Ø Introduction of topic
From a worldwide perspective,
it has been recognized that micro, small and medium enterprises (MSMEs) play a
vital role in economic development, as they have been the primary sources of job/employment
creation and output growth, not only in less developed countries but also in
developed countries.
MSMEs
have been accepted as the engine of economic growth and for promoting equitable
development.
Like other sectors of the
Indian economy, MSMEs have been hit badly due to lockdown imposed by the
government to tackle Covid-19 pandemic. However, even before the current
crisis, MSMEs growth has been marred by several challenges.
In order to revive the Indian
economy amidst Covid-19 pandemic, the government has come up with various
benefits and packages for the MSME sector which may help to scale up the
businesses of such micro, small and medium enterprises with the spirit of
“Aatmanirbhar Bharat” or “self-reliant India”.
Ø Meaning of MSME-
MSME stands for Micro, Small,
and Medium Enterprises. In accordance with the Micro, Small, and Medium
Enterprises Development (MSMED) Act in 2006, the enterprises are classified
into two divisions:
Manufacturing enterprises – engaged in the
manufacturing or production of goods in any industry
Service enterprises – engaged in providing or
rendering services
Ø New MSME
Definition
The revised definition of MSME will benefit the large number
of enterprises to conform under the definition of MSME and get entitled to the
benefits being awarded to MSMEs.
Revised MSME Classification
Composite Criteria: Investment and
Annual Turnover
|
|||
Classification
|
Micro
|
Small
|
Medium
|
Manufacturing
& Services |
Investment
< Rs. 1 cr.
and Turnover < Rs.5 cr. |
Investment<
Rs. 10 cr.
and Turnover < Rs.50 cr. |
Investment
< Rs. 50 cr.
and Turnover < Rs.250 cr. |
Ø How
and where to register?
Ø Benefits
of MSME Registration
·
Avail
various schemes introduced by government for MSMEs
·
Protection
against the delay in payment from Buyers i.e. maximum period for payment for
purchase from MSME shall not exceed 45 days, in case of delay, the buyer is
liable to pay interest to the supplier, at 3 times of bank rate
·
50%
reduction in fee for filing patents and trademarks
·
Exemption
provided while applying for government tenders
·
Under
bank loan, 15% import subsidy on fully automatic machinery (capital subsidy for
modern technology)
·
Financial
support for participating in foreign business exposure from the Government of
India
·
Becomes
easy to get licenses, approvals and registrations, irrespective of field of
business
·
Compensation
of ISO certificate expenditure
·
Loans
without guarantee, low-interest rates on loan
·
Concession
in electricity bills
·
Registered
MSMEs gets tariff subsidies and tax and capital subsidies
·
Gets
exemption under Direct Tax Laws
Ø Some
Government initiatives to promote newly MSMEs
·
Recently introduced CHAMPIONs portal
It has been felt necessary to put up
and promote a unified, empowered, robust, bundled and technology driven
platform for helping and promoting the Micro, Small and Medium Enterprises
(MSMEs) of the country. As the name suggests it will aim at Creation and
Harmonious Application of Modern Processes for Increasing the Output and
National Strength. Accordingly, the name of the system is CHAMPIONS. This is
basically for making the smaller units big by helping and handholding.
Three
basic objectives of the CHAMPIONS:
o
To
help the MSMEs in this difficult situation in terms of finance, raw materials,
labour, permissions, etc.
o
To
help the MSMEs capture new opportunities including manufacturing of medical
items & accessories.
o
To
identify the sparks, i.e., the bright MSMEs who can withstand at present and
become national and international champions.
It is a one stop solution for
everything related to MSME starting from MSME registration to procuring
resources, seeking guidance, giving suggestions and registering grievances.
