Policies and schemes for

the growth of MSMEs by

Ravi Pohani

Ravi Rawat

NEED FOR IDENTIFICATION OF MSMEs

Employment Opportunities (MSMEs > LARGE SCALE INDUSTRIES)

Capital Requirements (MSMEs < LARGE SCALE INDUSTRIES)

Industrialization of rural areas

Reducing regional imbalances

Equitable distribution of national income

Ancillary to LARGER industries

Facts & Figures about MSMEs

36 million units as on January 2016

80 million employees

6000 products

Contributing 8% to GDP

45% total manufacturing output

40% of total exports

Issues with MSMEs

Unquenched capital requirements + difficult financing of

working capital

Lack of modern-technology

Lack of professional management

Lack of necessary entrepreneurial and technical skills

Problem of electrical infrastructure in rural areas

Organizational Structure of Ministry

Ministry of Small Scale Industries Ministry of Agro & Rural Industries

Ministry of Micro Small and

Medium Enterprises (as on May

9th, 2007)

Amendment of GOI

(Allocation of business)

rules, 1961

Organizational Structure of Ministry

State Governments

(Responsibility of promotion of

MSMEs)

Central Government

(Supplements efforts of states)

Organizational Set-up

Development Commissioner

MSME

Development

Institutes

(30)

MSME

Promotional

Training

Institutes

MSME

Testing

Centers

Hand Tool

Design

Development

and Training

Centers

Autonomous

bodies

MSME DI

branchesMSME Testing

Stations

MSME Tool

Rooms

Central Footwear

Training

Institutions etc.

Central Glass

Training

Institutions

The Office Of Development

Commissioner

Apex body for monitoring policy implementation for growth and development

of MSMEs.

It functions through a network of MSME-Development Institutes, Regional

Testing Centers, Footwear Training Institutes, Production Centers, Field

Testing Stations and specialized institutions.

Serves as advisory to ministry for policy framework

Provides techno-economic and managerial consultancy

Common facilities and extension services to MSMEs

Provides facilities for technological up-gradation, modernization, quality

improvement and infrastructure

Develops Human Resource through training and skill development.

Khadi and Village Industries Commission

(KVIC)

Developed under Khadi and village Industries Commission ACT,1956

Statutory Organization engaged in promoting and developing khadi and village

industries for providing employment and opportunities in rural areas.

Major organization for generation of sustainable rural-non-farm employment,

thereby reducing rural to urban migration.

Mahatma Gandhi Institute for Rural

Industrialization (MGIRI)

Established under Societies(Registration) ACT, 1860

Erstwhile Jamnalal Bajaj Central Research Institute

Strengthens the R&D activities in Khadi and Village Industries.

Encourages research through extension of R&D projects, quality control,

training and dissemination of technology related information.

Coir Board

Established under Coir Industries ACT, 1953

Promotes overall sustainable development of coir industry

Improves living conditions of workers engaged in traditional industry

Includes undertaking of scientific, technological and economic R&D activities

Promotes co-operative organization between husk producers, coir fiber and

coir yarn manufacturers, and end-product manufacturers.

National Small Industries Corporation

Ltd. (NSIC)

Established in 1955 by GOI

To promote aid and foster the growth of SSIs in India.

Procures raw material; markets their products; provides credit ratings to SSIs;

technological acquisitions; provides with latest management practices, etc.

It has 142 offices located in India and one office in Johannesburg, S.A.

National Institute for

MSMEs (NI-MSME)

Ministry develop NIMSME to inculcate

entrepreneurial culture amongst first generation

of entrepreneurs on a regular basis.

Engages in developing training modules, undertakes R&D and training,

provides consultancy for entrepreneurial services.

During the last 3 years, it has offered ~5000 training programs benefiting

~1,60,000 participants , undertook many research and consultancy programs.

Over 9000 executives from 140 developing countries have profited from its

expertise, knowledge and resources

Its international connections makes its endeavors more meaningful and

effective

National Board for MSMEs (NB-MSMEs)

The large range of development works in MSMEs involves various departments

or ministries and different Central and State govt. organizations. NB-MSMEs

facilitates coordination and inter-institutional linkages in pursuance of MSMED

act, 2006.

It is the apex advisory to govt. on all issues pertaining to MSME sector.

MSMEs Definitions as per MSMED ACT,

2006

Village industries have been redefined in amended KVIC, ACT, 1956, as any industry located in rural area

which produces any goods or renders any services with or without use of power and in which the fixed

capital investment per artisan or worker doesn’t exceeds Rs. 1 lakh (Rs. 1 lakh 50 thousand in hilly

areas).

Change of definitions of MSMEs

Cabinet in its meeting held on 25.3.15 approved proposal for introduction of a

bill namely, MSMED (Amendment) Bill, 2015 to revise the definitions of MSMEs,

increasing their capital investment range.

Also to include micro or tiny or village enterprise as a part of Medium

enterprise so as to make them more competitive

And to empower Central Govt. to revise existing limit of investment,

considering inflation and dynamic marketing situations.

