ASSIGNMENT

ON

“Government Initiatives for Micro, Small and

Medium Enterprises (MSME)’’

Submitted to-
Mr. Talha Akbar Kamal
Guest Lecturer AMU, Kishanganj Centre

Submitted by-
Md Muntakhab Alam
MBA (Finance)
Roll no. 17MBAB-02
ENR. NO. GH0404

ALIGARH MUSLIM UNIVERSITY, KISHANGANJ CENTRE, BIHAR

 Micro, Small and Medium Enterprises
(MSME)

Micro, Small and Medium Enterprises (MSME) sector has

emerged as a highly vibrant and dynamic sector of the Indian economy
over the last five decades. MSMEs not only play crucial role in
providing large employment opportunities at comparatively lower
capital cost than large industries but also help in industrialization of
rural & backward areas, thereby, reducing regional imbalances,
assuring more equitable distribution of national income and wealth.
MSMEs are complementary to large industries as ancillary units and
this sector contributes enormously to the socio-economic
development of the country.
Khadi is the proud legacy of our national freedom movement and the
father of the nation. Khadi and Village Industries (KVI) are two national
heritages of India. One of the most significant aspects of KVI in Indian
economy is that it creates employment at a very low per capita
investment. The KVI Sector not only serves the basic needs of
processed goods of the vast rural sector of the country, but also
provides sustainable employment to rural artisans. KVI today
represent an exquisite, heritage product, which is 'ethnic' as well as
ethical. It has a potentially strong clientele among the middle and
upper echelons of the society.
Coir Industry is an agro-based traditional industry, which originated in
the state of Kerala and proliferated to the other coconut producing
states like Tamil Nadu, Karnataka, Andhra Pradesh, Orissa, West
Bengal, Maharashtra, Assam, Tripura, etc. It is an export oriented
industry and having greater potential to enhance exports by value
addition through technological interventions and diversified products
like Coir Geotextiles etc. The acceptability of Coir products has
increased rapidly due to its 'environment friendly' image.
Ministry of Micro, Small & Medium Enterprises (M/o MSME) envision
a vibrant MSME sector by promoting growth and development of the
MSME Sector, including Khadi, Village and Coir Industries, in
cooperation with concerned Ministries/Departments, State
Governments and other Stakeholders, through providing support to
existing enterprises and encouraging creation of new enterprises.

The Ministry of Micro, Small and Medium Enterprises, a branch of

the Government of India, is the apex body for the formulation and
administration of rules, regulations and laws relating to micro, small
and medium enterprises in India. The Minister of Micro, Small and
Medium Enterprises is Giriraj Singh since 03 September 2017.

The statistics provided by the annual reports of Ministry of Small and

Medium Enterprises (MSME) shows a rise in the plan amount spent on
the khadi sector from ₹194.27 crore to ₹1454 crore, and non-plan
amounts from ₹43.7 crore to ₹229.1 crore, in the period from 1994–
95 to 2014–2015. The interest subsidies to khadi institutions increased
from ₹9.63 crore to ₹31.45 crore in this period.
The Ministry of Small Scale Industries and Agro and Rural Industries
(SSI&ARI) was created in October 1999. In September 2001, the
ministry was split into the Ministry of Small Scale Industries (SSI) and
the Ministry of Agro and Rural Industries (ARI).
The President of India amended the Government of India (Allocation
of Business) Rules, 1961, under the notification dated 9 May 2007.
Pursuant to this amendment, the ARI and SSI were merged into a
single ministry, the current MSME.
The now-defunct SSI was tasked with the promotion
of micro and small enterprises (MSEs). The Small Industries
Development Organization (SIDO) was under the control of the
ministry, as was the National Small Industries Corporation
Limited (NSIC) public sector undertaking (PSU).
GOVERNMENT SCHEMES FOR MSME

Indian government has launched the various schemes for

providing assistance to Micro, Small and Medium Enterprises (MSME)
in terms of finance, technology, and other aspects to improve the
Micro, Small and Medium Enterprises (MSME).
Following are some important schemes which are explained:-

1. Prime Minister's Employment Generation Programme

(PMEGP).
2. Market Promotion & Development Scheme (MPDA)
3. Financial Support to MSMEs in ZED Certification Scheme
4. Coir Industry Technology Upgradation Scheme (CITUS)
5. Assistance to Training Institutions (ATI)
6. Micro & Small Enterprises Cluster Development (MSE-CDP)
7. Othes schemes
 1. Prime Minister's Employment Generation Programme
(PMEGP).

