The Micro, Small and Medium Enterprises (MSME) Ministry is working on a "special package" to give a boost to the sector hit by the economic slowdown.
"The contribution of MSMEs to overall exports has declined to 36 per cent from 40 per cent earlier owing to less demand from domestic as well as global markets," MSME Minister K H Muniyappa said.
"I have asked officials of my ministry to work on a special package which I will then take to the Cabinet for their consideration and guidance."
This would help set up more micro and small units in the country which will generate more employment opportunities, he added.
"The ministry would soon prepare a Cabinet note in this regard and circulate it to the ministries concerned in the next one month," an MSME official said.
Besides providing sops, the package would address other issues like cumbersome inspection process and difficulties in getting environmental clearances.
"Overall, these sops would help the sector grow. We hope that MSMEs contribution to exports will move above 40 per cent in the next few years," Muniyappa said.
The MSME sector contributes over 8 per cent to the country's Gross Domestic Product (GDP) and accounts for 45 per cent of the manufacturing sector. There are around 3.6 crore such enterprises, employing over 8 crore people.
In the 12th Five-Year Plan, the Budget allocation for the sector has been more than doubled to Rs 24,000 crore from Rs 11,000 crore in the last plan period, Muniyappa said.
To encourage youths, "we have decided to set up 100 new enterprises in every district of the country every year under the Prime Minister's Employment Generation Programme (PMEGP)," the minister said.
Under the PMEGP, urban and rural entrepreneurs in the general category can avail a subsidy of 15 per cent and 25 per cent on the project cost. In the case of weaker sections of society, a 25 per cent and 35 per cent subsidy is provided to urban and rural businessmen.