MAJOR PLANS AND

SCHEMES IMPLEMENTED

BY THE MINISTRY

Performance and Credit Rating Scheme

(PCR)

Implemented through NSIC

Provides trusted third-party opinion on capabilities and credit-worthiness of

MSMEs, so as to create awareness amongst them about their strengths and

weakness of their existing operations.

Rating agencies involved are CRISIL, CARE, ONICRA, ICRA, Brickwork India,

SMERA.

Rating fee payable by MSMEs subsidized for first year and that is subject to

maximum 75% of the fee or Rs. 40000 whichever is less

During the year 2015-16, ~13000 units have been rated

Budget under this scheme was Rs. 28 Cr. For 13000 units

Marketing Assistance (MA) Scheme

Implemented through NISC

Main objective is to enhance marketing competitiveness of MSMEs

Providing them a platform for interaction with buyers

Updating them with prevalent market scenario

Providing them a form for problem redressing.

MSMEs are supported under the scheme for capturing new market

opportunities and participating in various domestic and international trade

fairs.

During year 2015-16, 8 international and 66 domestic fairs have been organized.

Budget under this scheme was around Rs. 14Cr. For the year 2015-16.

Assistance to Training Institutions (ATI)

Implemented through National Institutes for MSMEs

Engages in technical and entrepreneurial skill development

Strengthening of infrastructure and program support

Maximum of 150 lakhs on matching basis not exceeding 50% of project cost

(270 lakhs or 90% project cost whichever is less for residents of N.E.,

Andaman and Nicobar and Lakshadweep)

During year 2015-16 1146 programs held and ~31000 people trained under the

scheme with budget estimates of Rs. 80Cr.

Prime Minister Employment Generation

Program (PMEGP)

Credit Linked subsidy scheme

Implemented through KVIC and DICs

Helps in establishing new self-employment ventures/ projects and micro

enterprises

The objective is to bring together rural and urban artisans and unemployed

youth(>18yrs. of age) and give them opportunities to start their own

businesses, thereby preventing migration.

assistance of upto 25 lakhs for manufacturing enterprise and 10 lakhs for

service sector

During year 2015-16 ~2 lakh employments generated and Rs.631Cr. of subsidy

utilized.

Market Promotion and Development

Assistance (MPDA)

Market development assistance scheme of KVIC has been modified to Market Promotion and Development Scheme is formulated as unified scheme by merging different schemes and sub-schemes of the 11th – Plan, namely Market development assistance, publicity, marketing and market promotion and adds a new component of infrastructure(inclusive of new component of Marketing Complex/Khadi Plaza)

The existing MDA scheme , had subsidy @ 20% on production value of Khadi be distributed among producing institutions (30%), selling institutions (45%) and artisans (25%). The Modified MDA shall be at 30% of the Prime Cost and shall be distributed amongst producing institutions (20%), selling institutions (40%) and artisans (40%).

Assistance for visiting and exhibiting in trade fairs domestic as well as international is also provided

production

institution30%

sellers45%

artisians

25%

0%

SUBSIDY DISTRIBUTION

MDA

producer

20%

seller40%

artisian40%

0%

SUBSIDY DISTRIBUTION

MPDA

Coir Vikas Yojana

Implemented through Coir Board

For marketing, publicity, product development, sustainability of the Coir

Industry in domestic as well as industrial markets as an eco-friendly product.

TA of about 2 lakhs is provided to Coir exporters to participate in

international fairs.

Assistance for material publicity upto 25% of production cost is also provided

with a cap of Rs. 15000

Budget estimates for the year 2015-16 was Rs.26.37Cr.

Coir Udyami Yojana

Implemented through Coir Board

To Rejuvenate, modernize and technologically Upgrade the most crucial link

in Coir production chain.

Replacement of outdated looms and providing worksheds to spinners for

increase in production.

Under the scheme SC&STs, women and residents of A&N islands and

Lakshadweep will be given priority.

Budget estimates of 2015-16 was Rs20 Cr.

Technology Centre System Programs

15 new tool rooms would be set-up and existing ones would be upgraded with

support of World-Bank.

Objective is to strengthen tech. capabilities of MSMEs, Cluster network

Management to establish linkages between all key stake holders, National

Portal for creating vibrant and interactive Platform to meet various needs of

MSMEs

Trade Related Entrepreneurship Assistance

and Development (TREAD) for Women

Economic Empowerment of such women through trade relate training, information and counseling extension activities related to trades, products and services.

The scheme provides financial loans through NGOs who are also provided GOI grant for capacity building

Grant of 30% on maximum credit of Rs. 30 lakhs by lending institutions/ banks through NGOs(min 3yrs. Of experie.nce in taking and managing funds) for undertaking non-farm activities

GOI grant of Rs. 1 lakh per program to training institutes? NGOs imparting training to women entrepreneurs

State govt. sponsored institutes provided with a grant of upto Rs.5lakhs per project for primarily undertaking activities aiming at women empowerment like, field surveys, research studies, evaluation, and design of training modules.

Total no. of women beneficiaries till 2015-16 was ~28000

THANK – YOU