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Let's Make A MSME Dominated Economy

Micro, small and medium enterprises Day is celebrated on 27th June every year across the world with the aim to appreciate the contribution of MSMEs in increasing the country's economic growth

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The ‘Make in India’ initiative and the ‘Atmanirbhar Bharat Abhiyaan’ by the Prime Minister-led central government played a key role in promoting business and local manufacturing, giving special thrust to micro, small and medium enterprises (MSMEs). However, the Covid-19 pandemic has turned their world upside down.

Presently, Indian MSMEs require government handholding as the country is moving forward on the path of economic recovery. Hence, in order to maintain and eventually expand operations, small businesses require substantial funds in the form of large amounts of capital. Therefore, the government of India has brought several schemes for this sector.

Small businesses are the backbone of India's economy and could be the key to solving the country's unemployment crisis. The MSME sector in India employs more than 100 million people and accounts for 45 per cent of the manufacturing output and more than 40 per cent of the country's exports.

Here is the list of several government schemes for MSMEs:

Prime Minister Employment Generation Programme: This scheme is implemented at the national level by Khadi and Village Industries Commission (KVIC) and at this level, all the work related to this scheme will be looked after by KVIC. The government has fixed a budget of Rs 5,500 crore for the programme. This budget will be invested under this expansion plan. With the extension of the term of the Prime Minister's Employment Generation Program, 15 lakh people of our country will be able to get jobs and many new projects will be started.

Under the manufacturing sector, only those projects will be acceptable whose maximum cost is up to Rs 25 lakh and similarly, under the business/service sector only those projects will be acceptable whose maximum cost is up to Rs 10 lakh. Under this scheme for the general category of people, 25 per cent of their project cost will be given by the government as a margin money subsidy. This 25 per cent margin money subsidy was kept only for the general category of people in rural areas. At the same time, for the general category of people in urban areas, the government has fixed the margin money subsidy at 15 per cent.

Credit Guarantee Fund Trust For Micro & Small Enterprises: The scheme was launched by the Indian government to provide collateral-free credit to the micro and small enterprises sector. Both existing and new enterprises are eligible to be covered under the scheme. The Ministry of MSME, GoL and small industries development bank of India (SIDBI) set up a trust named Credit Guarantee Fund Trust for Micro and Small Enterprises to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises.

Fund and non-fund-based credit facilities up to Rs 200 lakh for every qualified borrower are covered under the assurance plot given they are stretched out on the venture suitability without insurance security or outsider assurance. The extent of assurance cover is 85 per cent for miniature undertakings for credit up to Rs 5 lakh. The extent of assurance cover is half of the endorsed measure of the credit office for credit from Rs 10 lakh to Rs 100 lakh for each MSE borrower for retail exchange movement.

Interest Subsidy Eligibility Certificate Scheme: It is an important mechanism to finance the Khadi program started by Khadi institutions. It was brought in to raise funds from banking institutions to bridge the gap between the actual requirements of the fund and the availability of funds from budget sources.

Under the ISEC scheme, credit is provided for working capital as per the requirement of the institutions at a concessional rate of interest of 4 per cent per annum. The difference between the actual lending rate and 4 per cent is paid by the central government through KVIC to the lending bank. Approving the continuation of the scheme for implementation during the XII Plan period, the Government of India approved an integrated version of the scheme for Khadi and Polyvastra to facilitate interest subsidies for institutions.

Entrepreneurship and Skill Development Programme: Entrepreneurship advancement and improvement programs are coordinated to support the ability of youth by illuminating them on different parts of the business movement expected for setting up MSEs. These programs are led for youth and others intrigued to set up their own industrial/self-employment adventure. Such exercises are likewise coordinated in ITIs, polytechnics and other specialised foundations/business colleges, where ability is accessible to rouse them towards self-employment.

Zero Defect Zero Effect: The ZED scheme has the potential to become a national movement as it aims to provide a roadmap to global competitiveness for the MSMEs of India. This scheme is to enable and facilitate MSMEs to adopt ZED practices and motivate and incentivize them for ZED Certification while also encouraging them to become MSME Champions.

Through the journey of ZED Certification, MSMEs can reduce wastage substantially, increase productivity, enhance environmental consciousness, save energy, optimally use natural resources, expand their markets, etc.

Under the scheme, MSMEs will get a subsidy as per the following structure, on the cost of ZED certification. Micro enterprises are about 80 per cent, small enterprises are about 60 per cent and medium enterprises are about 50 per cent, according to the ministry.

Credit Linked Capital Subsidy: The CLCS Component of the CLCS-TU Scheme targets working with innovation upgradation by giving capital appropriation to MSE units, on institutional money (credit) profited by them for modernisation of their plant and apparatus associated with assembling interaction and gear for delivering administrations, by and large. The endowment stretched out on the acquisition of qualified machinery and equipment proves to be useful for decreasing the general credit weight of the MSME to a significant degree.

The plan accommodates a forthright appropriation of 15 per cent on institutional credit for distinguished areas, subsectors, as well as advances. The computation of the endowment sum depends on the real expense of the procurement plant and hardware drafted by the unit for innovation upgradation. The higher limit of loan amount eligibility is Rs 1 crore.

World MSME day was declared MSME Day in the 74th meeting of the United Nations General Assembly in 2017. The day is celebrated because MSMEs play a vital role in setting the Sustainable Development Goals.


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