Schemes and Subsidies for MSMEs in India
By Kaustubh Jadhav
In the past six decades, MSMEs in India have grown at a rapid rate. The contribution of the sector to the economy has also increased significantly, year after year. In the last few years, the Government and the RBI have introduced structural reforms to make the sector a catalyst for the growth of the economy. Union Budget 2018-19 was another concrete step in that direction. Increased budgetary allocation under various schemes, multiple policy level reforms (helping the sector), revision in the corporate tax rate, and extension of tax exemption for start-ups are some of the key reforms that are aimed at benefiting the MSME sector.
The MSME industries:
MSME
industries are divided into two sectors - manufacturing and service. It is
important to know what industry falls under which sector to find the applicable
Government schemes and subsidies.
MSMEs are
eligible for availing the benefits of various schemes and subsidies, depending
upon their size, operations, and current turnover. The following info-graphic
illustrates the industry-specific schemes and subsidies available for MSMEs.
Schemes, subsidies and applicable industries
MSME Schemes and Subsidies by the Government
of India:
The Government
of India has drawn schemes and subsidies to support and aide the growth of the
MSMEs. These have seen some modifications with every budget, as new data
emerged annually.
Following is
a brief introduction to these MSME schemes. A more in-depth summary of the
schemes and subsidies, along with a section on “How to Avail the benefits of
the Scheme” is available at https://msmemitra.com/home/schemessubsidies
1. Science and Technology Scheme:
Description:
This Scheme falls under the Development of Khadi, Village and Coir industries.
The Scheme has been designed to facilitate research around coir technology. The
idea is to extend the outcomes of the research and its application at the field
level.
Nature of Assistance: Technology Transfer, Incubation, Testing and
Service Facilities
Budgetary Allocation: NA
2. Market Promotion & Development Scheme
(MPDA):
Description:
This Scheme has been launched by merging different schemes implemented by the
Khadi sector including publicity, marketing, market promotion and marketing
development assistance. The objective of the scheme is to ensure increased
incomes for the artisans.
Nature of Assistance: Modified Market Development Assistance (MMDA)
is allowed at 30% on the Prime cost of Khadi (cotton, silk, woollen) and
Polyvastra.
Budgetary Allocation: Rs. 340 Crores (Union Budget 2018-19)
3. Revamped Scheme of Fund for Regeneration of
Traditional Industries (SFURTI):
Description:
The main objectives of this scheme are to “organise” traditional industries and
artisans into clusters, and thus help make them competitive, get them more
revenue, make their products more marketable, and provide long term
sustainability.
Nature of Assistance: The assistance is divided into two types:
Soft interventions, which can draw upto Rs. 25 Lakh; and Hard interventions,
which will be assessed as per project requirement.
Budgetary Allocation: Rs. 125 Crores (Union Budget 2018-19)
4. Coir Udyami Yojana (CUY):
Description:
This scheme is for the setting up of coir units. It is a credit-linked scheme.
Nature of Assistance: Financial assistance in the form of MSME Loan
plus working capital, which shall not exceed 25% of the project cost. Rate of
Subsidy is fixed at 40% of the project cost.
Budgetary Allocation: Rs. 10 Crores (Union Budget 2018-19)
5. Coir Vikas Yojana (CVY):
Description:
Coir Vikas Yojana is an umbrella under which multiple schemes fall. The
objectives of this are skill development of artisans, mahila coir yojana,
supporting the setting up of production infrastructure, promoting the domestic
as well as export market, providing of trade and industry related functional
support services, and welfare of coir workers.
Budgetary Allocation: Rs. 80 Crores (Union Budget 2018-19)
5.1. Skill
Upgradation & Mahila Coir Yojana (MCY):
Description: This is one of the core schemes under CVY.
Apart from skill development and training, employment/entrepreneurship
opportunities, trade related services and welfare of women in the coir
industry, this scheme also provides spinning equipment at otorized rates.
Nature of
Assistance: Provision of
stipend for trainees, trainers and training agencies. The Coir Board provides
75% cost of otorized Ratt/otorized traditional Ratt as one time subsidy.
5.2.
Development of Production Infrastructure (DPI):
Description: The objective of this scheme is to improve
productivity and increase employment opportunities by providing modern
infrastructure facilities to coir production units.
Nature of
Assistance: Under the
DPI scheme, the Coir Board financial assistance is provided for setting up of
coir units with a project cost up to Rs.10 lakhs.
5.3. Domestic
Market Promotion Scheme:
Description: Envisaged under the Coir Industry Act 1953,
the Coir Board implements measures to opularize coir and coir products. The
measures taken include I. Establishment and Maintenance of Showrooms &
Sales Depots. II. Participation in Domestic Exhibitions.
Nature of
Assistance: Provision of
financial assistance to the Apex Co-operative Societies, Central Co-operative
Societies, Primary Co-operative Societies, Public Sector Enterprises in the
coir industry and the Showroom and Sales Depots of the Coir Board.
5.4. Export
Market Promotion:
Description: This scheme is designed to improve the
exports of Indian Coir Sector through a variety of promotional activities.
