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Government Schemes For MSMEs – Know More And Benefits

Government Schemes For MSMEs – Know More And Benefits

MSME or Micro, Small or Medium Enterprises are considered as the backbone of the country’s economy, considering the significant contribution these enterprises make to the economy. The concept of MSME (or Micro, Small and Medium Enterprise) was introduced by the Government of India and is managed by the Ministry of MSME, classifying entities that are engaged in the manufacturing, production, preservation or processing of commodities and goods.

Enterprises are classified as Micro, Small or Medium depending on the amount of investment and the annual turnover of these businesses, irrespective of whether they belong to the manufacturing sector, service sector or both. An enterprise with an investment of less than Rs 1 crore and a turnover of less than Rs 5 crore is termed as a Micro Enterprise. A Small Enterprise is one where the investment is less than Rs 10 crore and the annual turnover is up to Rs 50 crores. An enterprise with an investment of less than Rs 50 crore and a turnover of up to Rs 250 crore is termed as a Medium Enterprise.

Government Schemes And Their Benefits

The Government of India introduces several schemes for the benefit of these MSMEs. However, often the MSME business owners are not aware of these schemes and thus lose out on benefiting from them.
These Government schemes for MSMEs have several advantages that business owners can benefit from. Some of the benefits of the Government schemes are as follows

  • The Government schemes provide a sense of security to the entrepreneurs
  • Some schemes provide financial security to businesses and individuals
  • Certain schemes provide technological support and guidance to individuals
  • Overall, Government schemes help individuals and entrepreneurs improve their livelihood

But often businesses lose out on taking advantage of these schemes designed for them owing to a lack of information regarding the various Government schemes.

deAsra’s Assistance

deAsra has always had the well-being of entrepreneurs in mind and continues to work towards helping small business owners expand and grow.
In the same vein, deAsra is helping MSMEs be aware of the several Government schemes that they are eligible for and can thus take benefit of the schemes.

The platform makes it convenient and easy for small business owners to become aware of the several Government schemes that MSMEs can apply for and can benefit from and further help the entrepreneurs to apply for it promptly with the necessary paperwork ready.

Let’s learn of some of the Government schemes for MSMEs that have been introduced by the Government keeping small business owners in mind and know their benefits.

Infographic

Title- Some Beneficial Government Schemes For MSMEs

MSME – Samadhan (Delayed Payment Monitoring System) Digital MSME Scheme SAFE Plus (SIDBI) ECLGS Scheme Secured Business Loan PMEGP Scheme
The MSME – Samadhan portal is created for MSMEs to file their online applications regarding delayed payments The Digital MSME scheme encourages the MSME sector towards Cloud Computing for ICT adoption in their business process and production. The SAFE Plus Scheme helps to meet the working capital requirements of MSMEs against Government orders related to working against the virus. The ECLGS Scheme aims to provide 100% guarantee coverage to banks and NBFCs to enable them to extend emergency credit facilities to MSMEs to meet their additional term loan or additional working capital requirements during the pandemic. Secured Business Loan provides faster dispensation of credit to MSMEs, especially those in the manufacturing segment and service sector for business-related expenses, (planned or unplanned). The PMEGP is a credit-linked subsidy scheme to promote the generation of employment opportunities through the establishment of micro-enterprises in rural and urban areas.

MSME – Samadhan ( Delayed Payment Monitoring System)

The MSME – Samadhan ( Delayed Payment Monitoring System) is a portal created by the Office of DC(MSME), Ministry of Micro, Small and Medium Enterprises (MSME) where Micro and Small Enterprises (MSEs) can file their applications online regarding delayed payments.

