Boost up Stratyegies and Policies for MSME Part-2

In our last post (MSME-Boon to Industries part-1), we discussed the elements of MSME like Introduction, objectives, registration process, document required etc. In this post, we discuss in detail the Policies and various Scheme launched by Government for the promotion of MSME.

Micro Small and Medium Enterprises Loan


MUDRA (Micro Unit Development and Refinance Agency) was introduced to provide support to the Small Business Owners. MUDRA Yojna is further classified into three parts i.e.

Sub-Schemes offered under Mudra Loan Yojana 

  1. Credit for Micro Enterprises 

This is the sub-scheme which focuses on maximizing the association of micro enterprises in the economic development. The extra advantages covered an enormous number of beneficiaries running Micro enterprises. The major sections of the population that are associated with Land Transport, Food Creation, Textile, and Community Services may exploit the scheme and set up their own small business unit

  1. Mahila Uddyami Scheme 

Mahila Udyam Nidhi (MUN) Scheme is a scheme designed specifically for women entrepreneurs with the goal to support and engage women entrepreneurs and promote Women’s Entrepreneurship by giving financial assistance at concessional interest costs. The maximum loan repayment period offered under this plan is as long as 10 years with the moratorium pages upto 5 years.

  1. Refinance Scheme 

Refinance Scheme for Banks is a Mudra Yojana which refinances MSME loan amounts of up to Rs.10 lakh extended by the banks to the borrowers, only manufacturing and service sector MSME unit proprietors ( get the advantages of this refinancing scheme

  1. Micro-Credit Scheme

Micro-credit plans focus around Micro Finance Institutions (MFIs) and furnish them with the financial support to make their lending operations available for people, gathering of individuals, or Micro business entities

  1. MUDRA Card 

MUDRA Card is a debit card issued against the MUDRA loan account, for working capital segment of the loan Mudra Card can be utilized as a MasterCard for the assigned overdraft limit and it can likewise be utilized as a platinum card for ATM withdrawals

Documents Required for MSME Loan

Sl. No.ParticularsDocument Required
1Application form duly filled
2Identity ProofPassportDriving LicensePAN CardVoter’s Identity Card
3Residence ProofPassportLease AgreementTrade LicenseTelephone & Electricity BillsRation Card and Sales Tax Certificate
4Age ProofPassportVoter’s Identity CardPhotoPAN card

Financial Documents Required

CGTMSE (Credit Guarantee Funds Trust for Micro and Small Enterprises)

CGTMSE (Credit Guarantee Funds Trust for Micro and Small Enterprises) was introduced with set up a strong credit relief framework and advance a superior credit flow for the MSME sector Under the this scheme, the credit is sponsored with no external collateral or third party guarantee.

Here, the MSME credit endorsed by the Member Lending Institution (MLI) is backed by the scheme which gives the guarantee cover to an enormous portion of the advance loan. Under CGTMSE scheme, both new and existing medium, small, and micro enterprises, including service enterprises are qualified for a maximum credit cap of Rs.2 crore.

CGTMSE likewise offers rehabilitation assistance to the units. Any MSME unit that is in a bad condition because of the components beyond the control of the management is supported by the CGTMSE rehabilitation assistance. The maximum credit cap of Rs.1 crore is offered to the dilapidated MSME units.

Eligibility of CGTMSE Scheme

CGTMSE scheme is offered to various institutions which are as follows:

CGTMSE scheme helps all new and existing medium, small, and micro enterprise borrowers who satisfy the conditions referenced underneath:

  • The trust guarantees up to 75% of the defaulted principal amount for all categories and up to 85% of the defaulted principal amount for selected category of borrowers. The maximum guarantee cap is kept at Rs.62.50 lakh/Rs.65 lakh for the credit offices up to Rs.50 lakh 
  • Associated charges, for example, penal interest, commitment charge, and service charge including some other levy / expenses are not secured by the scheme
  • Small and Micro Enterprises possessed and/or operated by women are additionally qualified for an guarantee front of 80% and all the credit/loans  in the North East Region (NER) for credit facilities are eligible for an guarantee of Rs.40 lakh. Different perspectives, for example, retail trade, educational institutions, agriculture, training organizations, and Self-Improvement Groups (SHGs) are not qualified for guarantee cover under the plan