Nature of
Assistance:
1. Delegation, Consultancy & Information
Sourcing
2. Participation in seminars and conferences
3. Participation in international
fairs/buyer-seller meets
4. Publicity abroad
5. External Market Development Assistance
6. Coir Industry Awards
5.5. Trade
and Industry Related Functional Support Services (TIRFSS):
Description: Collection of various statistical data of all
aspects of the coir industry. The objective is to make this data available for
the trade and industry.
Nature of
Assistance: Apart from
the data, under this scheme the coir industry can avail the HRD Program to
upgrade the skills and knowledge of the coir workers.
6. National Manufacturing Competitiveness
Programme (NMCP):
Budgetary Allocation: Rs. 1006 Crores (Union Budget 2018-19)
6.1.
Financial Support to MSMEs in ZED Certification Scheme
Description: This scheme is envisaged in order to
inculcate Zero Defect and Zero Effect (ZED) practices in the manufacturing
processes, encourage continuous improvement and support the Make In India
initiative.
Nature of
Assistance: Financial
assistance for Assessment & Rating, Re-rating, Gap analysis, Hand holding
of the MSMEs to inculcate an ecosystem of Zero Defect and Zero Effect on the
manufacturing front.
6.2. Credit
Linked Capital Subsidy for Technology Upgradation (CLCSS):
Description: This scheme facilitates upgradation of
existing equipment/ technology and induction of state-of-the-art equipment/ technology.
Nature of
Assistance: CLCSS
provides 15% MSME subsidy for additional investment up to Rs. 1 cr for
technology upgradation by MSEs.
6.3. ISO
9000/ISO 14001 Certification Reimbursement:
Description:
To enhance the competitive edge of SMEs, this scheme provides incentives to
those who have already acquired the ISO 9000/ISO 14001/HACCP certification by
reimbursing the expenses incurred.
Nature of
Assistance: Financial
assistance in the way of 75% of the expenditure incurred in acquiring
aforementioned certification.
6.4.
Marketing Support/Assistance to MSMEs (Bar Code):
Description: Under this scheme, the Ministry conducts
seminars and also reimburses registration fees for bar coding.
Nature of
Assistance: Financial
assistance for reimbursement of 75% of one-time registration fee (Under
MSE-MDA) and 75% of annual recurring fee for first three years (Under NMCP)
paid by MSEs.
6.5. Lean
Manufacturing Competitiveness for MSMEs:
Description: This scheme has been envisaged in order to
enhance manufacturing competitiveness of MSMEs through lean manufacturing
techniques.
Nature of
Assistance: Financial
assistance is provided for implementation of lean manufacturing techniques,
primarily the cost of lean manufacturing consultant.
6.6. Design
Clinic for Design Expertise to MSMEs:
Description: Through design and its learning, MSMEs can
increase competitiveness and the scheme encourages that.
Nature of
Assistance: Funding
support to attend design-related seminars and workshops and facilitate MSMEs to
develop new design strategies.
6.7.
Technology and Quality Upgradation Support to MSMEs:
Description: The scheme encourages MSMEs to adopt and use
energy efficient technologies (EETs) in manufacturing units.
Nature of
Assistance: Financial
support of 25%-75% to MSMEs for various expenses of auditing, certification,
licensing and forming MSME clusters.
6.8.
Entrepreneurial and Managerial Development of SMEs through Incubators:
Description: The objective of the scheme scheme is to
provide early stage funding to nurture innovative business ideas.
Nature of
Assistance: Financial
assistance for setting up of Business Incubators.
6.9. Enabling
Manufacturing Sector to be Competitive through QMS & QTT:
Description: The scheme encourages MSMEs to understand and
adopt latest Quality Management Standards (QMS) and Quality Technology Tools
(QTT).
Nature of
Assistance: Funding
support for conducting awareness campaigns and implementation for QMS and QTT.
6.10.
Building Awareness on Intellectual Property Rights (IPR):
Description: The scheme endeavours to increase awareness
among the MSMEs about Intellectual Property Rights.
Nature of Assistance: Conducting awareness/ensitization programmes
about IPR.
7. A Scheme
for promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE):
Description: The main objectives of the scheme are to:
(i) Create new jobs and reduce unemployment
(ii) Promote entrepreneurship culture in India
(iii) Boost Grassroots economic development at
district level
(iv) Facilitate innovative business solution
for unmet social needs
(v) Promote innovation to further strengthen
the competitiveness of the MSME sector
Nature of
Assistance: Setting up
of Livelihood Business Incubators through which the above objectives will be
met.
Budgetary Allocation: Rs. 232 Crores (Union Budget 2018-19)
8.
International Cooperation Scheme:
Description: The scheme has been drawn on the need of
international participation and exposure for Indian MSMEs. It facilitates
deputation, participation, holding and promoting international conferences and
seminars.
Nature of
Assistance: IC scheme
provides financial assistance for airfare and space rent in exhibitions for
entrepreneurs for going in a delegation abroad.
