Govt taking measures to empower MSMEs

The Ministry of Micro, Small and Medium Enterprises (MSMEs) is proactively taking steps to increase the number of micro and small business enterprises around India through various schemes and programmes

June 24, 2019

MSMEs contribute to sustainable economic growth, apart from generating new employment and strengthening the nation’s manufacturing capabilities

Indian MSMEs cater to a vast market, ranging from processed foods to defence equipment, the MSME sector has recorded an annual growth of over 10%

Currently MSMEs in India are engaged in the manufacturing of nearly 6,000 products, this has helped improve India’s position in global value chains

An amount of over US$324 million has been allocated under the Prime Minister’s Employment Generation Programme (PMEGP) for fiscal year 2019-20

The Ministry of Micro, Small and Medium Enterprises (MSMEs) is proactively taking steps to increase the number of micro and small business enterprises around India through various schemes and programmes. The ministry said on June 24 that the measures will contribute to sustainable economic growth, apart from creating new employment and strengthening the nation’s manufacturing capabilities. To drive this, the ministry has been providing credit, technology upgrades and skilling to boost the MSME ecosystem. While on the one hand, Indian MSMEs have helped empower India’s rural and cottage enterprises, on the other it has connected Indian capabilities with foreign innovation and investment. Indian MSMEs currently cater to a vast market, ranging from processed foods to defence equipment. 

Followings are the major schemes being implemented by the Ministry of MSME: 

  1. Prime Minister’s Employment Generation Programme (PMEGP): This is a credit-linked subsidy programme aimed at generating self-employment opportunities through establishment of micro-enterprises in the non-farm sector by helping traditional artisans and unemployed youth. The Scheme was launched during 2008-09. A total of 545,000 micro enterprises have been assisted with a margin money subsidy of US$1.7 billion, providing employment opportunities to an estimated 4.5 million persons since PMEGP’s inception until March 2019. An amount of over US$324 million has been allocated under PMEGP for 2019-20 which is substantially higher with respect to allocation in the earlier financial year which would further lead to increased number of units assisted and employment generation.

  2. Scheme of Fund for Regeneration of Traditional Industries (SFURTI): It is a cluster-based scheme for development of Khadi, village industries and coir clusters by providing them with improved equipment, common facilities centers, business development services, training, capacity building and design and marketing support, among others. SFURTI Scheme has been revamped in 2015. A total of 34,791 artisans have benefitted with the assistance of over US$20 million in  2018-19.

  3. A Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship (ASPIRE): This was launched in 2015 to set up a network of technology centres and to set up incubation centres to accelerate entrepreneurship and also to promote start-ups for innovation and entrepreneurship in agro-industry. Under ASPIRE, 74 Livelihood Business Incubation (LBI) centres as well as 11 Technology Business Incubators have been approved since the inception of the scheme.

  4. Coir Board: Ministry of MSME, through the Coir Board, is implementing various Schemes and programmes to assist entrepreneurs to set up new MSMEs in all coconut producing states. Under Coir VikasYojna, more than 3.6 million employment opportunities have been created since 2014-15 till 2018-19 in the coir sector.

  5. Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE): The scheme facilitates credit to the MSE units by covering collateral-free credit facility (term loan and /or working capital) extended by eligible lending institutions to new and existing micro and small enterprises. The scheme has extended guarantee cover to over 3.5 million enterprises leading to around 10 million employment generation. During FY 2018-19, a total of 435,520 proposals have been approved providing guarantee to the tune of over US$4.3 billion.

  6. Credit linked Capital Subsidy Scheme (CLCSS): CLCSS facilitates technology upgradation of small scale industries, including agro and rural industrial units by providing 15 per cent upfront capital subsidy (limited to a maximum of US$21,600). Since inception of the scheme in 2000-01 till date, a total of 62,827 MSE units have been assisted utilizing subsidy of over US$560 million. During 2018-19, a total of 14,155 MSE units have been assisted utilizing subsidy of US$142 million.

  7. Micro & Small Enterprises-Cluster Development Programme (MSE-CDP): The Ministry of MSME has adopted the Cluster Development approach as a key strategy for enhancing the productivity and competitiveness as well as capacity building of MSEs and their collectives in the country. A cluster is a group of enterprises located within an identifiable and as far as practicable, contiguous area and producing the same, or similar products and services. During 2018-19, 17 Common Facility Centres and 11 Infrastructure Development projects have been established.

With 38 per cent contribution to India’s GDP and 49 per cent and 45 per cent share of national exports and manufacturing output, respectively, MSMEs play a vital role in the economy

In India, the MSME sector has recorded an annual growth of over 10 per cent over the past years. With 38 per cent contribution to India’s GDP and 49 per cent and 45 per cent share of national exports and manufacturing output, respectively, MSMEs play a vital role in the economy. MSMEs in India are engaged in the manufacturing of over 6,000 products ranging from traditional to hi-tech items. They also hold the potential to create up to 10 million new jobs in India over the coming five years as the nation expands its manufacturing prowess. Currently, only 15 per cent of India’s consumption is manufactured within the nation. This, along with India’s growing skill base and R&D capabilities, has offered opportunities for local manufacturing, besides improving the nation’s position in Global Value Chains (GVCs). 

Improvement in capabilities has led to the manufacturing of finished goods by Indian MSMEs, beyond the production of just parts and components. Indian MSMEs are also contributing to R&D of precision hardware and software for sectors spanning healthcare to space sciences. The MSME Ministry has also established an Export Promotion Cell to best promote the high-margin and high-quality capabilities of the sector, worldwide. The cell will help Indian MSMEs export their products and services, identify areas of improvements to export efficiently, and drive integration of Indian MSMEs amid global value chains. Along with the export promotion cell, an action plan has also been proposed to achieve US$100 billion of MSME exports from India by 2020. This is a considerable part of the national economic growth.