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Introduction
On 12th May, 2020 PM Modi addressed the nation to build the hope and patience of citizens in this pandemic mode, in his speech he focused on local or a self reliant India. The task of Atmanirbhar Bharat Abhiyan that he and the citizens want to achieve resides its backbone on MSME. To further elaborate FM Nirmala Sitaraman announced the first tranche aiming on MSME and NBFC’s funds of Rs 20 lakh crore relief funds. In our country where the entrepreneurial activities are pioneering rapidly, the blend of earlier schemes and covid-19 help plans serves as a perfect cocktail for the former goal.
Definition of MSME
The government has recently broadened the scope for firms registering under MSME act. There has been an upliftment in investment amounts in conjunction with the introduction of turnover limits. Also now there is one threshold limit for both manufacturing and service providing units.
| Micro | Small | Medium | |
| Manufacturing | >1 crore investment and >5 crore turnover | >10 crore investment and >50 crore turnover | >20 crore investment and >100 crore turnover |
| Services |
Benefits of MSME
Bank loans
MSME are provided with the benefits of cheap loan with an interest rates ranging between 1-1.5% with an additional perks of no collateral requirement. Along with it two initiatives were taken i.e., credit guarantee trust fund scheme and small industries development bank of India (SIDBI).
A collateral and guarantee free loan of 3 lakh crore is announced under the covid -19 package. The threshold for the same is 20% of entire outstanding credit as on 29.2.2020. This could be availed by enterprises having an outstanding up to Rs 25 crore and Rs 100 crore turnovers. These loans have tenure of 4 years and moratorium for 12 months on principle repayment along with a capped interest. This is a 100% government guarantee covered loan which could be availed till 31st October, 2020 benefitting 45lakh units.
Subordinate debt fund of Rs 20000 crore is formed to help the ventures facing cash problem or declared NPA, existingly there are 2 lakh units facing the same problem. The fund could be availed through banks, which is to be infused by promoters as equity in unit.
Fund of funds
Rs 50000 crore equity infused in via fund of funds. This will help in expansion of small ventures. It operates through mother fund and a few daughter funds.
Global tender
The government has taken a land marking step by not making up to Rs 200 crore tenders global. This will protect the MSME from the competition with the foreign companies.
E-market
An e- market platform has been created to replace traditional trade fairs and exhibition. In addition to this the receivables would be released within 45 days from government and CPSEs.
Subsidies and concessions
The ventures incorporated under MSME can avail 50% subsidy which could be availed by an application to respective authority while patent registering.
These are also eligible for subsidy for industrial promotion.
They could avail concessions in their electricity bills by application to the respective department with the certificate of registration by MSME.
There is also a provision for reimbursement of outlays done for ISO certification.
Interest on delayed payments
Often MSME face the delay in payments from customers, thus blocking their working capital. To combat this problem conciliation and arbitration was brought into effect to minimise the dispute redress timings. According to the provision, if any registered MSME supplies goods or services to the buyer then he is required to settle the payment on or before the agreed date of payment or within 15 days from the day of purchase. If the delay overpasses 45 days from the acceptance of goods and services, then the buyer is liable to pay compound interest in addition with the interests on amount that was agreed. The above interest rate is thrice the rate notified by RBI.
Interest rate exemption
Registered MSME can avail perk of 1% on overdraft which differs from bank to bank as described in scheme.
Incubation
Under this scheme the entrepreneurs could be financed by government to the extent of 75%- 80% of the project cost. This scheme encourages new ideas, deigns, products etc.
Credit linked capital subsidy scheme
Under this scheme the ventures could directly approach banks for availing the funds. These funds are used to upgrade business with latest technology and equipments in place of obsolete ones.
Women entrepreneurship
The government has rigorously making efforts to encourage women to start their own ventures. Under this the government facilitates capital, training, counselling and techniques.
Conclusion
The government is initiating steps to strengthen the foundation of MSME on which the mansion of self reliant India would be built. Additionally, this also serves as a great opportunity for entrepreneurial activities in the country thus, encouraging greater investments and larger economy.