The scheme is implemented by Khadi and Village Industries

Commission (KVIC) functioning as the nodal agency at the national
level. At the state level, the scheme is implemented through State
KVIC Directorates, State Khadi and Village Industries Boards (KVIBs),
District Industries Centres (DICs) and banks. In such cases KVIC routes
government subsidy through designated banks for eventual disbursal
to the beneficiaries / entrepreneurs directly into their bank accounts.

Nature of assistance:-
The maximum cost of the project/unit admissible in manufacturing
sector is ₹ 25 lakhs and in the business/service sector, it is ₹ 10 lakhs.
Categories of Beneficiary’s Rate of subsidy under PMEGP (of project
cost)
Area (location of project/unit) General category 15%(Urban),
25%(Rural), Special 25%(Urban), 35%(Rural)
(including SC/ ST/ OBC/ Minorities/Women, Ex-servicemen, Physically
handicapped, NER, Hill and Border areas, etc.)
The balance amount of the total project cost will be provided by the
banks in the form of term loan and working capital.

2. Market Promotion & Development Scheme (MPDA)

The Market Promotion and Development Assistance Scheme (MPDA)

has been launched as a unified scheme by merging different schemes
implemented by the Khadi sector including publicity, marketing,
market promotion and marketing development assistance. Further,
grant/subsidy will also be available for construction of Khadi plazas.
The overall objective of the scheme is to ensure increased earnings for
artisans.

Nature of assistance:-
Modified MDA (MMDA) shall be allowed @ 30% on the Prime cost of
Khadi (cotton, silk, woollen) and Polyvastra.

3. Financial Support to MSMEs in ZED Certification

Scheme

The objectives of the scheme include inculcating Zero Defect & Zero
Effect practices in manufacturing processes, ensure continuous
improvement and supporting the Make in India initiative.

The ZED Certification scheme is an extensive drive to create proper

awareness in MSMEs about ZED manufacturing and motivate them for
assessment of their enterprise for ZED and support them. After ZED
assessment, MSMEs can reduce wastages substantially, increase
productivity, expand their market as IOPs, become vendors to CPSUs,
have more IPRs, develop new products and processes etc.

The scheme envisages promotion of Zero Defect and Zero Effect (ZED)
manufacturing amongst MSMEs and ZED Assessment for their
certification so as to:

Develop an Ecosystem for Zero Defect Manufacturing in MSMEs.

Promote adaptation of Quality tools/systems and Energy Efficient
manufacturing.

Enable MSMEs for manufacturing of quality products.

Encourage MSMEs to constantly upgrade their quality standards in

products and processes.

Drive manufacturing with adoption of Zero Defect production

processes and without impacting the environment.

Support ‘Make in India’ campaign. Develop professionals in the area

of ZED manufacturing and certification.

Nature of assistance:-
Assessment & Rating/Re-rating/Gap analysis/Hand holding

The subsidy provided by the Government of India for Micro, Small &
Medium Enterprises will be 80%, 60% and 50% respectively. There
shall be an additional subsidy of 5% for MSMEs owned SC/ST/women
and MSMEs located in NER and J&K for assessment & rating/re-
rating/gap analysis/hand holding:

a) Assessment/Rating by empanelled Credit Rating Agencies/other

Agencies valid for 4 years (Ministry of MSME will subsidize* 80% of
Micro, 60% of Small, 50% of Medium Enterprises' Certification Fee:
average 70% of Fee) (Assessment Fee Rs. 10,000/-& Rs 80,000/- per
enterprise respectively for Desktop Assessment and ZED rating
Complete Assessment).
b) Additional rating for Defence angle i.e. Defence ZED by empanelled
Credit Rating Agencies/other Agencies valid for 4 years (Ministry of
MSME will subsidize* 80% of Micro, 60% of Small, 50% of Medium
Enterprises' Certification Fee: average 70% of Fee) (Assessment Fee
Rs. 40,000/- per enterprise.)

