World MSME Day 2023: MSMEs face a host of challenges around formal credit, employment generation, direct selling to the government, quality manufacturing, micro-credit access, lack of awareness, and more.
World MSME Day 27th June 2023: Micro, small and medium Enterprises (MSMEs) are the backbone of the Indian economy. However, the MSMEs face a host of challenges around formal credit, employment generation, direct selling to the government, quality manufacturing, micro-credit access, lack of awareness, and more. In order to address these challenges, a number of initiatives were introduced by the government in the past to help new businesses get off the ground. Below is a quick brief of these prominent measures with the latest data available:
Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE)
The Credit Guarantee Scheme for Micro and Small Enterprises is a landmark initiative by the government, which has, for over two decades, provided collateral-free loans by providing a guarantee cover of up to 75 per cent for loans amounting to Rs 5 crores to first-generation entrepreneurs. In FY 2022-23, the scheme provided guarantee cover of more than Rs 1 lakh crore as compared to Rs 56,172 crores in FY 2021-22, as told by Bhanu Pratap Verma, Minister of State, MSME Ministry, in a written reply to the Rajya Sabha in March this year.
Government e-Marketplace (GeM)
Launched in August 2016, the Government e-Marketplace is the digital public procurement platform under the Ministry of Commerce and Industry which urges every government ministry, department, and central public sector enterprise (CPSEs) to procure goods and services digitally from the platform. As per the Public Procurement Policy Order 2012, 25 per cent of annual procurement by central ministries, departments, and CPSEs has to be made from micro and small enterprises. This includes 4 per cent from MSEs owned by SC/STs and 3 per cent from MSEs owned by women entrepreneurs.
As of June 27, 2023, there are 8.25 lakh MSEs listed on the GeM platform. Since its inception, the platform has processed orders worth over Rs 4.41 lakh crore, according to the data from the portal.
PM Employment Generation Program (PMEGP)
Launched in 2008, the Prime Minister Employment Generation Program (PMEGP) is a central government scheme, implemented by the Ministry of MSME. PMEGP is a credit-linked guarantee scheme which provides credit up to Rs 50 lakh (increased from earlier up to Rs 25 lakh) to aspiring entrepreneurs for launching their new manufacturing units and up to Rs 20 lakh (from Rs 10 lakh earlier) for new service units. The scheme was also extended over the 15th Finance Commission Cycle from 2021-22 to 2025-26 with an outlay of Rs 13,554.42 crore.
Zed (Zero Defect, Zero Effect) scheme
The Zed scheme was introduced in the year 2016 to build the competitiveness of Indian MSMEs in the manufacturing sector. The scheme is built around creating awareness and assessment and certification of MSMEs to promote ZED-based practices on “Zero Defect, Zero Effect,” focusing on producing high-quality products sustainably.
Also, the certified MSMEs get additional benefits from other schemes such as CGTMSE. As of 27th June, as per the Zed Scheme dashboard, there are over 7,327 Zed-certified MSMEs in India across different categories such as Bronze, Silver and Gold.
Raising and Accelerating MSME Performance (RAMP) scheme
The Raising and Accelerating MSME Performance (RAMP) scheme is a World Bank-supported scheme launched in 2022 to strengthen governance at the centre and the state, technological upgradation and easier access to credit and finance to MSMEs. Out of the total outlay of Rs 6,062.45 crore, Rs 3,750 crore was provided by the World Bank, while the remaining corpus of Rs 2312.45 crore is to be funded by the central government, as per a statement released by Cabinet on March 30, this year.
Udyam portal
To bring more MSMEs into the formal fold, the Udyam platform was launched in July 2020 to enable MSMEs to register their enterprises with the government. Maintained by the MSME Ministry, the platform provides paperless and free-of-cost registration facilities. In addition, the Udyam is linked to the Goods and Services Tax Network and Central Board of Direct Taxes data which helps in a seamless flow of data across organisations.
At present, there are more than 2.01 crore enterprises with 12.16 crore employees registered on the Udyam Platform (along with the Udyam Assist portal), out of which 1.79 crore enterprises are in the micro category, according to the data from the Udyam portal.
Mudra Yojana
Launched in 2015, the MUDRA scheme was launched to provide non-collateral loans of up to Rs 10 lakh to non-farming, non-corporate small and micro enterprises, in order to support small entrepreneurs. Mudra loans can be used for starting a new business, or also for an existing business. As per the MUDRA platform, loans worth Rs 4,56,537.98 crore were sanctioned across 6,23,10,598 loans with disbursed amounts worth Rs 450423.66 crores alone in 2022-23. In FY24 so far, loans worth Rs 75,392 crore have been sanctioned across 97,91,387 loans.
Emergency Credit Line Guarantee Scheme (ECLGS)
Launched during the Covid crisis as a part of the relief package, the scheme provided 100 per cent guarantee coverage to the banks and NBFCs, to encourage them to lend to MSMEs who were facing a liquidity crunch due to delayed payments and lockdowns in several markets. The emergency credit line scheme, which was closed on March 31, 2023, enabled enterprises to avail of an additional 20 per cent loan on the amount of existing loans outstanding with banks. According to a statement by the finance ministry, 1.19 crore borrowers have benefited from guarantees amounting to Rs 3.61 lakh crore under ECLGS as on 31st January 2023.
