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Government Initiatives for Startups and SMEs (Parichay Webinar Series ‒ Ask the Expert)

By greytHR
September 22, 2021

Blog Banner 01 - Parichay 5 - Ask the Expert - SEP 2021 - V1

The Government of India has always taken the initiative to support MSMEs/SMEs through various schemes and policies. But how many existing and budding business owners are aware of them? How many know how to gain access to them?  

In our maiden edition of Parichay Ask the Expert webinar, Vinamra Mishra, Director (Technical and Projects), Ministry of Micro Small and Medium Enterprises, answered questions about the different schemes for SMEs, benefits, scope, and post-pandemic roadmap. In this blog post, we share our key takeaways from the interactive session.

The Significant Role of MSMEs:

Who’s an MSME? Investment and turnover are the two parameters that determine the category of a business. An MSME (Micro Small and Medium Enterprises) is a company with a turnover of less than INR 250 crores with an investment of less than INR 50 crores. 

MSMEs contribute to about 45% of the national GDP, and the sector employs close to 101 million people across 63 million enterprises. This vast ecosystem is divided mainly into two categories of business: manufacturing and services.

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This is the second-highest employment generator for the country after agriculture. So, SMEs are really into nation-building, and we can safely say that if MSMEs prosper, the nation prospers and if MSMEs grow, the GDP grows. So, there is a direct correlation.

Vinamra Mishra, Director (Technical and Projects), Ministry of MSME, Govt. of India


The Pandemic Effect

Most of the MSMEs are now stressed, and their margins have shrunken. The waves of the pandemic have hit them hard. In this situation, the key to revival lies in better technology, innovation, access to credit, and marketing support. In a survey by the National Institute of MSME, Hyderabad, approximately 35% of MSMEs reported that their enterprises were stressed because of the pandemic, and about 32% said that the recovery is going to take more than six months.

The Revival Strategy

The government has charted out a revival strategy for the MSMEs in the country. The strategy comprises several technology interventions, credit schemes, and support initiatives to help these businesses bounce back during these trying times. The Ministry of Finance is reviewing various schemes that are to be launched in the future. Eligible MSMEs can access all the schemes through the Udyam Registration Portal

Here’s a bird’s eye view of the schemes under three different buckets. 

Technology Centers & Tool Rooms

The government, in collaboration with the private sector and foreign governments, has commissioned a network of technology centers, tool rooms, and extension centers. These centers, based on the hub and spoke model, will function as autonomous bodies under the Ministry of MSME and provide support to MSMEs across the country. 

Every center will provide affordable access to technology to enhance the competitiveness of these business units. Skilling programs and employment options will create livelihood opportunities for our youth. The centers will also offer consultancy services and handholding support to these MSMEs 

Technology Upgradation Schemes

Launched by the Prime Minister in 2016, the Zero Defect Zero Effect (ZED) scheme aims to improve product quality by improving process quality. A certified MSME will get a waiver of fees/charges and an increase in credit, among other benefits.

Based on the internationally accepted Lean manufacturing concept, the Lean scheme is about increasing efficiency by reducing input. The onboarding and assessment processes are easy, and the registration can happen online. All the good aspects of the ZED scheme have also been incorporated into this scheme. 

Developed for solopreneurs and tiny startups with a bright idea, the Innovative scheme enables interoperability between several existing schemes. This turnkey approach ensures that a potential idea is nurtured into a viable and secure business proposition by eliminating unwarranted bottlenecks. 

The Digital scheme, a part of Atmanirbhar Bharat, gives small businesses a digital identity and helps portray their products better. Their HR, payroll, finance, and other statutory requirements will be handled by an ERP. Moreover, the required training, technology, and marketing will be provided to all of them. 

Capacity Building & Credit Access Schemes

Jointly funded by the Government of India and World Bank, the Raising and Accelerating Micro, Small and Medium Enterprise Performance (RAMP) Program supports, finances, and improves the performance of MSMEs.

The UNIDO-GEF 5 Energy Efficiency Program identified a few energy-efficient technologies that help achieve profitability/breakeven in about 18 months to two years. Initially launched in some model clusters, the program is planned to be expanded to others. It’s also expected to touch more beneficiaries and create more investment opportunities in the days to come.  

Scheme of Fund for Regeneration of Traditional Industries (SFURTI) & A Scheme for Promoting Innovation, Rural Industry and Entrepreneurship (ASPIRE) are two different schemes meant to develop businesses in the rural and agricultural sectors. 

Aside from a geo-based cluster development program, the government has rolled out different financial assistance schemes for MSMEs. An efficient grievance redressal mechanism supports all the aforementioned schemes.  

In Summary

Fostering nationwide social and economic development, MSMEs generate employment, boost local industries, and complement growth in the large-scale industry. Although the pandemic has played spoilsport, the Ministry of MSME is leveraging the current and upcoming schemes to make these businesses domestically and globally competitive.  

Watch the recording of the webinar

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