Various Schemes introduced by Government to facilitate the growth of Small and Medium Enterprises in India.

1. Schemes to facilitate MSME growth in India
Considering the importance of MSMEs in the Economic growth and Employment
Generation, during Diwali , government announced 12 schemes ,which can facilitate the
growth of MSME sector. The salient one was to approve loans up to Rs.1 cr in 59 minutes.
The loan amount will be between Rs. 10 lakh and Rs.1 cr. The rate of interest starts from
8%. After the approval of the application, the loan amount will be disbursed within a week.
There is no mandatory requirement for collateral as the online portal is directly connected
to the Credit Guarantee Fund Trust for Micro and Small Enterprises scheme. While
registering, the borrower need not make any payment. Once the applicant’s proposal
matches the bank’s minimum criteria for lending, the borrower will have to be submit a fee
of Rs, 1,000 plus taxes.
Rebate in interest rate. When the GST was introduced. Many MSMEs started paying GST for
the first time. Paying GST creates a credit profile for the MSMEs and it is possible to assess their
credit rating based on the financial profile of the firm. On the new loans to be availed, GST-
registered MSMEs will get 2% subvention or rebate on incremental new loans of up to Rs 1
crore. Interest subvention on pre- and post-shipment credit for exports by MSMEs has also
been increased from 3% to 5%. Assuming their average cost of funds of 10%, the 2%
subvention will reduce their interest cost .
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Cash flow certainty. Companies with a turnover of more than Rs 500 crore to join Trade
Receivables e- Discounting System (TReDS) and it has become mandatory. This will help
MSMEs to discount their bills and improve the cash flow, to ensure a smooth operation.
Procurement by PSUs. Public Sector units in Several sectors are the market leaders and their
purchase budget in a year is a very large. Now, PSUs have to procure, at least a quarter of their
requirement (25%) from MSMEs. Earlier, it was at 20%. This will give a big boost to MSMEs and
their integration into the industry value chain will increase . This will also help to create more
jobs due to higher demand.
Women entrepreneurs. The participation of women in various sectors is rising and the
government also has created several special schemes to promote women’s participation in the

2. society. With a view to encourage , more women to pursue entrepreneurship, out of the
25% procurement mandated from MSMEs from PSUs, 3% has been reserved for women
entrepreneurs.
Government e-Marketplace (GeM). Government has created a grand programme on
Digitiation of the Economy. One of the initiatives under digitisation is creating E- marketplaces,
where MSMEs can participate easily. Now it is mandatory for all Central PSUs to take
membership of the Government e-Marketplace (GeM) and they will put their purchase
requirements in the market place, which MSMEs can identify easily and participate in the
process.
Technological upgradation. MSMEs have money only to run their business and they are
constrained to invest in upgrading their technology, products and R&D related to their
business. With a view to assist MSMEs in upgrading the Technology, Government has created a
budget of Rs 6,000 crore and it will be used for 20 hubs and 100 tool rooms for technology
upgradation.
Pharma companies. India has gained competitiveness in Pharma business and has emerged as
the Generic pharma product hub in the world. There are more than 10,000 companies
producing pharma products in India and with a view to encourage setting up more Pharma
units government has created a scheme for forming MSME pharma clusters. 70% cost of
establishing these clusters will be borne by the government.
One annual return. At present MSMEs are filing several reports in a year relating to Labour
laws and Central rules. This consumes lot of times of the entrepreneurs and taking away their
attention from the core business. To make this process simple, now, MSMEs will have to file
just one annual return on eight labour laws and 10 central rules.
Inspections. At present, Inspectors visit the factories and many a times, entrepreneurs are
harassed and this has become one of the irritants for MSMEs and they are finding it difficult to
manage this process. The process of inspection from the discretion of the inspector has been
changed to selection of a company through a computerised random allotment and inspectors

3. will have to upload reports on the portal within 48 hours of their visit. This has brought lot of
transparency to the process.
Air and Water Pollution Laws. Now MSMEs can file returns with self certification and only 10%
of the units will be inspected. Further, they need a single air and water clearance and just one
consent to establish a factory. The process has been made simple and become a single window
clearance.
Minor Violations under Companies Act. An ordinance has been promulgated to simplify the
levy of penalties for minor offences under the Companies Act. Now MSMEs no longer have to
approach courts which is a time consuming process but they can correct them through simple
procedures.
The twelve initiatives, will go a long way in boosting the growth of MSMEs in India to create
robust business models and pave the way for faster integration of MSMEs into the Indian
Economy. The awareness has to be created about these schemes to all the MSMEs in India.
By R . Kannan