  • Salient Features Of MSME Samadhan
    • Under this Government scheme for MSMEs, if a buyer is unable to make payments to the supplier within 45 days of receiving or accepting the supply of his goods or services rendered, then the buyer is liable to pay compound interest to the supplier with monthly interest on the amount at three times the bank rate notified by RBI.
    • Each reference made to Micro and Small Enterprise Facilitation Councils (MSEFC) regarding delayed payment shall be decided within a period of ninety days from the date of making such a reference as per provisions laid in the Act.
    • Through the portal, MSEs can check the status of the filed online applications for delayed payments.
    • The portal also has a dashboard giving information about the pending amount of MSEs with individual CPSEs/Central Ministries, State Governments, etc. The CEO of PSEs and the Secretary of the concerned Ministries will be able to monitor the cases of delayed payment and issue necessary instructions to resolve such issues.
  • Benefits Of The Scheme
    • The Ministry of MSME has taken the initiative for filing online applications by the supplier MSME unit against the buyer of goods/services before the concerned MSEFC of his/her State/UT. These will be viewed by the MSEFC Council for their actions. These will also be visible to Concerned Central Ministries, Departments, CPSEs, State Government, etc for pro-active actions.
    • This scheme and the portal are helpful for MSMEs to register an online complaint if payment is not received from the buyer or supplier.
  • Eligibility For MSME – Samadhan Scheme
    • Any micro, small and medium enterprise that has a valid Udyam Registration is eligible and can apply for this scheme.

    Link for the Samadhaan scheme- https://samadhaan.msme.gov.in/MyMsme/MSEFC/MSEFC_Welcome.aspx

Digital MSME Scheme

The Digital MSME is a Government scheme for MSME that was launched for promoting Information and Communication Technology (ICT) in the MSME Sector by adopting ICT tools and applications in the production and business process of MSMEs.

  • Objective And Features Of The Scheme
    The features of the Digital MSME Scheme include-

    • The Scheme is introduced to encourage the MSME sector towards Cloud Computing for ICT adoption in their business process and production.
    • The Scheme helps improve the quality of business, services as well as commodities and leads to an increase in the number of MSMEs.
    • The Digital MSME scheme also increases productivity, cost-effectiveness and revenue of the enterprise through the Cloud platform.
    • The Scheme’s features help decrease the cost of infrastructure and software programs and the delivery time cycle.
    • Another beneficial feature of the Scheme is that it helps the MSME sector connect with the technology centres for better support and updates from the Government.

    The services that will be available for MSMEs through various service providers include-

    • ERP
    • Accounting
    • Manufacturing Design
    • Regulatory compliance including GST
  • Benefits Of The Scheme
    • The ICT has led to significant growth in the socio-economic development of the country and will help the MSME sector to re-invent and digitalise themselves for better productivity and profits.
    • The Digital MSME Scheme is aimed at creating awareness, supporting developments and e-platforms, thereby creating literacy, training and promoting digital marketing in MSME sectors.
  • Eligibility For The Scheme
    • The eligibility for applying for the Digital MSME Scheme includes having an Udyam Registration.
    • Additionally, the business or MSME should be able to pay the full amount to the service providers.
    • The MSEs will be selected on a First Come, First Serve basis.
    • The MSEs that need funding assistance have to apply through http://digitalmsme.gov.in/ICT/MSME_Status.aspx. Upon payment of the full amount to the service providers by the MSEs the subsidy will be disbursed through the Direct Benefit Transfer (DBT) route. The office of MSME, GOI will transfer funds to Telecommunications Consultants India Limited (TCIL) who in turn will transfer to the account of MSMEs. The implementing agency will provide the details of MSMEs with user charges, subsidy details to the Office of MSME, GOI on a monthly basis.
    • The other eligibility factors necessary for the Digital MSME Scheme include financial soundness, a wide product range, export of goods or services, the scope of expansion and the desired turnover.

    Link for the Digital MSME Scheme- http://digitalmsme.gov.in/

SAFE Plus (SIDBI)

The SAFE (SIDBI Assistance to Facilitate Emergency) Plus Scheme is introduced to meet the working capital requirements of MSEs against Government orders related to working against the COVID-19 virus.

  • Salient Features Of The Scheme
    • This Government Scheme for MSMEs is launched to meet the emergency or additional working capital needs of all existing MSMEs that have confirmed orders from the Central or State Government or from Government agencies.
    • These orders must be for those manufacturing any products or providing any services directly related to fighting the coronavirus (Covid-19).
    • The loan amount sanctioned under the scheme is up to Rs 100 lakh and the interest rate levied is 5% per annum.
  • Benefits Of The Scheme
    • The Scheme provides up to 100% working capital against specific orders.
    • The scheme promises quick delivery, where the loan is sanctioned within 48 hours.
    • The cost of credit guarantee cover is borne by SIDBI under the Scheme.
    • A further benefit of the Scheme is that it takes no prepayment charges or processing fees from the applicants.
  • Eligibility For The Scheme
    • The applicability for new bank customers includes having at least two years of cash profits and accounts not in the SMA1 or 2 categories.
    • The applicability for existing bank customers includes having cash profit in the last audited balance sheet and account not in the SMA1 or 2 categories.

