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Budget 2019 announcement!

GST registered MSMEs can get 2% interest subvention from Government for incremental loans of Rs 1 crores under the MSME Credit scheme

MSME stands for Micro, Small and Medium Enterprises. These industries or enterprises form the backbone of our economy and need assistance and protection from other big companies as they lack in resources and technology. To do this the government provides some schemes, rebates or counselling to these enterprises.

The threshold for the enterprises to be called as Micro, Small or Medium is as follows

The existing MSME classification was based on the criteria of investment in plant and machinery or equipment. So, to enjoy the MSME benefits, they have to limit their investment to a lower limit, as mentioned below:

 

                            Existing MSME Classification

Sector

Criteria

Micro

Small

Medium

Manufacturing

Investment 

< Rs.25 lakh

< Rs.5 crore

< Rs.10 crore

Services

Investment 

< Rs.10 lakh

< Rs.2 crore

< Rs.5 crore

These lower limits are killing the urge to grow as they are unable to scale their businesses further. Also, there has been a long-pending demand for the revision of MSME classification so that they can further expand their operations while continuing to avail the MSME benefits.

Now, under the Atmanirbhar Bharat Abhiyan, the government revised the MSME classification by inserting composite criteria of both investment and annual turnover. Also, the distinction between the manufacturing and the services sectors under the MSME definition has been removed. This removal will create parity between the sectors. The following is the revised MSME classification, where the investment and annual turnover, both are to be considered for deciding an MSME.

 

                        Revised MSME Classification

Criteria

Micro

Small

Medium*

Investment 

       & 

Annual Turnover

< Rs.1 crore

 &  

< Rs.5 crore

< Rs.10 crore

&

< Rs.50 crore

< Rs.50 crore

&

< Rs.250 crore

* Further upward revision made by the government

The revision of MSME classification allows for further scaling of business and also increases a healthy competition among businesses.

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Some of the MSME schemes launched by the Government are

Udyog Aadhaar memorandum

Aadhaar card is a 12 digit number given to all individuals by the government. In this, the Aadhaar card is a mandatory requirement. The benefit of registering in this scheme is ease in availing credit, loans, and subsidies from the government. Registration can be done both ways in the online mode or the offline mode.

Zero Defect Zero Effect

In this model, goods that are manufactured for export have to adhere to a certain standard so that they are not rejected or sent back to India. To achieve this the government has launched this scheme. In this, if the goods are exported these are eligible for some rebates and concessions.

Quality Management Standards & Quality technology Tools

Registering in this scheme will help the micro, small and medium enterprises to understand and implement the quality standards that are required to be maintained along with the new technology. In this scheme, activities are conducted to sensitize the businesses about the new technology available through various seminars, campaigns, activities etc.

Grievance Monitoring System

Registering under this scheme is beneficial in terms of getting the complaints of the business owners addressed. In this, the business owners can check the status of their complaints, open them if they are not satisfied with the outcome.

Incubation

This scheme helps innovators with the implementation of their new design, ideas or products. Under this from 75% to 80% of the project cost can be financed by the government. This scheme promotes new ideas, designs, products etc.

Credit Linked Capital Subsidy Scheme

Under this scheme, new technology is provided to the business owners to replace their old and obsolete technology. The capital subsidy is given to the business to upgrade and have better means to do their business. These small, micro and medium enterprises can directly approach the banks for these subsidies.

Women Entrepreneurship

This scheme is especially started for women who want to start their own business. The government provides capital, counseling, training and delivery techniques to these women so that they manage their business and expand it.

The government has launched a number of more schemes and support system for these enterprises, to know more about the MSME schemes the following link of the government can be checked.

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