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December 21, 2022

Government Schemes For MSMEs

    • December 21, 2022
    • By Team Kinara
    • < 1 mins read

    MSME Loan

    What are MSMEs?

    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 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 73rd National Sample Survey held from 2015 to 2016, there are around 63 million registered MSMEs which employ more than 111 million people 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.

    Prime Minister Employment Generation Programme (PMEGP)

    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:

    a. The online one-page form is a mandatory requirement for both individuals and organisations. The PMEGP webpage and application form are mobile-friendly, allowing applicants to receive email and SMS messages at each stage of the procedure.

    b. Banks transfer 90-95% of the total amount when the loan is approved so the owners can begin preparing the units for operation.

    c. An enterprise owner from the general category has to contribute 10% of the cost of the project, and for other special categories, the contribution is 5% of the total cost.

    d. To facilitate interaction and ensure the project's sustainability under the programme, Entrepreneurship Development Programme (EDP) training, an awareness campaign, and other supporting activities are organized.

    Entrepreneurship and Skill Development Programme (ESDP)

    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.

    Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

    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:

    a. Helping traditional craftspeople by providing long-term employment

    b. Facilitating the establishment of manufacturing facilities with cutting-edge equipment, providing raw materials, and offering other support like marketing, business development, and digitisation of the various processes.

    c. The Government of India (GoI) provides financial support under this programme, up to INR 5 crore for more than 500 artisans and INR 2.5 crores for up to 500 artisans.

    d. Another support this programme offers is soft interventions up to INR 25 lakhs for buyer-seller meetings, exposure trips, and skill development.

    Grow your MSME with collateral-free business loans

    Micro and Small Enterprises Cluster Development Programme (MSE-CDP)

    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 organizations, business clusters, and established entrepreneurs. The Government of India also supports the initiative financially for the following two categories:

    a. 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 centers, testing facilities, design centers, and plug-and-play facilities.

    b. 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.

    Procurement and Marketing Support (PMS) Scheme

    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:

    a. Participation of individual MSMEs in national trade shows and exhibitions

    b. Building MSMEs' marketing skills, their ability to adapt new packaging techniques, use bar codes, and their potential to use e-commerce platforms

    c. Establishment of a retail space.

    d. Coordinating events such as domestic trade shows, exhibitions, or awareness campaigns, as well as numerous foreign seminars and vendor development initiatives

    Conclusion

    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 utilized 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 75,000 Business Loans worth INR 4000+ crores till date. MSMEs across 3,400 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. For more information, you can reach Kinara Capital at toll-free number 18001032683 or give a missed call at 080-68264454 to speak with their customer service team.

    FAQs

    1. Where can I get information about MSME loan Schemes?

    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.

    2. What is the MUDRA Loan Scheme?

    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.

    3. How can I avail the Government schemes for my small business?

    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.

    4. Who can avail the scheme provided by the Government of India?

    Registered MSMEs from the manufacturing, trading and service sectors can avail the schemes provided by the Government.

    5. How can I register my business as an MSME?

    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.

    Check your eligibility in just 1-minute!

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    Written by
    Team Kinara
    • Tags
    • Government schemes
    • government for MSMEs
    • schemes
    • programmes
    • initiatives
    • MSME growth
    • Kinara Capital

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