NEW DELHI: The Ministry of Micro, Small and Medium Enterprises (MSME) is expected to send Rs 5,500-crore 'India Inclusive Innovation Fund' proposal to theCabinet soon, with a view to encourage R&D activities in these units.
The proposal would also help in generating employment and supporting livelihoods across the country through innovative enterprises, an official said.
"In the next few days, the ministry will send the note to the Cabinet for its consideration and the fund is expected to be in place by November," he said.
The fund would be released in two phases. "The first tranche will have a corpus of Rs 500 crore and in the second phase the amount would be Rs 5,000 crore," the official said.
The MSME Ministry, which had taken the initiative in consultation with the National Innovation Council to set up the fund, has circulated a Cabinet note for consultations to the concerned ministries.
The scheme would also promote innovation aimed at improving the competitiveness and efficiency of small and medium enterprises.
MSMEs face challenges such as lack of access to finance, non-availability of collaterals and delayed realisation of receivables.
There are over 26 million MSMEs in the country that provide employment to around 60 million people.
The MSME sector contributes 8 per cent to the country's GDP, 45 per cent to the manufactured output and 36 per cent to exports.