PMEGP (Prime Minister’s Employment Generation Programme)

PMEGP (Prime Minister’s Employment Generation Programme) scheme is implemented by Khadi and Village Industries Commission (KVIC) functioning as the nodal agency at the national level. The Ministry of MSME administers the Prime Minister’s Employment Generation Programme (PMEGP).

PMEGP is a merger of two schemes, namely, Prime Minister’s Rojgar Yojna (PMRY) and Rural Employment Generation Programme (REGP), to generate employment among the educated youth of the country. At the state level, the scheme is implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centers (DICs) and banks. Under PMEGP scheme, the beneficiary has to invest close to 5-10% of the project cost while the government grants a subsidy of 15-35% of the project.

Subsidy and funding under PMEGP

Beneficiary CategoriesBeneficiary’s Share (of Total Project)Subsidy Rate (from Govt.) – UrbanSubsidy Rate (from Govt.) – Rural

To avail PMEGP loan, individuals and organizations should meets certain criteria which are recorded underneath:

  • Age Criteria: Min. 18 years 
  • Education Qualification: eighth class went for individuals
  • Must be a part of Self-Help Group (SHG) 
  • Production Co-operative Societies
  • Charitable Trusts Age Criteria: Min. 18 years & Education Qualification: 8th class passed for individuals
  • Must be a part of Self-Help Group (SHG)
  • Societies that are registered under Societies Registration Act, 1860
  • Production Co-operative Societies & Charitable Trusts

MSME schemes launched by the Government

In Udyog Aadhaar memorandum Aadhaar card is an obligatory necessity. The advantage of enrolling in this plan is ease in benefiting credit, loans and subsidies from the Government. Registration should be possible the two different ways in the online mode or the Offline mode.

In Zero Defect Zero Effect model, goods that are produced for export have a need to adhere to a certain norm with the goal that they are not dismissed or sent back to India. To accomplish this the Government has launched this scheme. In this, if the goods are exported these are qualified for certain rebates and concessions

By Registering in Quality Management Standards and Quality innovation Tools scheme, it will help the Micro, Small and Medium Enterprises to understand and execute the quality standards that are required to be kept up alongside the new technologies. In this plan, activities are led to sharpen the organizations about the new innovation accessible through different courses, campaigns, and activities so forth.

Incubation scheme helps innovators with the implementation of their new structure, thoughts or products. Under this from 75% to 80% of the project cost can be financed by the Government. This plan advances new ideas, designs Products and so forth. 

Under Credit Linked Capital Subsidy Scheme, new technology is provided to the entrepreneurs to supplant their old and obsolete technology. A capital Subsidy is given to the business to upgrade and have better intends to do their business. These small, micro and medium enterprises can directly approach to move toward the banks for these subsidies.

Women Entrepreneurship plot is particularly started for women who need to start their own business. The government gives capital, counseling, training and delivery techniques to these ladies with the goal that they deal with their business and extend it and support system for these enterprises.

Activities Specifically Excluded From Coverage under MSME

As per Section 7 of the MSME Act, 2006 activities that would be specifically not included in the manufacturing or production of commodities or rendering of services are 

  1. Forest and Logging
  2. Fishing and aquaculture
  3. Wholesale, retail trade and repair of motor vehicle and motorcycles
  4. Wholesale trade except for motor vehicles and motorcycles.
  5. Retail Trade Except of Motor Vehicles and motor cycles
  6. Activities of households as employees for domestic personnel
  7. Undifferentiated goods and services producing activities of private households for own
  8. Activities of extraterritorial organisations and bodies
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