Government schemes and initiatives that support MSME growth in India

A baker in a tier-2 town is hugely popular locally, for years he has been using the traditional methods and processes but he is not open to adopting new technology for growth. He has been running his business for over a decades by employing 6 people. A flower garland maker in a city is able to earn enough to sustain her family and employs 5 people to cater to seasonal demand. Often, she incurs losses as the flowers wilt and she has no means to store them. Though her garlands are very popular, she has not been able to expand her business that largely depends on festivals and weddings to make some money.

Running a small business and not being able to grow even after showing a potential to create employment is a typical trait of India’s MSME sector. And, it is something that need immediate attention. While MSMEs are in important source of job creation, there is a strongly perceived hesitance among them to move ahead with time, grow and compete because of their inability to get right information and support from the right people and funding agencies. While the baker we saw in the above example is not ready to modernize his infrastructure, the garland maker does not have financial support to purchase proper storage equipment. Both of them guidance, hand-holding, mentoring and access to right channels of information. Let’s explore various MSME schemes and initiatives from the government.

Micro, Small and Medium enterprises (MSMEs) is the largest job creator for the last four years 13.9% growth

According to a survey report titled ‘Survey on Jobs Creation and Outlook in MSME Sector’ by the Confederation of Indian Industry (CII) recently ,Micro, Small and Medium enterprises (MSMEs) is the largest job creator for the last four years with growth of 13.9 per cent. The sector which ranks the second largest after China accounts for more than 40 percent of the total exports of the nation and contribute nine percent to the GDP. It is emerging as a major supplier and producer of mass consumption goods, electronic equipments, drugs etc. and more and more MNCs are keen on tapping the sector that has approximately 40 million enterprises. As per the Ministry of MSME’s annual report 2017-18, the sector contributes to Rs.3.6 crore jobs in the manufacturing sector.

Government schemes and initiatives that support MSME growth in India

A major focus area related to the development of MSMEs is the lack of proper mentoring and guidance to many entrepreneurs. There is a need for systematic interventions for promoting financial inclusion and financial literacy, along with technological and market expertise, adequate infrastructure. Click the link https://msme.gov.in/all-schemes  and  http://www.dcmsme.gov.in/ to know about all the schemes listed below:

Prime Minister Employment Generation Programme and Other Credit Support Schemes

The scheme is implemented by Khadi and Village Industries Commission (KVIC) functioning as the nodal agency at the national level. Under this there are 3 other credit and subsidy related schemes.

Development of Khadi, Village and Coir Industries

This includes six schemes related to Khadi, Coir, export promotion, market promotion and fund regeneration.

Technology Upgradation and Quality Certification

This category has 9 schemes related to funding, promoting competitiveness, IPR, ASPIRE, NMCP, Marketing support, Certification etc.

Marketing Promotion Schemes

This covers 3 schemes for international cooperation, marketing assistance and P&MS

Entrepreneurship and skill Development Programme

This program has covers Assistance to Training Institutions (ATI)

Infrastructure Development Programme

This program covers Micro & Small Enterprises Cluster Development (MSE-CDP)

Scheme of Surveys, Studies and Policy Research

This contains revised guidelines (bilingual) of scheme SS&PR with effect from 15-10-2018.

National SC-ST-HUB

The Development Commissioner of the MSME sector offers several schemes like:

National Manufacturing Competitiveness Programme (NMCP) Schemes Under XI Plan – This scheme was announced in in 2005 with an objective to support the Small and Medium Enterprises (SMEs) in their endeavour to become competitive and adjust the competitive pressure caused by liberalization and moderation of tariff rates.

Micro & Small Enterprises Cluster Development Programme (MSE-CDP)

(MSME) launched MSE-CDP for holistic development of selected MSEs clusters through value chain and supply chain management on co-operative basis.

Credit Linked Capital Subsidy Scheme for Technology Upgradation

This scheme aims at facilitating Technology Upgradation of Micro and Small Enterprises by providing 15% capital subsidy (12% prior to 2005) on institutional finance availed by them for induction of well-established and improved technology in approved sub-sectors/products.

Credit Guarantee Scheme

This scheme provides collateral free loans upto a limit of Rs.50 lakhs – for individual MSEs 

MSME MDA

The scheme offers funding to individual MSMEs & associations upto 75% in respect of to and fro air fare for participation by MSME Entrepreneurs in overseas fairs/trade delegations. The scheme also provide for funding for producing publicity material (upto 25% of costs) Sector specific studies (upto Rs. 2 lakhs) and for contesting anti-dumping cases (50% upto Rs. 1 lakh)

Scheme of Micro Finance Programme

This scheme for creating self-employment opportunities has been tied up with the existing programme of SIDBI by way of contributing towards security deposits required from the MFIs/NGOs to get loan from SIDBI. The scheme is being operated in underserved States and underserved pockets/ districts of other States.

It is a proven fact that with proper incubation and handholding support, budding entrepreneurs will be able to develop their business ideas and contribute more to the sector. We need more initiatives like this one from the Government of Telangana. The MSME networking portal, Telangana State GlobalLinker (ts-msme.globallinker.com) digitizes over 2.3 million MSMEs of the state. Initiatives like this, provides MSMEs access to global networking opportunities. It also helps them to find buyers and suppliers, economies of scale on a wide range of business services, access to industry news, articles and discussions, etc.