Introduction
The number of MSMEs has been growing steadily. The number of MSMEs registered in the UDYAM portal is impressive at 4,00,42,875 as of March 2024. However, even after so much growth in their numbers, many MSME entrepreneurs aren’t aware of the government scheme available to them. Many MSMEs are plagued with problems like lack of availability of loans, lack of collateral to take loans from standard channels, marketing, and lack of infrastructure are some of them. The Indian government has started many schemes to support the MSMEs. This blog will explore MSME government schemes launched to support their growth.
Understanding MSMEs
MSME comprises three different types of enterprises: Micro, Medium and Small, each with caps and definitions. The Ministry of Micro, Small & Medium Enterprises gives the meaning. Any enterprise that qualifies for micro manufacturing and services units should have an investment of Rs. 1 crore, and its turnover should be at most five crore. The limit of medium manufacturing and service units is Rs. 20 Crore of investment and Rs. 100 Crore of turnover. The limit of small units is Rs. 10 Crore of investment and Rs 50 Crore of turnover.
Registration in the Udyam Portal
An MSME must register in the UDYAM portal to avail of various schemes offered by the government. An MSME has to qualify the definitions given by the government to register in the Udyam Portal. After registration, the MSME receives a Unique 12-digit code called Udyam Aadhar. The Udyam registration makes it easy for MSMEs to apply for MSME Financial Support schemes offered by the government.
Advantages of Udyam Registration
- Registration makes it easy for MSMEs to get subsidised interest rates and collateral-free loans from financial institutions like banks.
- The Registration makes it easy for MSMEs to get licences, permits, registrations and approvals.
- Registered MSMEs get up to 50% discounts on patents and trademark registration fees.
Government Initiatives for MSMEs
Skill India Mission for MSMEs
The government has launched many schemes to support the skill development of MSME entrepreneurs. The many programs that the government runs do not only help the individuals but also the institutions that provide the various skill development programs.
According to government data, the Women Entrepreneurship (TREAD) program was led by government 56471 women until 2016. Women Entrepreneurship (TREAD)
Even after training and counselling sessions, women in the MSME sector need help accessing loans through financial institutions. The TREAD scheme aims to channel credit to applicant women through non-governmental organisations (NGOs) that can manage funds. These NGOs will not only distribute loans to women but also provide them with counselling and training. The focus of the scheme is to provide financial assistance to such institutions. Training organisations, such as Micro, Small and Medium Enterprises Development Institutes (MSME-DIs), Entrepreneurship Development Institutes (EDIs), NIMSME, NIESBUD, and NGOs conducting training programs for empowering women beneficiaries are given funds under the TREAD scheme. They will be eligible for financial support up to the Rs. 1.00 lakh limit per program.
Assistance to Training Institutions Scheme
The Assistance to Training Institutions Scheme provides financial support through grants for various programs relating to the development of the MSME sector. It supports infrastructure and capacity building for training institutions under the Ministry of MSME and existing State-Level Entrepreneurship Development Institutes (EDIs). The scheme also funds research and studies on MSME-related matters, establishes MSME Chairs, and facilitates skill development programs and training of trainers by MSME training institutions. The maximum grant for State-Level EDIs is capped at Rs. 250 lakh per case, which can be used for infrastructure development, equipment, faculty training, and building research. For Research and Studies, the maximum assistance will be Rs. 15 lakh in each case. Also, assistance will be provided for conducting Skill Development Programmes to train the Ministry of MSME institutions.
Technology Upgradation Fund Scheme (TUFS)
The TUFS scheme was launched by the Ministry of Textiles(MOT) in 1999. The scheme aims to generate employment and promote exports, support technological advancements, upgrade different textile sectors regarding quality and productivity, and promote technical textiles for export and employment. The scheme is a credit-linked subsidy program to increase capital investments in the textile manufacturing sector. It aligns with the Government of India’s flagship initiatives like ‘’Make in India’ and ‘Zero Defect and Zero Effect’ (ZED).
Export Promotion Schemes for MSMEs
International Cooperation Scheme
The scheme aims to empower MSMEs to enter the export market by facilitating their participation in international exhibitions/ fairs/conferences/seminars/ buyer-seller meets abroad. It also aims to provide MSMEs with actionable market intelligence and reimbursement of various costs of exporting goods and services, like getting a patent or trademark. The scheme also helps MSMEs upgrade their infrastructure, technology and marketing to meet the challenges of changes in demand, emergence of new markets, etc.
The scheme has three sub-components
- Market Development Assistance of MSMEs (MDA): The Ministry of Commerce runs the scheme to encourage MSME exporters to access and participate in overseas markets. The scheme funds MSME entrepreneurs to participate in international fairs, study tours, trade delegations, fairs/exhibitions, etc.
- Capacity Building of First-Time MSE Exporters (CBFTE): This scheme is run by the Ministry of Micro, Small & Medium Enterprises. This scheme is for first-time exporters, and the government reimburses the incidental costs like registration com, membership certifications, export insurance premiums, and quality certifications. The ministry has signed MOUs with h 18 Export Promotion Councils (EPCs), Export Credit Guarantee Corporation Ltd (ECGC) and National Small Industries Corporation Ltd (NSIC) as implementing agencies.
- Framework for International Market Intelligence Dissemination (IMID): This proposed framework is supposed to act as a repository of data related to exports on foreign markets. This repository will simplify information on trade statistics, market access issues and potential export indicators.
Regulatory Compliance and Ease of Doing Business
Shram Suvidha Portal
Ministry of Labour & Employment has launched the unified ‘Shram Suvidha Portal’ to promote transparency and accountability and simplify compliance processes. The portal has many salient features to streamline labour law enforcement and ease establishment compliance complexities.
The portal gives MSMEs a unique labour identification number (LIN). This enables them to file self-certified and simplified Single Online Common Annual Returns. It also makes it easy to implement a transparent labour inspection scheme through a computerised system based on risk-based criteria and upload inspection reports within 48 hours by the labour inspectors.
Success Stories and Case Studies
Aadhya Enterprises is a women-led business based in Delhi. They have a diverse range of products, from backpacks to school, gym, and travel bags, catering to various consumer needs. MSME-DI helped Aadhya enterprises successfully register as an MSME, allowing them to benefit from reduced credit periods. This helped them with improved cash flow and increased profits.
The champions desk of MSME guided Aadhya Enterprises, helping them find new business avenues and opportunities. The MSME-DI also introduces them to new and expanded product categories and platforms where they can sell their products online. This guidance empowered them to distribute, create and sell the products more effectively.
Aadhya Enterprises has taken the arduous journey of being an MSME entrepreneur with some help from the Ministry of Micro, Small and Medium Enterprises. The founders of Aadhya have been able to navigate the challenges of running a business, diversify their product offerings, and unlock new opportunities for expansion and success.
Conclusion
MSMEs play an essential role in economic growth, employment generation and innovation. Entrepreneurs must use government schemes and support mechanisms to overcome barriers, enhance competitiveness, and unlock their full potential, contributing significantly to the nation’s economic development. The journey for MSMEs is very challenging, but with collective support from the government and financial institutions, they can create a robust and thriving environment for their growth.
