Stating that the MSME sector is of vital importance to the national economy, Prime Minister Manmohan Singh on Saturday said participation of the private sector and civil society is needed to make government's initiatives for the sector a success.

While speaking at an award ceremony here, he also emphasised the need to promote exports from micro, small and medium enterprises (MSMEs).

He added, "I would urge industry associations and chambers of commerce in India to come forward with innovative solutions to address constraints that still hinder the development of the MSME sector and provide constructive inputs for policy formulation and implementation."

"Only a fraction of enterprises today has the skills, risk appetite and resources to avail of the opportunities offered by globalisation. We need to change this state of affairs," he said.

The MSME sector accounts for 8 per cent of the country's GDP, 45 per cent of its manufactured output and 43 per cent of its exports. It provides employment to over 10 crore people.

Singh said the government believes that strong performance in the sector is necessary for India to achieve rapid and inclusive growth.

"It is a matter of satisfaction for us that the MSME sector has grown at a healthy rate of 10 per cent in recent years," he added.

The Prime Minister presented national awards to MSMEs and also Banks for excellence in lending to the sector.

Speaking on the occasion, MSME Minister K H Muniyapppa said the government has increased the allocation for the sector in the 12th Plan to Rs 24,124 crore from Rs 11,500 crore during the previous plan period.

The minister urged Singh to "favourably consider" a proposal to waive Rs 286.5 crore of loans to the khadi and village industries, a move that would make about 2,000 institutions in the sector debt-free and benefit 10 lakh weavers and spinners.