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Micro-Small & Medium Enterprises Sector (MSME’s)

By :    April 9, 2021


Manufacturing sector constitutes 31.8 % of MSME sector.

The government has notified the Public Procurement Policy for MSMEs order 2012.

Enactment of the Micro, Small and Medium Enterprises Development (SMED) Act, 2006

  • It provides first ever legal framework for recognition of the concept of enterprise (comprising both manufacturing and services) and integrating the three tiers of these enterprises viz., micro, small and medium.

   Some Government Programmes for the MSMEs

The Prime Minister’s Employment Generation Programme (PMEGP):

  • Launched by merging the erstwhile Rural Employment Generation Programme and Prime Minister’s Rozgar Yojna in August 2008.  Micro-Small & Medium Enterprises Sector (MSME’s)
  • Its objectives are to generate employment opportunities in rural and urban areas by setting up new self-employment ventures/projects/micro enterprises, bringing together dispersed traditional artisans and unemployed youth and increasing their wage-earning capacity.
  • Khadi and Village Industries Commission (KVIC) is the national nodal agency for this programme.

Credit Guarantee Scheme:

The objective of facilitating flow of credit to the MSEs, particularly to micro enterprises by providing guarantee cover for loans up to Rs. 100 lakh without collateral / third party guarantees.

For making the scheme more attractive to both lenders as well as borrowers, several modifications have been undertaken which, inter alia, include:

(a)   enhancement in the loan limit to Rs. 100 lakh;

(b)   enhancement of guarantee cover from 75 per cent to 85 per cent for loans up to Rs. 5 lakh;

(c)   enhancement of guarantee cover from 75 per cent to 80 per cent for MSEs owned/operated by women and for loans in north eastern region (NER);

(d)   reduction in one-time guarantee fee from 1.5 per cent to 1 per cent and annual service charges from 0.75 per cent to 0.5 per cent for loans up to Rs. 5 lakh and

(e)   reduction in one-time guarantee fee for NER from 1.5 per cent to 0.75 per cent.

Credit Linked Capital Subsidy Scheme for Micro and Small Enterprises (CLCSS)

  • The scheme aims at facilitating technology upgradation of MSEs by providing 15 per cent capital subsidy (limited to maximum Rs, 15 lakh) for purchase of plant & machinery. Maximum limit of eligible loan for calculation of subsidy under the scheme is Rs. 100 lakh. Presently, 48 well established and improved technologies / sub sectors have been approved under the scheme.
  •  The CLCSS is implemented through 11 nodal banks / agencies including the Small Industries Development Bank of India (SIDBI), National Bank for Agriculture and Rural Development (NABARD) and Tamil Nadu Industrial Investment Corporation (TICC), Chennai (TIIC) and National Small Industries Development Corporation (NSIC) Ltd.  Micro-Small & Medium Enterprises Sector (MSME’s)

National Manufacturing Competitiveness Programme (NMCP)

It is the nodal programme of the Government of India for developing global competitiveness among the Indian MSMEs. Under this ten components have been made operational:

(1)    Building awareness on intellectual property rights (IPRs) for MSMEs.

(2)    Scheme for providing Support for Entrepreneurial and Managerial Development of SMEs through Incubators.

(3)    Enabling the Manufacturing Sector to be Competitive through Quality Management Standards and Quality Technology Tools (QMS/ QTT).

(4)    Mini Tool Rooms under PPP mode.

(5)    Marketing Assistance Support to MSEs (Bar Code) Lean Manufacturing.

(6)    Competitiveness Programme for MSMEs.

(7)    Promotion of Information & Communication Tools (ICT) in the Indian MSME Sector.

(8)    Design Clinics Scheme for MSMEs.

(9)    Marketing Assistance and Technology Up gradation Scheme for    MSMEs.

(10) Technology Quality Up gradation Support to MSMEs.

Rajiv Gandhi Udyami Mitra Yojana:

The main aim of this programme is to offer guidance to the first generation entrepreneurs through the lead agencies called Udyami Mitra. They also help them in completing the formalities for establishment of enterprises.

New Schemes to support the Khadi Sector:

  • Under workshed Scheme for Khadi artisans, it has been targeted to provide 8,000 worksheds to Khadi spinners/artisans.
  • To implement a comprehensive Khadi Reform Programme, financial aid has been tied up from the Asian Development Bank amounting to US$150 million over a period of 3 years. Initially the programme will be initiated in 300 Khadi institutions.
  •  Under the Market Development Assistance (MDA) introduced in 2010-11, the production and sales of khadi and polyvastra is to be promoted.
  • The scheme provides for assistance up to 20 per cent of the value of production to be shared among artisans, producing institutions, and selling institutions in the ratio 25:30:45.

Conclusion: As a result of these supportive policies, MSEs constitute an important segment of the Indian economy, contributing around 8% to the country’s GDP, 45% of the country’s manufacturing output and 40% of the exports in 2009-10.  Micro-Small & Medium Enterprises Sector (MSME’s)

It provides employment to around 29.5 million people in the rural and urban areas of the country.



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