Contributions of Micro, Small, and Medium Enterprise (MSME) sector is immense in creating employment, manufacturing output, exports, and providing inclusive growth within the country. If MSME Industries flourishes, the economy of the country also flourishes. It’s the backbone of any state. Considering India’s MSME sector powerhouse, the govt has included several measures and policies since the independence to make an impactful department sector.
Government Policies to Support MSME Industries since Independence
Some of these policies and measures are listed below:
Set up within the year 1954 that served as an apex body, the Micro, Small, and Medium Enterprises Development Organization, also referred to as Small Industries Development Organization (SIDO), was liable for expanding MSME Industries. In another two years, the Village Industries Commission, Khadi, and the Coir Board were established.
The new Small, Tiny, and Village Enterprises policy of August 1991 found out the framework stating that the govt will support liberalization that boosted competitiveness rather than protection. More vitality and growth are often introduced to MSMEs and hence, can combat the foreign completion and market.
The Ministry of MSME, also called the Ministry of Small-Scale Industries and Agro & Rural Industries (SSI & ARI), was established within the year 1999 so it could provide more focus to promoting the development of the arena.
Make in India Initiative
The “Make in India” swadeshi movement was established in 2014 to manufacture India’s indigenous products and not be dependent on foreign countries. From there began the Indian Government campaign to introduce measures like UdyamSangam, MSME Sambandh, Solar Chakra Mission, MSME Sampark, etc. to upgrade the MSME Industries in becoming the versatile and vibrant sector within the Indian economy.
Micro, Small and Medium Enterprises Development Act
In 2006, the Micro, Small and Medium Enterprises Development Act came into power whose primary goal was to direct the event, promote, and increase the competitiveness of small, micro, and medium enterprises and the matters connected to that. This Act is entitled to supply funding for the growth and promotion of those MSME Industries, economic and technical support, and progressive credit policies that ease doing business.
Aatma Nirbhar Bharat Scheme
However, the current situation and the aftermath of the COVID-19 crisis have led to the breakdown of the MSME sector. Nevertheless, the Indian government is hasty to form decisions to safeguard the MSME Industries and hence announce the “Aatmanirbhar Bharat” scheme on May 13th, 2020. This scheme has re-evaluated the scheming methods of the MSME sector and defined new limits for them. The law, however, has yet to be amended regarding this scheme.
Existing MSME Industries Classification
1. Credit Guarantee Scheme
Unsecured loan facilities are offered to the MSME businesses. Under this scheme, the MSME Industries can avail of term loans as well as capital loans. These loans don’t incline MSMEs to rearrange for a 3rd party guarantee for helping credit and wouldn’t require any security. If, perchance the MSMEs become sick because of uncontrollable reasons, then the lender is entitled to supply rehabilitation facilities to the MSMEs under the Credit Guarantee Scheme.
2. Subordinate debt for NPA/stressed MSMEs
As subordinate debt, the govt has made arrangements to give Rs.20,000 crores to assist the MSMEs with non-performing assets (NPA)s and stressed accounts. Thus, the promoters are entitled to a 15% debt of the prevailing deal within the MSME Industries under this scheme, which rounds close to 75 lakhs that the champion will need to infuse as equity. This debt will then be available at banks and issue it, which might categorize under quasi-equity. It can be guaranteed via Credit Guarantee Trust for the small and Medium Entrepreneurs.
3. Fund of Funds
There is another fund that the govt has created consisting of Rs. Fifty thousand crores that will help MSMEs that have growth potential and capacity to expand their business. It’s entirely to infuse equity to the MSME Industries, which will expand themselves. The govt is inclined to fund Rs. 10,000 crores and on the opposite hand, SBI and LIC institutions are tempted to support the remaining amount. This funding helps MSMEs to be on the list of the most board of stock exchanges because of the most fund and several other daughter funds.
4. The foreign companies have the whip hand on the MSMEs and faced unfair competition. Hence, Government procurement tenders up to Rs. 200 crores because the worldwide tenders are disallowed.
5. Another measure is that the govt of India and Central Public Sector Enterprises is entitled to clear all receivables because of MSMEs within the next 45 days.
6. The Tax Collected at Source and also the Tax Deducted at Source will see a discount of 25% on the rate of those sources ranging from May 14, 2020, to March 31, 2021. 7. Another measure called the Vivaad se Vishwas Scheme had been extended till December 31, 2020, that focuses disputes on tax payments.
Although the protocol will be there in every scheme, these financial measures are there to revive and restore the MSME Industries and help the country be self-reliant utilizing the Aatmanirbhar Bharat Abhiyan scheme.