The top MSME schemes from the Indian Government
The Indian Government has always given special importance to the Micro, Small and Medium Enterprises (MSME) sector. These sectors were at the heart of the Indian economy before industrialization took over but even with all the industrialization and the stress on bulk production, the presence of MSMEs is still significant because it absorbs the shocks from the economic tsunamis that happen around the globe. These homegrown businesses today, contribute to 33.4 % of the manufacturing output according to this report from CII. (http://www.cii.in/Sectors.aspx?enc=prvePUj2bdMtgTmvPwvisYH+5EnGjyGXO9hLECvTuNuXK6QP3tp4gPGuPr/xpT2f) It is also worth noting that the MSMEs account for 24.63% of the GDP from service activities as per estimates of www.prestloans.com. The importance of MSMEs is hence well-known and the government has floated some impressive schemes to help these businesses grow. Let us take a look at the top schemes amongst all of them.
1) The Performance and Credit Rating Scheme
An MSME today would rely on securing credit from either banks or NBFCs. However, the process of judging the credit health of an MSME can be complex and also expensive, if the assistance of the usual credit rating agencies is taken. The Indian Government has introduced the performance and credit rating scheme to help an MSME get a trusted third-party opinion on its creditworthiness and the capabilities. This scheme has a list of registered rating agencies. The key advantage here is that the rating fee is subsidized to the ‘extent of 75% subject to ceiling of ₹ 1500/-, ₹ 30000/-or ₹ 40000/-based on the turnover’
2) Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT SME)
This scheme talks about the establishment of a trust fund that implements the ‘Credit Guarantee Scheme’ for MSMEs. This scheme is useful for the MSMEs that are seeking credit from banks but have trouble putting up collateral or securing a large enough amount. The scheme guarantees 75% of the loan amount to the bank helping the MSME have a relaxed collateral burden.
3) Credit Linked Capital Subsidy for Technology Upgradation (CLCSS)
This scheme is one extremely useful way for MSMEs to upgrade their technology and come to be at par with the larger players. The CLCSS provides 15% up front capital up to INR 1 crore for technology upgradation. The scheme also explicitly states that the technology introduced should be state-of-the-art or near-state-of-the-art. The scheme allows every MSME to apply.
Entrepreneurial and Managerial Development of SMEs through Incubators
The government has also recognized the growing enthusiasm of college graduates to start their own ventures. To that end, the government provides early stage funding to nurture ‘innovative business ideas’. These ideas could be a new technology, or product or service or even a process that should have a plan to become commercialized in a year. The scheme talks about an assistance of INR 4 lakh to INR 8 lakh for each idea. This scheme is ideal for college graduates on their way to setup their own MSME.
5) Financial Support to MSMEs in ZED Certification Scheme
The government also wants to introduce measures of quality in MSMEs by introducing the Zero Defect, Zero Effect (ZED) certification scheme. The hand-holding initiative would empower MSMEs to reduce wastages, increase productivity, increase in-house Intellectual Properties, and pioneer new processes. This scheme introduces subsidy of 80%, 60% and 50% of the certification cost to Micro, Small and Medium enterprises respectively. The steps in the scheme involved rating of the MSME, gap analysis and hand-holding of the MSME towards the certification.
Building Awareness on Intellectual Property Rights (IPR)
This is a scheme that is useful for MSMEs to build their knowledge about Intellectual Property Rights and also build their own products or services that can be patented. The scheme provides various amounts of assistance for pilot studies and awareness programs. There is funding support for setting up IP facilitation and also for patent and GI registration. The scheme also includes the fees for training conducted by expert agencies on specialized IPR issues.
The Indian Government has really come of age in creating the right schemes for MSMEs. There are several more than you can check out at http://msme.gov.in/all-schemes. The Indian Government’s schemes are designed to help MSMEs evaluate their operations, secure hassle-free credit, organize better operations and build patentable products. In regards to securing hassle-free credit, a NBFC like www.prestloans.com is very effective. The dual impact of a good scheme and a committed financial partner like NBFC can help an MSME to skyrocket its growth journey.