Considering
the importance of MSMEs in the Economic growth and Employment Generation,
during Diwali , government announced 12 schemes ,which can facilitate the
growth of MSME sector. The salient one
was to approve loans up to Rs.1 cr in 59 minutes. The loan amount will be between Rs. 10
lakh and Rs.1 cr. The rate of interest
starts from 8%. After the approval
of the application, the loan amount will be disbursed within a week.
There is no mandatory requirement for collateral as the online portal is
directly connected to the Credit Guarantee Fund Trust for Micro and Small
Enterprises scheme. While registering, the borrower need not make any payment.
Once the applicant’s proposal matches the bank’s minimum criteria for lending,
the borrower will have to be submit a fee of Rs, 1,000 plus taxes.
Rebate in interest rate. When the GST was introduced. Many MSMEs started
paying GST for the first time. Paying GST creates a credit profile for the
MSMEs and it is possible to assess their credit rating based on the financial
profile of the firm. On the new loans to be availed, GST-registered MSMEs will get 2%
subvention or rebate on incremental new loans of up to Rs 1 crore. Interest
subvention on pre- and post-shipment credit for exports by MSMEs has also been
increased from 3% to 5%. Assuming their average cost of funds of 10%, the 2%
subvention will reduce their interest cost .
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Cash flow certainty. Companies with a
turnover of more than Rs 500 crore to join Trade Receivables e- Discounting
System (TReDS) and it has become mandatory. This will help MSMEs to discount their bills and improve the cash flow, to ensure a smooth operation.
Procurement by PSUs. Public Sector units in Several sectors are the
market leaders and their purchase budget in a year is a very large. Now, PSUs
have to procure, at least a
quarter of their requirement (25%) from MSMEs. Earlier, it was at 20%. This
will give a big boost to MSMEs and their integration into the industry value
chain will increase . This will also help to create more jobs due to higher
demand.
Women entrepreneurs. The participation of women in various sectors is
rising and the government also has created several special schemes to promote
women’s participation in the society. With a view to encourage , more women to
pursue entrepreneurship, out of the
25% procurement mandated from MSMEs from PSUs, 3% has been reserved
for women entrepreneurs.
Government e-Marketplace (GeM). Government has created a grand programme
on Digitiation of the Economy. One of the initiatives under digitisation is
creating E- marketplaces, where MSMEs
can participate easily. Now it is mandatory for all Central PSUs to take membership of the Government e-Marketplace (GeM) and they will
put their purchase requirements in the market place, which MSMEs can identify easily and
participate in the process.
Technological upgradation. MSMEs have money only to run their business
and they are constrained to invest in
upgrading their technology, products and R&D related to their business.
With a view to assist MSMEs in upgrading the Technology, Government has created
a budget of Rs 6,000 crore and it will be used for 20 hubs
and 100 tool rooms for technology upgradation.
Pharma companies. India has gained competitiveness in Pharma business and
has emerged as the Generic pharma product hub
in the world. There are more than 10,000 companies producing pharma
products in India and with a view to encourage setting up more Pharma units
government has created a scheme for forming MSME pharma clusters. 70% cost of establishing
these clusters will be borne by the government.
One annual return. At present MSMEs are filing several reports in a year
relating to Labour laws and Central rules.
This consumes lot of times of the entrepreneurs and taking away their
attention from the core business. To make this process simple, now, MSMEs will have to file just one annual return on eight labour laws and
10 central rules.
Inspections. At present, Inspectors visit the factories and many a times,
entrepreneurs are harassed and this has become one of the irritants for MSMEs
and they are finding it difficult to manage this process. The process of
inspection from the discretion of the inspector has been changed to selection of a company through a
computerised random allotment and inspectors will have to upload reports on the
portal within 48 hours of their visit. This has brought lot of transparency to
the process.
Air and Water Pollution Laws. Now
MSMEs can file returns with self certification and only 10% of the units
will be inspected. Further, they need a single
air and water clearance and just one consent to establish a factory. The
process has been made simple and become a single window clearance.
Minor Violations under Companies Act. An
ordinance has been promulgated to simplify the levy of penalties for minor
offences under the Companies Act. Now MSMEs no longer have to approach courts
which is a time consuming process but they can correct them through simple
procedures.
The twelve
initiatives, will go a long way in boosting the growth of MSMEs in India to
create robust business models and pave
the way for faster integration of MSMEs into the Indian Economy. The awareness
has to be created about these schemes to all the MSMEs in India
.
By R . Kannan