Budgetary Allocation: Rs. 5 Crores (Union Budget 2018-19)
9. Marketing
Assistance Scheme:
Description: The scheme provides assistance for
organisation of exhibitions abroad, co-sponsoring of exhibitions, organising
buyer-seller meets and marketing promotion activities.
Nature of
Assistance: Financial
assistance to participate as well as to for co-sponsoring an event.
Budgetary Allocation: Rs. 15 Crores (Union Budget 2018-19)
10. MSME
Market Development Assistance (MDA):
Description: MSMEMDA scheme has been envisaged with a view
to increasing the participation of international and domestic fair and adoption
of bar coding.
Nature of
Assistance: Financial
assistance towards participation by MSME entrepreneurs in overseas fair/trade
delegations and publicity material.
Budgetary Allocation: Rs. 65 Crores (Union Budget 2018-19)
11.
Assistance to Training Institutions (ATI):
Description: The assistance is provided to National level
training institutions operating under the Ministry of MSME, namely, NIMSME,
KVIC, Coir Board, Tool Rooms, NSIC & MGIRI.
Nature of
Assistance: Revenue
grant is provided to these institutions on an annual basis.
Budgetary Allocation: Rs. 30 Crores (Union Budget 2018-19)
12. Micro
& Small Enterprises Cluster Development (MSE-CDP):
Description: The scheme provides financial assistance to
special purpose vehicles companies set up by cluster units.
Nature of
Assistance: Financial
assistance is provided for diagnostic study, as soft intervention, hard
intervention and infrastructure development.
Budgetary Allocation: Rs. 400 Crores (Union Budget 2018-19)
Prime Minister Employment Generation Programme
and Other Credit Support Schemes:
13. Prime
Minister Employment Generation Programme (PMEGP):
Description: Implemented by Khadi and Village Industries
Commission (KVIC), the scheme’s objective is to generate employment across the
country in the manufacturing and service sectors through MSMEs.
Nature of
Assistance: Financial
assistance in the form of MSME subsidy on a project/unit.
Budgetary
Allocation: Rs. 1800
Crores (Union Budget 2018-19)
14.
Performance and Credit Rating Scheme:
Description: The objective of the scheme is to create
awareness among MSEs about their current operations and its capabilities and
creditworthiness through a trusted third party opinion.
Nature of
Assistance: Rating fee
is subsidised by the Government to the extent of 75%.
Budgetary Allocation: Rs. 5 Crores (Union Budget 2018-19)
15. Credit
Guarantee Trust Fund for Micro & Small Enterprises (CGT SME):
Description: This trust fund has been formed to execute
the Credit Guarantee Scheme. The trust has been established by the Ministry of
MSME and SIDBI (Small Industries Development Bank of India).
Nature of
Assistance: Collateral
free loan of up to Rs. 200 lakh is available for MSEs on payment of a guarantee
fee to the bank.
Budgetary Allocation: Rs. 700 Crores (Union Budget 2018-19)
16. Interest
Subsidy Eligibility Certificate (ISEC):
Description: The scheme was introduced to mobilise funds
from banking institutions to fill the gap between the actual fund requirements
and availability of funds.
Nature of
Assistance: Under this
scheme, MSME credit is made available at a concessional rate of 4% interest per
year for working capital. The difference is paid by the Central Government
through KVIC to the lending banks.
Budgetary Allocation: Rs. 50 Crores (Union Budget 2018-19)
Find out how to avail the benefits of these
schemes and subsidies at https://msmemitra.com/home/schemessubsidies
To know more about the recent modifications
and introductions in the Union Budget 2018-19 with respect to MSMEs, click here.
Most MSMEs face challenges due to lack of
funding at the right time, and find it difficult to avail the benefits of
applicable Schemes and Subsidies by the Government of India. These can curtail
the right kind of progress for your company and thus, stunt growth.
MSMEMitra.com specialises in pinpointing
funding (Debt Funding and Equity Funding) opportunities best suited to business
of all sizes. Our services include - assessing the funding requirement,
identifying the best way to fund your business, providing the best funding
option/s available, finding applicable Schemes and Subsidies, and providing
bespoke consultancy and guiding you through the entire process of availing the
benefits of the schemes and subsidies applicable for your business.
Make an informed decision about the most
suitable funding options available for your business, and find out how to avail
the benefits of the schemes and subsidies applicable for your business, by
visiting https://msmemitra.com
Thank you for
reading.
About the author:
Kaustubh Jadhav is a freelance content writer
whose work helps him dive into a variety of industries and sectors, especially
the MSME. His work involves a lot of research around the concerned
industry/sector. His keen interest in attempting to understand the small-scale
economics brings him here. You can follow Kaustubh Jadhav on Twitter -
@kausjadhav
Disclaimer:
The views expressed in the
article are the author’s own. This write-up has been collated from various
publicly available materials and secondary data, and MSMEmitra.com cannot
guarantee the accuracy of the content. The opinions and expectations arrived at
in this article, are based upon the analysis of the Industry by the author and
the editorial team at MSMEmitra.com. Readers are requested to check the authenticity
of the data at their end, before making any decisions with inherent financial
risks.
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