The MSMEs and the small scale businesses contribute to the backbone of Indian economy. It may help in solving the current unemployment crisis in India. Statistics states that “India employs over a hundred million people” and “accounts for 45% of the manufacturing output”. It is also recorded that 40% of the country’s exports depend on the small businesses and MSMEs. Thus, MSME government schemes have been introduced to help these small scale businesses sustain and flourish reducing unemployment.
In the bid to sustain, the MSMEs and the small scale businesses require enough funding in the form of huge capital. Currently, this sector is experiencing a working capital crunch where they lack the access to affordable capital. In this article, we have drawn a list of top 4 most popular and advantageous MSME government schemes that even the small scale businesses can avail.
Credit Linked Capital Subsidy Scheme
This government scheme aims to boost the competitiveness of the MSMEs by including the onprocess technology upgradation efforts with the CLCs or the Credit Linked Capital Subsidy and ZED or Zero Defect Zero Effect Manufacturing. This raises productivity via waste reduction, cloud computing, design intervention, nurturing new ideas and facilitating intellectual property.
Under the scheme, the MSMEs including the khadi, tiny, village and coir industrial units receive straightforward capital subsidy of 15% up to INR 1 crore. This can be used in the induction of improved and well-established technology for the 51 approved products or sub-sectors.
The scheme offers special provisions to promote entrepreneurship for the SC/STs alongside the women-led SMEs. The scheme focuses on the mountain regions like Himachal Pradesh, Jammu & Kashmir, Uttarakhand and the island countries (Lakshadweep and the Andaman and Nicobar islands) alongside the aspirational districts.
The entire application has been uploaded by the PLI to the attached nodal agency that in turn recommends the online application to the MSME/Office of DC for releasing the subsidy.
After the application has been processed and checked for the availability of funds, due approval is required from the competent authority in accordance with the internal finance wing. Following this, the funds are released to the nodal agencies, which then transfers the funds to the PLIs that operate the MSE’s account.
Credit Guarantee Fund Trust For Micro & Small Enterprises (CGTMSE)
This scheme has been established by the Small Industries Development Bank of India (SIDBI) and MSME Ministry. The scheme ensures the lending institution that in case a borrowing MSE unit could not discharge its liabilities to the lender, the trust will offer a certain percentage of the credit facility to cover up the lender’s loss incurred.
The MSME government schemes offer collateral-free credit (non-fund and fund based) extended by the eligible financial institutions to the existing and new small and micro enterprises These enterprises can avail up to a limit of INR 2 crore (INR 200 lakh) from the fund trust.
The guarantee cover is extended to 80% for the women owned and/or operated MSEs. The guarantee remains applicable on all loans/credit in the North-East region (NER) for the credit facilities up to INR 50 lakh. The candidates meeting the eligibility criteria may go ahead and approach the financial institutions, eligible banks or selected regional rural banks for applying the loans under this scheme.
Prime Minister’s Employment Generation Programme (PMEGP)
This is one of those MSME government schemes that focuses on generating a steady employment opportunities stream in several areas of the country. It also runs on another objective that is facilitating the financial institutions for lending more to the micro sector.
For availing this, any individual needs to be above 18 years of age. The person is required to be at least an eighth grade passed for the projects that cost over INR 10 lakh in the manufacturing sector and the projects costing above INR 5 lakh in the service/business sector.
Special categories that include SC/ST/OBC/women/minorities, physically handicaped, ill and border areas, NER will be subjected to 25% in the urban areas and 35% in the rural areas. The banks provide the total balance amount of the total project cost in the form of working capitals and term loans.
The divisional or the state directors of KVIC in consultation with the Director of Industries of the respective states (for DICs) and KVIB provide advertisements locally via the print and electronic media. They invite applications additionally with the project proposals from the prospective beneficiaries who are desirous of establishing the starting of service units or enterprises under PMEGP.
The beneficiaries can too submit their respective online application here and take the printout of the application. Then they can submit their application to the respective offices along with the detailed project report and the other essential documents.
Pradhan Manti Mudra Yojna
This scheme had been launched back in 2015. Prime Minister Narendra Modi had introduced the scheme with a corpus of INR 20,000 crore and a credit guarantee corpus of INR 3,000 crore. This scheme consists of three vital products such as –
- Sishu: covering the loans up to INR 50,000.
- Kishor: covering the loans above INR 50,000 and up to INR 5 lakh.
- Tarun: covering the loans above INR 5 lakh and up to INR 5 lakh and up to INR 10 lakh.
The businesses or entrepreneurs/units in both the rural and urban areas having financial requirements of up to INR 10 lakh can apply. The eligible individuals and the institutions can send their applications to the respective region’s Nodal Officer. Find more details here.
These are all the latest schemes that the government has introduced for the MSMEs and the small businesses (MSME government schemes) for boosting their activities. All of these are aimed at growing the business of these entrepreneurs.