Micro Small and Medium Enterprises, commonly known as MSMEs are an essential part of the Indian economy as they contribute 30% to the GDP of the nation. The government intends to increase this contribution to 50% in the upcoming years by establishing a number of new programmes, including the MSME loan scheme, to support the sector’s rapid development.
MSMEs are pivotal in the growth of the economy as the sector is the second largest employer in the country after agriculture. As per the recent report, there are around 4.5 crore registered for MSMEs in India, which 98% are micro enterprises in the country.
When a business registers as an MSME, it may be eligible to obtain government subsidies, quick loan approvals, lower electricity costs, and accessibility to MSME clusters for skill and technology development. According to the categories listed below, MSMEs should register to obtain Udyam Registration.
Micro Enterprises: Businesses with an annual turnover of up to INR 5 crores.
Small Enterprises: Businesses with annual turnover ranging between INR 5 crores and INR 50 crores.
Medium Enterprises: Businesses with a yearly turnover of more than INR 50 crores but less than INR 250 crores.
In order to assist the MSME industry, the government has introduced various programmes. These include funding and financial support, skill improvement and training, infrastructure support, and technological advancement. Here are some of the popular MSME schemes offered by the Government of India in collaboration with other institutions.
Micro, Small, and Medium Enterprises (MSMEs) are crucial to the global economy, especially in countries like India. The importance of MSMEs is evident in their significant contribution to GDP, job creation, and innovation. They create employment opportunities, absorb a large portion of the workforce, and improve living standards. MSME businesses drive economic progress through widespread presence in rural and urban areas, ensuring balanced regional development.
These enterprises are hubs for innovation and entrepreneurship, enabling individuals to turn ideas into viable businesses. They also contribute substantially to exports, enhancing the country’s trade balance. Recognising their significance, governments offer various schemes for MSMEs, including the MSME loan scheme for financial assistance.
MSMEs are vital to the supply chains of larger industries and promote financial inclusion by integrating unbanked sectors into the formal economy. Supporting MSMEs through schemes and loans is essential for fostering economic resilience and sustainable growth.
Government schemes for MSMEs, such as the MSME loan scheme, provide access to affordable credit, ensuring businesses can secure the funds they need to grow and expand.
The MSME subsidy scheme offers financial assistance to reduce the overall cost of capital, making it easier for small businesses to invest in new technology and infrastructure.
Various MSME government schemes help businesses reach broader markets through support in marketing and distribution, increasing their competitiveness and market presence.
Government schemes for MSMEs often include training and skill development programs, which enhance the capabilities of the workforce and improve overall business efficiency.
Many schemes promote the adoption of advanced technology by providing financial support, enabling MSMEs to modernise their operations and improve productivity.
MSME government schemes offer incentives and assistance for businesses looking to export their products, helping them to enter and compete in the global market.
Government initiatives streamline regulatory processes and reduce bureaucratic hurdles, making it easier for MSMEs to operate and grow their businesses.
Thus, government schemes for MSMEs have vast and varied benefits, providing crucial support in finance, skill development, technology, and market access. These initiatives are instrumental in empowering MSMEs, driving economic growth, and fostering a more inclusive and dynamic economy.
The program’s objective is to provide financial assistance for self-employment ventures in order to generate long-term employment for unemployed youth and traditional craftsmen in both rural and urban areas. MSMEs can take advantage of this programme by obtaining bank-financed loans with subsidies to help them launch new micro businesses in industries other than agriculture. For projects up to 50 lakhs in the manufacturing sector and 20 lakhs in the service sector, banks offer margin money subsidies ranging from 15 to 35% on the loans. For special categories like SC/ST/women, the margin is 25% in urban areas and 35% in rural regions.
PMEGP is open to individuals over the age of 18 and a number of organisations which are registered as Self Help Groups, Charitable Trusts, Associations, and so on. Here are some of the details of the scheme:
The programme seeks to increase public awareness of entrepreneurial culture to inspire young people from various social groups, such as SC/ST, women, etc., to consider entrepreneurship as a potential career path. One of the key goals of the programme is to offer fundamental entrepreneurship training to assist entrepreneurs in putting their concepts into action, bring about cognitive and attitude changes in the target group and enhance their individual entrepreneurial skills.
The ESDP additionally encourages the growth of existing MSMEs and the establishment of new ones, which will increase productivity and lead to the creation of new jobs. Agro-based products, food and fruit processing industries, carpet weaving, mechanical engineering workshops, fabrication, carpentry, etc., are just a few of the industries that would receive entrepreneurial training and skill development under the programme.
The SFURTI purpose is to group traditional industries and craftspeople into clusters in order to enhance their competitiveness for long-term sustainability objectives. Non-governmental organisations (NGOs), state and federal institutions, semi-governmental organisations, craftsmen from traditional industries, and groups of artisans from the handicraft, textile, bamboo, honey, coir, and khadi industries can all submit applications for skill development under the programme.
