It was only in November last year that the government announced revised regulations and schemes to aid MSME businesses and start-ups. The topics addressed by the government include every required aspect from the availability of MSME loans to upgrading existing MSMEs and even business opportunities.
Some of the steps taken by the government to the MSME Sector include:
- Credit access:
The PM has launched PMMY, which assures 3 types of loans depending on the financing amount. These loans under the MUDRA Yojana go up to Rs. 10 Lakh. On the other hand, in collaboration with CGTMSE, there are financing options that go up to even Rs. 1 Crore. As for the MUDRA scheme, there are 3 basic categories.
- Tarun: Under this business loan scheme, applicants can borrow up to Rs. 10 Lakh. Along with all the requirements of the Kishor scheme, this also requires address details and government-approved identity credentials.
- Kishor: Offering sums ranging in between Rs. 50,000 and Rs. 5 Lakh, this scheme has a comparatively detailed requirement. It includes balance sheets from the past 2 years, account statements of the last 6 months, tax details, technical and related economic details, etc.
- Shishu: This scheme offers loan sums up to Rs. 50,000. The eligibility requirements are quite simple with basic quotations for the machinery to be acquired, along with the suppliers’ information and functioning of the machinery.
Many NBFCs are also offering lucrative MSME loans to existing as well as new start-ups. Financial institutions like Bajaj Finserv is one of them that provide loans up to Rs. 30 Lakh.
As for GST registered MSMEs, a subvention of 2% interest has also been declared by the government on new as well as incremental loans. In the case of export-related MSMEs, the rebate on interest ranges from 3% to 5%.
- Market access:
While previously, public sector companies had to procure 20% of their total purchases from MSMEs, the government has declared the percentage to go up to a compulsory 25%. Out of this 25% of procurement, a mandatory 3% has been reserved for women-owned businesses. With great sources of financing for women business persons, there already has been a rise in the female entrepreneurs and the above decision boosts the same.
Also, around 40,000 of applicants for registration to Government e-Marketplace amongst 1.5 Lakh have encouragingly been MSMEs
- Specialized initiatives for pharmaceuticals MSMEs:
There are several initiatives that have already been activated by the government to aid pharmaceutical MSMEs. Amongst these, one is the formation of clusters of such companies for improved functioning and upgrading of technology.
While easy MSME loans aid at starting a business, the government has also announced that the Union Government will bear 70% of the establishment costs. This greatly encourages new MSMEs which have already shown an upward curve over the past months.
With efficient financing solutions for MSMEs via business loans under Pradhan Mantri MUDRA Yojana scheme as well as ones in collaboration with CGTMSE, the Government of India has already influenced the small and medium enterprises. While their number is already on the rise, existing ones have begun upgrading, which has led to the expansion of economy and job creation.