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Last Updated : Jun 27, 2020 09:58 AM IST | Source:

MSME Day 2020 | A look at government initiatives to spur the sector's growth

Among states, Maharashtra has the highest number of registered MSMEs with 1,104,189 units, followed by Bihar (829,694), Tamil Nadu (791,288), Uttar Pradesh (706,342) and Madhya Pradesh (645,077).

Representative image
Representative image

The importance of MSMEs in India's economy is immense and the sector is one of the biggest job creators in the country.

There are 68 lakh registered MSMEs, as per numbers available on the Make in India website. Of these, there are 6,032,100 micro units, 28,611 medium units and 728,516 small units.

Also Read: MSME Day | With right policies, 2021 can see an MSME boom in India


Among states, Maharashtra has the highest number of registered MSMEs with 1,104,189 units, followed by Bihar (829,694), Tamil Nadu (791,288), Uttar Pradesh (706,342) and Madhya Pradesh (645,077).

Driving its Make in India goal, the Centre has announced measures to attract more FDI in the space. The government has also announced various schemes to support the sector, as the country now battles the coronavirus pandemic, as part of the stimulus package announced by Finance Minister Nirmala Sitharaman in May 2020, besides a host of measures .

Here's a look at initiatives taken by the government to boost the MSME sector:

> Definition of MSMEs: The Centre has expanded the definition of who qualifies as an MSME. This will benefit both the manufacturing and service sides. Now enterprises with investment up to Rs 1 crore and turnover of up to Rs 5 crore are defined as micro units; while those with investment of up to Rs 10 crore and turnover of up to Rs 50 crore will be small units; and enterprises with investment up to Rs 20 crore and turnover of Rs 100 crore will be defined as medium units.

> Collateral-free loans:  Collateral free bank loans worth Rs 3 lakh crore have been announced for MSMEs with turnover of Rs 100 crore. The scheme is available till October 31, 2020 and will benefit up to 4.5 million units.

> Subordinate debt provision: A provision of Rs 2,000 crore subordinate debt has been arranged for stressed MSMEs: Will benefit close to 200,000 eligible units

> Equity infusion: Equity infusion of Rs 5,000 crore through a special fund has been made for MSMEs with viable operations but needing support due to the coronavirus pandemic.

> Fund of funds: Corpus of Rs 1,000 crore has been set aside in a fund of funds to assist capacity expansion of MSME units wanting to be listed on the exchanges.

> Global tenders blocked: Global tenders for projects worth up to Rs 20 crore have been disallowed. This will give smaller, local players the opportunity to bid for government projects.

> Online support: The government has also assured that in lieu of cancelled trade fairs, the Centre will set up online market linkages to facilitate exchange between MSMEs and potential opportunities.

> Subsidies: 50 percent subsidy on patent registration to encourage innovation and research and development among MSMEs; concessions on power utility bills, industrial promotion subsidy availability, protection against delayed payments, exemption of 1 percent on interest rate on overdrafts and reimbursement of ISO certification charges.

Sectors likely to see increased MSME participation:

> Telecommunications: Incentivised domestic manufacturing of low-cost mobile phones, telecom equipment, and value added services will likely push MSME participation in the sector. Given the current border tensions with China and the government looking to curb dependence on Chinese companies, products and imports the sector may receive increased boost.

> Healthcare: India has quickly enhanced its capacities for manufacturing of personal protective equipment (PPEs), face masks and testing kits as COVID-19 battered global supply chains and health necessities created demand for healthcare solutions.

Manufacturing of low cost medical devices such as ventilators and low cost healthcare in general is set to boost MSME participation in the sector. In the post COVID-19 world, telemedicine, mobile diagnostics labs would also create avenues.

> Electronics: The Centre is keen on encouraging low cost and locally manufactured consumer electronics and consumer durables, especially for ‘strategic’ requirements for security forces.

> Information technology, pharmaceuticals, gems and jewellery, renewables, automobiles, textile, and food and agricultural sectors will also provide good opportunity.

Click here for our complete coverage of MSME day
First Published on Jun 27, 2020 09:58 am