The following list includes some programme’s features:
The MSE-CDP was established with the goal of assisting MSMEs in developing and being sustainable by addressing challenges with information technology, skills and excellence, and market access. Through the establishment of self-help groups, the strengthening of associations, and other strategies, the programme also increases MSMEs’ ability for collaborative supportive actions.
The plan also assists in setting up Common Facility Centers for testing, training, and other broad purposes as well as infrastructure facilities in new or existing industrial regions. In addition to this, the programme supports sustainable and environmentally friendly manufacturing processes for MSME clusters. The MSE-CDP is open to all government organisations, business clusters, and established entrepreneurs. The Government of India also supports the initiative financially for the following two categories:
Common Facility Centers: GoI provides assistance up to 80% of the project cost, which is a maximum of INR 30 crores, for the building of processing centres, testing facilities, design centres, and plug-and-play facilities.
Infrastructure Development: The Government of India (GoI) contributes up to 70% of the project cost of a maximum of INR 15 crore toward the development of roads, power distribution, drainage, and other infrastructure in existing and new industrial regions.
The Procurement and Marketing Support Scheme promotes new market access efforts, such as organising or participating in national or international trade fairs or exhibitions, in order to increase the marketability of services and goods in the MSME sector. The programme aids in fostering access initiatives and raising knowledge of numerous marketing-related subjects. Another goal of the programme is to raise knowledge of essential issues, including e-marketing, the GeM portal, the GST, and other associated topics.
MSMEs in the manufacturing and services sectors who possess a valid Udyam Registration Certificate are eligible to participate in the programme and can take advantage of the following benefits:
Now that you are aware of various government initiatives designed to aid MSMEs, you can take advantage of the chances, develop your abilities, and learn to use the most modern technological advancements to amplify the expansion of your small business.
A major assistance that can be given to small business owners is to provide them easy credit access for their business. In order to strengthen the MSME sector, Kinara Capital, an RBI-registered Systemically Important NBFC in India, offers MSMEs access to formal financing in the form of collateral-free Business Loans for the expansion of their enterprises.
These Business Loans can be utilised for a variety of purposes including enhancing the business space, purchasing equipment to speed up manufacturing activities, covering working capital needs like paying wages, obtaining raw materials, stocking up inventory, and other requirements of particular enterprises.
You can check your eligibility for a Business Loan in less than a minute using the myKinara app, which is free to download from the Google Play Store. The application gives you a provision to choose your preferred vernacular language from the 7 language options available to navigate around the app. Once you have met the requirements, you can upload your business and personal KYC records in the fully secure digital portal. Within 24 hours of document verification, the loan money will be transferred to your bank account.
Kinara Capital has disbursed over 90,000 Business Loans worth INR 5000+ crores till date. MSMEs across 4500 pin codes in 100+ cities in India can avail of collateral-free business loans from Kinara Capital. To help MSMEs with the process, Kinara also offers doorstep customer service. Also, we have a dedicated customer support team available between Monday – Friday (9.30 AM – 6.00 PM) at our toll-free number 1800-103-2683 for any questions or assistance. This ensures that entrepreneurs can get the help they need throughout the loan process.
On the website of the Ministry of MSME, you may get information about various credit programmes for business. To aid the MSME sector, the government has launched a number of programmes. These consist of money and financial assistance, education and skill improvement, infrastructure support, and technological advancement.
MUDRA, or the Micro Units Development and Refinance Agency, has taken the initiative to offer low-cost financial support to MSMEs in the manufacturing, trading, and service sectors.
Three categories of loans are available from cooperative societies, public and private sector banks, and other financial institutions. The Shishu Plan offers up to INR 50,000 to new startups and MSMEs, the Kishore Plan up to INR 5,00,000 to mid-range MSMEs, and the Tarun Plan up to INR 10,00,000 to established MSMEs in the nation.
To avail the scheme offered by the Government of India (GoI), MSMEs can visit the https://msme.gov.in/ and learn more about the available MSME schemes.
Registered MSMEs from the manufacturing, trading and service sectors can avail of the schemes provided by the Government.
First, your business must meet the MSME classification provided by the Government of India. MSMEs are categorised under the following three categories:
Micro Enterprises: Annual turnover up to Rs. 5 crore
Small Enterprises: Annual turnover ranging from Rs. 5 crores to Rs. 50 crores
Medium Enterprises: Annual turnover ranging from Rs. 50 crores to Rs 250 crores
Having a PAN and GST number is mandatory for MSMEs, so they should obtain GST registration, irrespective of the turnover. Obtaining a GST can help small business owners avail Input Tax Credit and can also provide GST bills to their customers.
To register your business as an MSME, you can register yourself for free on a fully online Udyam Registration portal by just providing your Aadhaar number.