    Link for the Safe Plus (SIDBI) Scheme- https://www.sidbi.in/en/products#section12

ECLGS or Emergency Credit Line Guarantee Scheme

The ECLGS or the Emergency Credit Line Guarantee Scheme was launched by the Government of India as a special scheme, considering the COVID-19 crisis. The Scheme aims to provide 100% guarantee coverage to banks and NBFCs to enable them to extend emergency credit facilities to business enterprises / MSMEs in view of COVID-19 to meet their additional term loan or additional working capital requirements.

Recently, the Government extended the ECLGS to 31st March 2022 with the purpose to provide relief to MSMEs.

  • Salient Features Of The Scheme
    • The Scheme provides an emergency credit line where the amount of the Emergency Credit line to be extended to business enterprises / MSMEs would be up to 20% of the total outstanding, as of Feb 29, 2020.
    • The Scheme provides 100% guarantee coverage for the additional funds sanctioned under the Emergency Credit Line Scheme.
    • The interest rate charged is capped at 9.25% for banks and 14% for NBFCs.
    • A maximum tenure of 4 years from the date of disbursement is stipulated under the Scheme.
    • The moratorium period on the principal amount is 12 months.
    • There are no charges or guarantee fees to be charged by MLIs/NCGTC under the Scheme.
  • Eligibility For The Scheme
    • The business enterprises or MSMEs with an outstanding loan of up to Rs. 50 crore, as of Feb 29, 2020, and turnover of up to Rs 250 crores for the FY 2019-20 are eligible for the Scheme and can apply for the same.

    Link for the ECLGS Scheme- https://www.eclgs.com/

Secured Business Loan For MSME – SIDBI

SIDBI is a primary financial institution that promotes, develops and finances Micro, Small and Medium Enterprises (MSME) through various schemes.

One such scheme is Secured Business Loan or SBL which was developed to provide faster dispensation of credit to MSMEs, especially those in the manufacturing segment and service sector. This Government scheme for MSMEs offers financial assistance for business-related expenses (planned or unplanned), depending upon the strength of the collateral security and the repayment capacity of the MSME.

  • Salient Features Of The Scheme
    The features that define the Scheme include-

    • The nature of the assistance of the Scheme is in the form of an open term loan and other forms of assistance such as working capital term loan, etc.
    • The maximum quantum of assistance under the SBL Scheme will be up to Rs.10 crore for the eligible MSME units. Also, the assistance provided will be linked to gross cash accruals and collateral security value provided.
    • The SIDBI Secured Business Loan will hold a fixed rate of interest linked to PLR as per the credit rating.
    • The maximum repayment tenure is 10 years, which includes the moratorium period.
    • The Scheme also provides foreign currency assistance for the creation of tangible assets subject to natural hedges and other terms and conditions.
  • Benefits Of The Scheme
    • The primary benefit and objective of the SBL Scheme is to facilitate MSME units by providing adequate and need-based credit facilities.
  • Eligibility For The Scheme
    The eligibility factors for applying for the Scheme include-

    • The business must be an existing MSME unit having a net profit in 2 years out of the last three years, with cash profits in all the three years.
    • Also, the borrower should not be a defaulter to any bank/financial institution.
    • The last criteria is that the business must follow all other financial norms as specified from time to time.

    Link for the Secured Business Loan for MSME scheme- https://www.sidbi.in/files/product/5%20Secured%20Business%20Loan.pdf

PMEGP Scheme

The Prime Minister Employment Generation Programme or PMEGP is a credit-linked subsidy scheme introduced by the Government of India. The aim of introducing the Scheme is to promote the generation of employment opportunities through the establishment of micro-enterprises in rural as well as urban areas.

