Expansion and Increase in Capacity of MSMEs
The Government of India has announced Fund of Funds with the nomenclature Self Reliant India (SRI) Fund to infuse Rs. 50,000 crore as equity funding in those MSMEs which have the potential and viability to grow and become large units. Under this scheme total size of fund of Rs. 50,000 Crore has a provision of Rs.10,000 Crore from Government of India and Rs.40,000 Crore leverage through Private Equity / Venture Capital funds. The guidelines of the fund have been issued. This initiative is aimed at providing growth capital to the deserving and eligible units of MSME sector.
Disbursal of Loans to Msmes Under ECLGS
Emergency Credit Line Guarantee Scheme (ECLGS) is under the operational domain of Ministry of Finance, Department of Financial Services (DFS). As informed by DFS, as on 2.07.2021, guarantees have been issued for loan granted to around 1.09 crore Micro, Small and Medium Enterprises (MSMEs).
ECLGS being a demand driven scheme, sanctions/disbursements are made by lending institutions based on assessment of borrower’s requirement and their eligibility.
The eligibility criteria for availing credit under ECLGS are:
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- For ECLGS 1.0, MSME units, Business Enterprises, Mudra Borrower and individual loans for business purpose having loan outstanding upto Rs.50 crore and days past due upto 60 days as on 29.02.2020.
- For ECLGS 2.0, Borrower belonging to 26 stressed sectors identified by Kamath Committee & Healthcare sector having loan outstanding above Rs.50 crore and upto Rs.500 crore and days past due upto 60 days as on 29.02.2020.
- For ECLGS 3.0 Borrower belonging to Hospitality, Travel & Tourism, Leisure & Sporting and Civil Aviation sector having days past upto 60 days as on 29.02.2020.
- For ECLGS 4.0 Existing Hospitals/Nursing Homes/Clinics/Medical Colleges/units engaged in manufacturing of liquid oxygen, oxygen cylinders etc. having credit facility with a lending institution with days past due upto 90 days as on March 31, 2021.
As on 2.07.2021 an amount of Rs.2.73 lakh crore have been sanctioned under the scheme of which an amount of Rs.2.14 lakh crore has been disbursed.
The scheme was designed to support existing borrowers meet the liquidity crisis due to Covid-19 pandemic. Ministry of MSME has launched Credit Guarantee Scheme for Subordinate Debt (CGSSD) to extend financial assistance to stressed MSMEs including NPA accounts. The credit needs of the first time bowers belonging to the Micro and Small Enterprises are catered to by the Credit Guarantee Scheme for Micro and Small Enterprises.
Loans to MSMES Industries under CGS
All new and existing Micro and Small Enterprises engaged in manufacturing or services including trading activity are eligible to be covered under Credit Guarantee Scheme (CGS) implemented by Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). No eligible proposal is denied. Upto June 30, 2021 CGTMSE has approved 53,86,739 guarantees cumulatively for an amount of Rs. 2,72,007 crore. During the first quarter of Financial Year 2021-22 CGTMSE has reported that guarantee approvals with respect to Banks and NBFCs are Rs. 6,693 crore and Rs. 6,603 crore respectively during first quarter of Financial Year 2021-22 as against Rs. 6,041 crore and Rs. 2,934 crore respectively during first quarter of Financial Year 2020-21.
During Financial Year 2020-21, CGTMSE has approved 22,021 guarantee applications amounting Rs. 1,408 Crore for the State of Telangana.
Government of India has announced a relief package to support Indian Economy including the MSME Sector. This package inter-alia also includes measures such as Rs 1.1 lakh crore loan guarantee scheme for covid affected sectors, additional Rs 1.5 lakh crore for Emergency Credit Line Guarantee Scheme, Credit Guarantee Scheme to facilitate loans to approximately 25 lakh small borrowers through Micro Finance Institutions etc.
Setting UP New Units of MSMES
The Government of India simplified the process of registration of MSMEs by replacing the Udyog Aadhaar Memorandum (UAM) with Udyam Registration (UR) on1st July 2020. UR is free of cost, transparent, online, hassle free and is based on self-declaration. It does not require any documents and has an automatic integration with ITR and GSTIN. During the second wave of Covid -19 pandemic MSMEs continued to register on UR Portal.
MSMEs can avail the benefits of schemes such as Prime Minister Employment Generation Programme (PMEGP)/Rural Employment Generation Programme (REGP)/Micro Units Development & Refinance Agency (MUDRA) and the announcements made to provide relief to MSMEs from the problems faced due to COVID-19 pandemic. The number of Projects and Employment generation under PMEGP during 2020-21 as on July, 2021 are 91,054 and 7,28,432, respectively.
Encouragement to MSMES
The Ministry of MSME implements various schemes and programmes for growth and development of MSME Sector in the country. These schemes and programmes include Prime Minister’s Employment Generation programme (PMEGP), Scheme of Fund for Regeneration of Traditional Industries (SFURTI), A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE), Interest Subvention Scheme for Incremental Credit to MSMEs, Credit Guarantee Scheme for Micro and Small Enterprises, Micro and Small Enterprises Cluster Development Programme (MSE-CDP), Credit Linked Capital Subsidy and Technology Upgradation Scheme (CLCS-TUS).
Post Covid-19, Government has taken a number of initiatives under AatmaNirbhar Bharat Abhiyan to support the MSME Sector in the country especially in Covid-19 pandemic. Some of them are:
i) Rs 20,000 crore Subordinate Debt for MSMEs.
ii) Rs. 3 lakh crores Collateral free Automatic Loans for business, including MSMEs.
iii) Rs. 50,000 crore equity infusion through MSME Fund of Funds.
iv) New revised criteria for classification of MSMEs.
v) New Registration of MSMEs through ‘Udyam Registration’ for Ease of Doing Business.
vi) No global tenders for procurement up to Rs. 200 crores, this will help MSME.
An online Portal “Champions” has been launched on 01.06.2020 by Hon’ble Prime Minister. This covers many aspects of e-governance including grievance redressal and handholding of MSMEs. Through the portal, total 35,361 grievances have been redressed upto 12.07.2021.
Studies have been conducted by National Small Industries Corporation (NSIC) and Khadi and Village Industries Commission (KVIC) to assess the impact of COVID-19 Pandemic on MSMEs including units set up under Prime Minister’s Employment Generation Programme (PMEGP).
The main findings of the online study conducted by NSIC to understand the operational capabilities and difficulties faced by the beneficiaries of NSIC schemes amid Covid-19 pandemic are as follows:
- 91% MSMEs were found to be functional.
- Five most critical problems faced by MSMEs were identified as Liquidity (55% units), Fresh Orders (17% units), Labour (9% units), Logistics (12% units) and availability of Raw Material (8% units.)
The findings of the study conducted by KVIC are as under:
i. 88% of the beneficiaries of PMEGP scheme reported that they were negatively affected due to Covid-19 while the remaining 12% stated that they were benefitted during Covid-19 Pandemic.
ii. Among the 88% who were affected, 57% stated that their units were shut down for some time during this period, while 30% reported drop in production and revenue.
iii. Among the 12% who had benefitted, 65% stated that their business increased as they had units in retail and health sector and around 25% stated that their units benefitted as they were dealing with essential commodities or services.
iv. On the question of regular payment of salaries to the employees, around 46.60% respondents stated that they had paid the salaries in full, 42.54% reported to have partially paid and 10.86% reported to have not paid salary for some time during this period.
v. Majority of the beneficiaries expressed the need for additional financial support, relaxation of waiver of interest and marketing support for their products.