Micro, Small, and Medium Enterprises (MSMEs) have played a vital role in inculcating an entrepreneurial spirit among the Indian masses. Presently, almost 6.34 crore MSMEs spanning diverse sectors are operational in India. The government plans to further increase the contribution of MSMEs to India’s GDP to 50% while employing around 15 crore people by 2024. 

These aims can be realised only by ensuring that MSMEs continue to enjoy adequate access to capital and technology while having the necessary skill set. Therefore, the government has been providing subsidies under various schemes to propel the growth of the MSME sector. Some of these have been outlined below: 

1) Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

The CGTMSE trust was established jointly by the MSME ministry and SIDBI to facilitate credit guarantee support for collateral-free and third-party guarantee-free loans to both the existing and new MSMEs. This trust was established to implement the Credit Guarantee Scheme for Micro and Small Enterprises. Credit guarantee cover is provided for loans up to Rs. 2 crores, ranging from 50% for a retail activity to 85% for micro-enterprises. 

2) Prime Minister’s Employment Generation Programme (PMEGP) 

PMEGP focuses on generating employment by encouraging the establishment of micro-enterprises in the non-farm sector. Under PMEGP, MSMEs can get loans up to Rs. 50 lakhs in the manufacturing sector and Rs. 20 lakhs in the service sector. These loans are offered at subsidised rates of 15% and 25% for urban and rural areas-based projects, respectively.  
 
PMEGP is a credit-linked subsidy programme which provides additional assistance to vulnerable sections, including women, SC/ST/OBC, physically handicapped, and NER, hilly, and border area applicants, in the form of higher subsidy rates of 25%-35%. 

3) 2nd Loan for Up-gradation of the Existing PMEGP/Mudra Units 

This scheme provides financial assistance to the existing MSME units planning to expand and upgrade. A subsidy of 15% of the total project cost is provided on loan. This subsidy increases to 20% for units established in NER and hill states. 

4) Micro and Small Enterprises Cluster Development Programme (MSE-CDP) 

A cluster development approach has been adopted by the government to create and upgrade infrastructural facilities in new and existing MSMEs. Grants restricted in the range of 60%-70% depending on the project cost, subject to a maximum of Rs 30 crores, are provided by the government to eligible MSMEs for the establishment of common facility centres (CFCs). These grants are raised to 70%-80% for CFCs set up in the NE and hill states, islands, and aspirational districts. 

5) National SC-ST Hub Scheme 

This scheme is specifically targeted at SC/ST entrepreneurs looking for professional support under Stand-Up India initiatives. 25% subsidy is provided on purchase of plant & machinery. Additionally, marketing and mentoring support are provided through vendor development programmes. The transaction costs incurred are also reimbursed. This scheme functions through various sub-schemes, including Special Marketing Assistance Scheme, Single Point Registration Scheme, Bank Loan Processing Reimbursement Scheme, etc.  

6) MSME Competitive LEAN Scheme (MCLS) 

MCLS aims to enhance the efficiency and competitiveness of MSMEs by implementing lean manufacturing techniques in the production processes. To achieve increased productivity, financial assistance is provided to the extent of 90% of the cost of implementation. 

7) MSME Sustainable (ZED) Certification

Under the ZED scheme, MSMEs are provided with financial assistance to carry out activities for zero defect and zero effect (ZED) certification, such as assessment, ratings, gap analysis, handholding, etc. Micro, Small, and medium enterprises are given 80%, 60%, and 50% subsidies, respectively.  

An additional 10% subsidy is provided to MSMEs that are owned by SC/ST/women or if the MSME is in NER/Himalayan/LWE/islands/aspirational districts. For MSMEs forming a part of the SFURTI or MSE-CDP scheme, an additional subsidy of 5% is granted. 

8) MSME Innovative Scheme (Incubation, Design and IPR) 

This scheme aims to assist MSMEs in commercialising their ideas, designs, and patents by offering equity support of up to Rs 1 crore for plant & machinery at the time of incubation. Design projects will be offered 75% (micro) and 60% (small & medium) subsidy on total project cost, subject to a maximum of Rs. 40 lakhs. Additionally, grants of Rs. 1 crore will be provided for IPR. 

9) Interest Subsidy Eligibility Certificate (ISEC) 

The ISEC scheme aims to fund the khadi programmes undertaken by khadi and polyvastra-based MSMEs. This scheme offers credit for working capital at a concessional rate of 4%. The burden of interest differential is borne by the central government and paid through KVIC to the lending banks.  

10) Promotion of MSMEs in North Eastern Region and Sikkim 

This scheme is envisaged to provide financial support for capacity building and productivity enhancement of MSMEs in the NER and Sikkim. The assistance of 90% of the project cost will be provided upto Rs. 13.5 crores for setting up mini technology centres and industrial estates. 

11) Fund of Funds Scheme for MSMEs: Self Reliant India (SRI) Fund 

This FoF scheme was introduced to provide funding support in the form of equity or quasi-equity financing to the MSMEs that have the potential to grow beyond the MSME bracket and become National Champions. The funds to the extent of Rs. 50,000 crores will be deployed in phases as per the demands raised by the empanelled daughter funds. 

12) Credit Support from National Small Industries Corporation (NSIC) 

NSIC has been tasked with supporting MSMEs by offering credit and marketing support. It subsidies the operations of MSMEs by providing credit support in the following form: 

• Raw Material Assistance (RMA) against bank guarantee 
• Credit facilitation through banks 
• Bill discounting 

13) Technology and Quality Upgradation Support (TEQUP) for MSMEs 

TEQUP aims to sensitise MSMEs to the use of energy-efficient technologies in order to reduce costs and GHG emissions. Subsidy to the extent of 25% of the project cost, subject to a maximum of Rs. 10 lakhs, is provided to MSMEs for implementing energy-efficient technologies in their operations.  

MSMEs are also provided with a subsidy of 75% of the actual expenditure incurred in acquiring product certification licences, subject to a maximum of Rs. 1.5 lakhs. 

14) Pradhan Mantri Mudra Yojana (PMMY) 

PMMY was launched in 2015 to provide Mudra loans not exceeding Rs. 10 lakhs to non-farm MSMEs. Mudra stands for Micro Units Development and Refinance Agency, an NBFC. The loans are classified into three categories: 

• Shishu: Up to Rs. 50,000 
• Kishore: From Rs. 50,000 to Rs. 5 lakhs 
• Tarun: From Rs. 5 lakhs to Rs. 10 lakhs  

These loans are collateral-free and are covered under Credit Guarantee Fund for Micro Units (CGFMU), which is operated by the National Credit Guarantee Trustee Company Limited (NCGTC). 

 This list is by no means exhaustive. The government continues to launch schemes to support specialised professions such as artisans, potters, beekeepers, etc. Financial support is also extended under PLI schemes to MSMEs set up in targeted industries, such as solar energy, pharmaceutical, defence, textile, cold chain facility, etc.  

Bottom Line – Grow your business with Protium

MSMEs need to be financially supported in order to continue to boost the growth of our country’s economy. This assistance to MSMEs can be provided not only by the government but also by finance companies, such as Protium. 

At Protium, MSMEs can access business loans at attractive interest rates without any collateral requirements.