c) Gap Analysis, Handholding, Consultancy for improving rating of

MSMEs by Consultants through QCI/NPC, Field formations of O/o DC-
MSME viz. MSME-DI, MSME-TC including its autonomous bodies, BEE
etc. (Ministry of MSME will subsidize* 80% of Micro, 60% of Small,
50% of Medium Enterprises' Consultancy charges: average 70% of
Fee) (Hand holding charges Rs. 1.9 Lakh per enterprise whereas in case
of MSMEs owned by SC/ST entrepreneurs additional support of Rs
10,000/- will be provided.)

d) Re-Assessment/Re-Rating by Credit Rating Agencies & Other

Agencies (Ministry of MSME will subsidize* 80% of Micro, 60% of
Small, 50% of Medium Enterprises' Certification Fee: average 70% of
Fee) (Assessment Fee Rs. 40000/- per enterprise.).

4. Coir Industry Technology Upgradation Scheme

(CITUS)

A new component namely “Coir Industry Technology Upgradation

Scheme (CITUS)” has been introduced replacing the earlier
component i.e. “Development of Production Infrastructure” of Coir
Vikas Yojana for giving away assistance to the entrepreneurs for
procurement of eligible Plant & Machinery for modernization,
upgradation and/or establishing a new unit on making application for
the purpose to go for larger investment in the coir sector. The financial
assistance shall be 25% of the cost of admissible items of Plant and
Machinery procured by the Coir units. The upper ceiling of the
financial assistance will be Rs.2.50 crores per coir unit/ project.

Nature of assistance:-
The financial assistance shall be 25% of the cost of admissible items of
Plant and Machinery procured by the Coir units for modernization,
upgradation and/or establishing a new unit. The upper ceiling of the
financial assistance will be Rs.2.50 crores per coir unit/ project.

5. Assistance to Training Institutions (ATI)

The assistance is provided to National level training institutions

operating under the Ministry of MSME, namely, NIMSME, KVIC, Coir
Board, Tool Rooms, NSIC & MGIRI in the form of capital grant for the
purpose of creation and strengthening of infrastructure and support
for entrepreneurship development and skill development training
programmes. Assistance is also provided to those State level EDIs that
enter into partnership with NIMSME for capacity development for
undertaking studies & research on MSME issues. The scheme also
provides research grant upto Rs 15.00 lakh on MSME issues. MSME
chair are also sanctioned in premier National academic institutions.

Nature of assistance:-
Revenue grant is provided to institutions on annual basis for the
MSME chair. State level EDIs that enter into partnership with NIMSME
are provided total grant upto Rs 2.5 cr.
 6. Micro & Small Enterprises Cluster Development
(MSE-CDP)

The Ministry of MSME has adopted cluster development approach for

enhancing productivity and competitiveness as well as capacity
building of MSEs. The Scheme supports financial assistance for
establishment of Common Facility Centres (CFCs) for testing, training
centres, R&D, Effluent Treatment, raw material depot,
complementing production processes etc. and to create/upgrade
infrastructural facilities (IDs) in the new/existing industrial
areas/clusters of MSE’s such as power distribution network, water,
telecommunication, drainage and pollution control facilities, roads,
banks, raw materials, storage and marketing outlets, common service
facilities and technological backup services for MSEs in the
new/existing industrial estates/areas.

Nature of assistance:-
Hard interventions, i.e., setting up of CFCs with maximum eligible
project cost of Rs 15.00 cr with GoI contribution of 70% (90% for
special category States and for clusters with more than 50%
women/micro/village/ SC/ST units). Infrastructure development in the
new/ existing industrial estates/areas in which the maximum eligible
project cost is Rs 10.00 cr, with GoI contribution amounting to 60% of
project cost (80% for special category States and for clusters with
more than 50% women/micro/SC/ST units).
 7. Othes schemes

There are several other schemes for development of Micro, Small and
Medium Enterprises like Skill Upgradation and Mahila Coir Yojana
(MCY), Export Market Promotion (EMP), Design Clinic for Design
Expertise to MSMEs, etc.

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