Indian Govt And MSMEs: Taking Small Businesses To New Heights

The Covid-19 pandemic has impacted economies worldwide, with micro, small, and medium enterprises (MSMEs) being the hardest hit. Around 70 per cent of MSMEs had to cease operations, according to a cross-continental survey conducted by the International Labour Organisation in August 2020.

The survey report revealed that half of these businesses temporarily closed due to direct instructions from authorities, while the remaining 50 per cent shut down temporarily due to reduced orders, increased Covid-19 infections among staff, or permanent layoffs.

Multiple factors contributed to the contraction of the sector, including lower revenue, decreased demand for orders, cash flow shortages, labour force impacts, and ongoing uncertainties surrounding the pandemic.

In India, the central government's Atmanirbhar package provides support to the economy, particularly for MSMEs. The Atmanirbhar Bharat special economic package, worth Rs 20 lakh crore, covers various aspects of society, including MSMEs and industries.

Furthermore, the government has implemented several measures to support the sector, such as a Rs 20,000 crore subordinate debt scheme for MSMEs, Rs 3 lakh crore collateral-free automatic loans for businesses, and Rs 50,000 crore equity infusion through the MSME fund of funds.

To assist crisis-hit MSMEs, the government has introduced new criteria for MSME classification, a simplified MSME registration process through 'Udyam' registration, and an exemption from global tenders for procurement up to Rs 200 crore.

Prime Minister's Employment Generation Programme (PMEGP) is implemented by the Khadi and Village Industries Commission (KVIC) at the national level. The scheme aims to provide government assistance through selected banks for the benefit of enterprises, supporting entrepreneurship and self-employment.

The Scheme of the Fund for Regeneration of Traditional Industries (SFURTI) focuses on clustering traditional businesses and craftspeople to enhance their competitiveness, viability, and employment opportunities. It also aims to improve marketability, provide better tools and facilities, and strengthen cluster governance systems.

The Scheme for Promoting Innovation, Rural Industry, and Entrepreneurship (ASPIRE) establishes technology and incubation centres to accelerate entrepreneurship and promote innovation in the agro-industry.

Pradhan Mantri Mudra Yojana (PMMY) is a pro-entrepreneurship and self-employment scheme launched by Prime Minister Narendra Modi in 2015, aimed at providing financial support for startups and small businesses.

Credit Linked Capital Subsidy is a scheme that offers a capital subsidy of 15 per cent to micro and small enterprises (MSEs) for technology up-gradation, based on institutional finance of up to Rs 1 crore.

The Cluster Development Programme (MSE-CDP) adopts a cluster development approach to enhance the productivity, competitiveness, and capacity building of MSEs in India. Clusters are groups of enterprises linked by common challenges and infrastructure, addressing issues such as technology improvement, skills, quality, and market access through collective actions.

These government initiatives and programs aim to support the sustainability and growth of MSEs, empowering them through capacity building, collective actions, and improved access to resources and markets.