MSME (Micro, Small and Medium Enterprises) has always been the backbone of Indian Economy. They have played a great role in achieving the socialistic goals like employment generation, income equality, poverty eradication and balanced regional development. It has the potential for wide reaching impacts on the Sustainable Development Goals (SDGs) globally including SDG1 (end poverty), SDG 2 (zero hunger), SGD 3 (good health and well-being), SDG 5 (gender equality), SDG 8 (improve inclusive and sustainable economic growth, employment and decent work) and SDG 9 (improve sustainable industrialization and fostering innovation).
The MSME sector comprises of manufacturing, service industry, logistic, infrastructure, food processing, packaging, chemicals and IT.
According to MSMED Act, 2006, an Enterprise means an industrial undertaking or a business concern or any other establishment:
According to MSMED Act, 2006, the micro, small and medium enterprises (MSME) is defined as:
The investment in plant and machinery is the original cost excluding land and building
However, in February 2018 the government has approved the basis of classifying Micro, Small and Medium enterprises from ‘investment in plant and machinery’ to ‘annual turnover’. Accordingly, MSME will be defined as:
The government of India has launched many schemes and initiatives to cater the growing needs of MSMEs in India. These schemes are devised from time to time keeping in view the latest trends and contemporary problems of this vibrant sector of Indian Economy. Some of these schemes are:
It is a web based application to submit and track online applications under various schemes of the ministry.
It empowers MSMEs to resolve the issues of delayed payments.
It disseminated information on procurement by CPSEs / Government departments.
Udyog Aadhaar is a mobile friendly application for registration of MSMEs on certification basis. The benefits of registering in this scheme are ease in availing credit, loans and subsidies from the government. Registration can be done in online as well as offline mode.
Micro Unit Development and Refinance Agency (MUDRA) was proposed in Union Budget 2015-16 to fund the unfunded entrepreneur. The MUDRA bank has corpus of Rs. 20,000 crore and credit guarantee corpus of Rs. 3000 crore. The beneficiaries can get assistance from Rs. 50,000 to Rs. 10 lakh. According to the stage of growth/development, the funding needs of entrepreneur are classified into three categories: Shishu, Kishor and Tarun.
The Ministry of MSME, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) with a view to facilitate flow of credit to the MSE sector without the need for collaterals / third party guarantees. The main objective of the scheme is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed. The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSE unit, which availed collateral – free credit facilities, failing to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 85 per cent of the outstanding amount in default.
The CGTMSE would provide cover for credit facility up to Rs. 200 lakh which have been extended by lending institutions without any collateral security and /or third party guarantees. A guarantee and annual service fee is charged by the CGTMSE to avail of the guarantee cover
It is a cluster development scheme launched by government. It aims at organisation of traditional industries and artisans into clusters to provide support for:
It is an initiative of government of India targeted towards developing a supporting eco-system for SC and ST entrepreneurs. It has resulted in registration of 13211 SC and 2704 ST enterprises on MSMEs databank by end of April, 2018. Public procurement order has made it mandatory from April, 2015 Central Ministries and Central Public Sector Enterprises (CPSEs) to procure 20% of goods and services from MSMEs. 4% out of the 20% are reserved for SC and ST owned MSMEs.
ZeD scheme envisages the promotion of Zero Defect and Zero Effect (ZeD) manufacturing amongst MSMEs to promote adaptation of quality tools/systems and energy efficient manufacturing. Under this model, goods that are manufactured for export have to adhere to certain standards, so that they are not rejected or sent back to India.
The government of India launched the ‘Make in India’ campaign to facilitate investment, foster innovation, enhance skill development, protect intellectual property & build best in class manufacturing infrastructure. The primary objective of this initiative is to attract investments from across the globe and strengthen India’s manufacturing sector. It is being led by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India.
KVIC was formed by government of India in 1956 as a statutory body with the purpose of promotion of Khadi and village cottage industries. The KVIC is charged with the planning, promotion, organisation and implementation of programs for the development of Khadi and other village industries in the rural areas in coordination with other agencies engaged in rural development wherever necessary. The total of 391344 Village industries is functioning under KVIC as per official data available for year 2016.
Prime Minister Employment Generation Program (PMEGP) is the flagship scheme of government of India in non-farm sector to be set up every year creating employment opportunities across the country. The KVIC is the nodal agency of the scheme. The objective of the scheme is generation of employment opportunities through establishment of micro enterprises in rural as well as urban areas. The maximum cost of the project/unit admissible under manufacturing sector is Rs. 25 lakh and minimum cost is Rs 10 lakh. The maximum cost of the project/unit admissible under business/service sector is Rs. 10 lakh and minimum cost is Rs 5 lakh. The scheme is implemented by KVIC as nodal agency at national level. It has record utilization of margin money of Rs 1312.40 crore in FY 2017-18.
Government of India, Ministry of Micro, Small and Medium Enterprises had launched Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation of Micro and Small Enterprises subject to the following terms and conditions:
The Stand Up India scheme was launched to provide bank loans between Rs 10 lakh to Rs 1 crore to at least one Scheduled Caste (SC) and Schedules Tribe (ST) borrower and at least one women borrower per bank branch of all scheduled commercial banks for setting up a Greenfield enterprise.
The scheme envisages economic empowerment of women through the development of their entrepreneurial skills in non-farm activities. There are three major components of the scheme:
Honey Mission was launched in July, 2017 to distribute bee-boxes across the nation. The scheme is managed by KVIC. Till date, the KVIC has distributed 29000 bee-boxes to the farmers, adivasis, SC/ST and unemployed youth. It has created a world record of highest bee-box distribution in a single day by distributing 2300 bee-boxes at Kupwara in J&K in association with Indian Army. World Honey Bee Day is observed annually on 20th May. The scheme is expected to generate addition income of upto Rs 50000 per annum per person to rural and tribal families.
The objective of TReDS is to create Electronic Bill Factoring Exchanges which could electronically accept and settle bills so that MSMEs could encash their receivables without delay.
The Prime Minister has launched the historic support and outreach programme for Micro, Small and Medium Enterprises Sector. The 12 key initiatives have been launched to help the growth, expansion and facilitation of MSME across the country. These initiatives are:
The implementation of this outreach programme will be intensively monitored for next 100 days.
Banks are expected to dispose of MSE loan application for a credit limit or enhancement in the existing credit limit:
The banks are advised to achieve:
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