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(GIST OF YOJANA) Reviving MSMEs

[December-2021]

Reviving MSMEs

Introduction:

The Bharat government Abhiyaan, reforms implemented under including the Atmanirbhar agricultural numerous supply chain improvements, rational tax systems, simple and clear laws, capable human resources, and a strong financial system. India’s PPE industry grew to 10,000 crores making it the world’s second-largest.

MSME Sector in India:

The contribution of the MSME Sector is 31% to the overall GDP of the country, out of which 6.1 % is from the manufacturing sector and the rest from the trade and service sector. MSME’s contribution to manufacturing output is around 35% while contribution to total export is 48%. There are around 33000 registered MSME exporters in India. The total number of MSME units in India is 6.34 crores and the sector employs 11.75 crores people which constitutes 40% of the workforce in India. Unfortunately, only 14% of MSMEs have a formal source of finance. Their Non-performing assets (NPA) are around 8 to 11%, which is very high.

The following criteria for the categorisation of micro, small, and medium firms are in force, with effect since 2020.

1. A micro-enterprise, defined as an investment in Plant and Machinery or Equipment of less than one crore rupees and revenue of less than five crore rupees.
2. A small firm with an investment in Plant and Machinery or Equipment of less than ten crore rupees and revenue of less than fifty crore rupees.
3. A medium-sized firm, with an investment in Plant and Machinery or Equipment of no more than filly crore rupees and a turnover of no more than two hundred and fifty crore rupees.

Production-Linked Incentive (PLI) Scheme PLI programme was created to build national manufacturing champions and provide job possibilities for the country’s young, as well as to promote manufacturing at home by giving production incentives and encouraging investments from both within and outside the country. The minimum output in India because of PLI Schemes is anticipated to be more than USD 500 billion in five years.

Startup India Seed Fund Scheme:

The Startup India Seed Fund Scheme supports companies with proof of concept, prototype development, product testing, market entrance, and commercialisation.
The Seed Fund is distributed to qualified companies across India via approved incubators. Grants of up to Rs 20 lakhs are provided for the validation of Proof of Concept, prototype development, or product testing. Investment of up to Rs 50 lakhs for market entrance, commercialisation, or scaling up via convertible debentures, loans, or debt-linked securities.
MSMEs are offered training under the Skill India programme to improve and provide practical training to entrepreneurs on a variety of skills. Every Central Ministry/Department/PSU sets an annual goal for procurement from the sector at the beginning of the year, to achieve an overall procurement goal of at least 25% of total annual purchases from the products or services produced or rendered by MSMEs.
In the fiscal year 2020-21, the Government of India purchased products worth around Rs 1.25 lakh crores, of which approximately Rs 40000 crores came from the MSE sector. International Cooperation scheme provides 100% of space rent paid to MSME units, limited to Rs 3 lakhs. Collateral-free loans for businesses, including MSMEs are also provided under Atma Nirbhar Bharat Abhiyaan.