  • Salient Features Of The Scheme
    The features of the scheme that provides credit-linked subsidy are as follows-

    • The maximum cost of the project/unit admissible for the subsidy in the manufacturing sector is Rs 25 lakhs and in the business/service sector, is Rs 10 lakhs.
    • The rate of subsidy under PMEGP (of project cost) is 15% for the general category in urban regions and 25% in rural regions.
    • The rate of subsidy for special cases including SC/ ST/ OBC/ minorities/women, ex-servicemen, physically handicapped, NER, hill and border areas, etc. is 25% for urban areas and 35% for rural areas.
    • Under the Scheme, the balance amount of the total project cost will be provided by the banks in the form of term loans and working capital.
  • Benefits Of The Scheme
    The benefits of this Government scheme include

    • Through the establishment of self-employment projects, micro ventures and enterprises the scheme will help produce employment opportunities in urban as well as rural areas.
    • The Scheme generates continuous as well as sustainable employment for youth and unemployed rural communities in their areas itself.
    • The Scheme also encourages traditional artisans and boosts their income-earning capacity.
  • Eligibility For The Scheme
    The eligibility criteria for the Government scheme include-

    • It is applicable for any individual who is above 18 years of age, has passed the 8th standard and has projects costing above Rs.10 lakh in the manufacturing sector and above Rs. 5 lakh in the business or service sector.
    • The scheme only considers new projects.
    • The scheme is also applicable for Self Help Groups (including those belonging to BPL, provided that they have not availed benefits under any other Scheme), as well as Institutions registered under Societies Registration Act,1860.
    • Under the scheme Production, Co-operative Societies and Charitable Trusts are also eligible.
    • Any existing units (under PMRY, REGP or any other scheme of Government of India or State Government) and the units that have already availed Government subsidy under any other scheme of Government of India or State Government are NOT eligible.
    • In order to apply, individuals need to submit a certified copy of the caste/community certificate or relevant document issued by the competent authority in the case of other special categories, to the concerned branch of the Banks along with the Margin Money (subsidy) Claim.
    • Those applying for the Scheme are also required to submit a certified copy of the bye-laws of the institutions to the Margin Money (subsidy) Claim, wherever necessary.
    • The project cost also needs to include capital expenditure and one cycle of working capital. Projects without capital expenditure are not eligible for financing under the Scheme. Projects costing more than Rs.5 lakh, which do not require working capital, need clearance from the Regional Office or Controller of the Bank’s Branch and the claims are required to be submitted with a certified copy of approval from the Regional Office or Controller, as the case may be.
    • The Scheme is applicable to all the new viable micro-enterprises, including Village Industries projects, except activities indicated in the negative list of Village Industries. Existing/old units, however, are not eligible.

    Link for the PMEGP scheme- https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp

These are 7 schemes introduced by the Government or Government bodies keeping MSMEs in mind and for the upliftment and growth of the small business sector. Several MSMEs can benefit from these schemes. To gain knowledge about the several Government schemes for MSMEs and to know which ones are applicable for their enterprise, small business owners can visit the deAsra’s website or talk to the experts at deAsra.

DISCLAIMERS

This blog (“Blog”) is made available to you by deAsra Foundation (“deAsra”) intends to provide information (“Information”) on current governmental schemes that are beneficial to small business owners, especially MSMEs in India.

PLEASE NOTE this Blog is neither written or endorsed by any governmental organization, nor does it have any affiliation or connection with any government ministry in India. deAsra makes no warranty or representation regarding the Information provided through this Blog and disclaims its liabilities in respect thereof, including any liability for authenticity, errors, omissions, or inaccuracies in this Blog, if any. Any action on the readers’ part based on the Information provided in this Blog is at his/her/its own risk and responsibility. deAsra reserves the right to modify the Information contained in this Blog at any time at its sole discretion.

deAsra agrees that though all efforts have been made to ensure the veracity of the Information in this Blog, the same should not be construed as accurate replacement for authorized commentary on the subject matter before it is for use for any legal, financial, or business purposes. deAsra accepts no responsibility in relation to the accuracy, completeness, usefulness or otherwise, of the Information. In no event, deAsra will be liable for any loss, damage, liability, or expense incurred or suffered that is claimed to have resulted from the use or misuse of Information in this Blog.

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