·
MSME
Samadhan
·
MSME
Sambandh
·
MSME
Sampark
·
Enterpreneurship
and Skill Development programs
·
MSME
Databank
·
PMEGP
e-portal
·
Infrastructure
Development programs
Ø Some
Government schemes to promote MSMEs
·
Prime
Minister Employment Generation Programme (PMEGP)
·
Credit
Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE)
·
Interest
Subvention Scheme
·
Credit
Linked Capital Subsidy Scheme for technology upgradation
·
Gram
Udyog Vikas Yojna
·
And
many more schemes
Ø Who
provides MSME/SME Loans?
·
Entities
registered under MSME can avail loans from following:
·
Small
Industries Development Bank of India (SIDBI)
·
National
Small Industries Corporation (NSIC)
·
Regional
Rural Banks (RRBs)
·
Scheduled
Commercial Banks (SCBs)
·
North
Eastern Development Finance Corporation (NEDFi)
·
Other
banks and NBFCs
Ø Certain
measures by government for businesses (including MSMEs) – a step towards AATMANIRBHAR
BHARAT:
·
Rs. 3 lakh crores collateral free
automatic loans for businesses including MSMEs
o
Borrowers
with upto Rs. 25 crore outstanding and Rs. 100 crore turnover are eligible to
avail such loan
o
Loans
to have 4 year tenor with moratorium of 12 months on principal repayment
o
Interest
to be capped
o
100%
credit guarantee cover to Banks and NBFCs on principal and interest
o
Scheme
can be availed till 31st October, 2020
o
No
guarantee fee
o
No
fresh collateral
·
Rs. 20,000 crores subordinate debt for
for MSMEs
o
Functioning
MSMEs which are NPA or are stressed will be eligible
o
Promoters
of MSME will be given debt by banks, which will then be infused by promoter as
equity in the unit.
o
Government
will provide a support of Rs. 4000 crores to CGTMSE
o
CGTMSE
will provide partial credit guarantee support to banks
·
Rs. 50,000 crores equity infusion
through MSME fund of funds
o
Funds
of funds (FoF) with corpus of Rs. 10,000 crores will be set up
o
Provide
equity funding for MSMEs with growth and potential viability
o
FoF
will be operated through Mother fund and few Daughter funds
o
Will
help to expand MSME size as well as capacity
o
Will
encourage MSMEs to get listed on main board of Stock exchanges
·
Rs. 45,000 crores partial credit
guarantee scheme 2.0 for NBFCs
o
NBFCs
/ HFCs / MFIs with low credit rating require liquidity to do fresh lending to
MSMEs and individuals
o
Existing
PCGS scheme to be extended to cover borrowings such as primary issuance of
bonds / CPs of such entities
o
First
20% of loss will be borne by the guarantor i.e., Government of India
o
AA
paper and below including unrated paper will be eligible for investment
·
Revision of MSME Definition (revised
definition of MSME as mentioned above)
o
Investment
limit to be revised upwards
o
Additional
criteria of turnover being introduced
o
Distinction
between manufacturing and service sector to be eliminated
·
Global tenders to be disallowed upto
Rs. 200 crores
o
Indian
MSMEs and other Companies have often faced unfair competition from foreign
companies. Therefore, global tenders will be disallowed in government
procurement tenders upto Rs. 200 crores
o
It
will help MSMEs to increase their business
o
It
will be a step towards self-reliant
India and support Make in India
·
Other measures
o
E-market
linkages for MSMEs to be promoted to act as a replacement for trade fairs and
exhibitions
o
Fintech
will be used to enhance transaction based lending using data generated by the
e-marketplace
o
MSME
receivables from Government and Central Public Sector Undertakings (CPSEs) to
be released in 45 days
o
Rs.
30,000 crores special liquidity schemes for NBFCs / HFCs / MFIs
Ø Conclusion
Being the
fastest growing economy, we shall create more awareness about MSME sector and
focus on generating more employment, improved industrialization, decrease in
imports, increase in exports, updation of technology, competitive businesses,
knowledge development, wealth creation and economy growth. By registering and
availing the benefits and schemes under MSME will help to achieve the growth
and economies of scale.
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