industries in particular provides both opportunities as well as challenges. An opportunity to grow in a global market place is available to access entry into the global value chain by virtue of their being internationally competitive. The others would need to reposition themselves and become competitive to meet the challenges if they have to survive.