Top Government schemes for MSMEs in India
As India’s GDP is predicted to reach the $6 trillion mark by 2030, Micro Small Medium Enterprises would play a much bigger role. With a contribution of around 33% to India’s total GDP, the MSME has been a significant economic muscle in recent years; and the Indian Government would put in place many more support mechanisms including updated MSME schemes in order to boost MSMEs as bigger growth engines of the economy. If we see the MSME Manufacturing segment, its contribution to all India Manufacturing output has been stable at — 36.6% (2019-20), 36.9% (2020-21) and 36.2% (2021-22). The export share of MSME specified products in all India exports has also been stable at – 49.4% (2020-21), 45% (2021-22), 43.6% (2022-23).
Government schemes for to support MSMEs and their contribution to India’s economy
Along with the Govt’s big initiatives like developing open-source digital platforms, the National Logistics Policy, the PLI programmes, the Ministry of MSMEs is implementing various schemes related to credit support, technological upgradation, infrastructure development, skill development & training, etc.
In this post (Part 1) and in the following post (Part 2), we will briefly cover some of the top government schemes for MSMEs from the Govt. Besides sharing information about each of the top schemes, its key features & benefits and who can apply for it, we will also tell you how much money has been disbursed under that scheme.
1. Pradhan Mantri Mudra Yojana
| Pradhan Mantri Mudra Yojana (completed 8 yrs, as on April 2023) | |
| Who can apply for this scheme | Key features and benefits of the scheme |
| Small enterprises from Manufacturing, Trading and Services sectors, Entrepreneurs, Single- Ownership businesses etcSector specific loans – agriculture & support services, poultry farming, food processing etc | No collaterals required Maximum loan –up to ₹ 10 lakhsRepayment period – from 3 yrs to 5 yrs Provided by Scheduled Commercial banks, Regional Rural banks, NBFCs, Micro Finance Institutions Interest rates lower than the industry ratesNo processing feesFlexibility to repay the loan – monthly, quarterly, half-yearly or yearly instalments |
| Shishu loan : Start-ups and new businesses | Loans up to ₹ 50,000 |
| Kishor loan : Start-ups and new businesses | Loans ranging from ₹ 50,001 to ₹ 5 lakh for buying equipment, new machinery, raw materials |
| Tarun loan : Start-ups and new businesses | Loans ranging from ₹ 5,00,001 to ₹ 10 lakh for established businesses |
(Source for this Infograph, Mint hyperlink )
If you want to know more about PMMY do visit Mudra website
2. Credit Guarantee Fund Trust for Micro and Small Enterprises – CGTMSE
| Credit Guarantee Fund Trust for Micro and Small enterprises | |
| Who can apply for this scheme | Key features and benefits of the scheme |
| Micro and Small enterprises (Manufacturing and service units), New entrepreneurs (Manufacturing and service units) including retail trade | Jointly set up by Ministry of MSME, Government of India and SIDBI , this scheme creates access to institutional credit from MLIs (Member Lending Institutions) for under-served, unserved and under-privileged MSMEs. The Govt provides a credit guarantee to banks and financial institutions to cover losses in case of default – provides coverage for up to 75-85% of the loan amount. Collateral-free loan up to ₹ 1 croreThe revamped scheme in April 2023 : The credit facility ceiling is increased from ₹ 2 to ₹ 5 crore per borrower and annual guarantee fees are reduced to as low as 0.37% |
| Max guarantee coverage | |||
| guaranteed credit facility is upto ₹ 5 lakh | guaranteed credit facility is > ₹ 5 lakh & upto ₹ 50 lakh | guaranteed credit facility is > ₹ 50 lakh & upto ₹ 500 lakh | |
| Micro enterprises | 85% | 75% | 75% |
| MSEs in North East region (including Sikkim, UT of J & K, UT of Ladakh | 80% | 80% | 75% |
| Women entrepreneurs/SC & ST entrepreneurs/MSEs situated in Aspirational district/ZED certified MSEs/Person with disability (PwD)/MSE promoted by Agniveers | 85% | ||
| Other categories of borrowers | 75% | ||
| Existing businesses | Documents for applying for a CGTMSE loan :Business incorporation papers, financial statements, annual reports, tax related documents, legal documents etcBusiness plan that includes financial forecast | ||
| New businesses | Documents for applying for a CGTMSE loan :Business registration documents, legal documents etc Business plan that includes financial forecast | ||
(Image from https://www.cgtmse.in/Home/VS/3)
If you want to know more about CGTMSE do visit the website https://www.cgtmse.in
In the Part 2 of this article, we will cover a few more top Govt schemes for MSMEs.
Credits :
Jyothsna Y, Google, Articles on Govt’s schemes for MSMEs