The redefined role of MSME classification aims to boost business and entrepreneurship, recognizing them as the backbone of the economy. It is designed to promote entrepreneurship and self-employment in India. Here are the key features:
1. Promotion of local manufacturing: The government encourages local production and reduces dependence on imports through incentives and subsidies. This initiative aligns with the “Vocal for Local” and “Atmanirbhar Bharat” (Self-reliant India) campaigns.
2. Realization of MSME potential: The new classification provides easier access to credit, technology upgradation, and other forms of government support for MSMEs.
3. Access to skilled manpower: Schemes like Skill India Mission, Apprenticeship Act, and Pradhan Mantri Kaushal Vikas Yojana offer skill training and employment opportunities to youth and workers.
4. Government support: Various schemes, such as credit guarantee schemes, the Prime Minister’s Employment Generation Program, and skilled manpower initiatives, provide support to MSMEs.
5. Tax benefits: The government acknowledges the contribution of MSMEs to economic growth and offers tax benefits and incentives, including income tax exemptions, tax holidays, and reduced tax rates.
6. Reduced cost of credit: MSMEs can avail a 1% reduction in the cost of credit.
7. Increased exportability of products: MSMEs receive a 2.5% concession on basic custom duty for better export opportunities, ensuring the availability of raw materials like copper scrap for copper producers.
8. Relief to startups: Startups benefit from carry-forward losses for up to 10 years, relaxed conditions regarding shareholding continuity, and extended due dates for tax benefits.
9. Agricultural accelerator fund for agri startups: Entrepreneurs in rural areas are encouraged to start agri startups, which offer affordable and innovative solutions to challenges faced by farmers. The fund supports the adoption of modern technologies, transforming agricultural practices, and increasing profitability.
10. Entity digi lockers for MSMEs: MSMEs and large businesses have access to entity digi lockers, allowing them to securely share and store documents online with regulators, business entities, and banks.
11. Coir processing subsidy: MSMEs involved in coir processing can receive a 90% subsidy for overall development.
12. Prime Minister’s Employment Generation Program (PMEGP): This program aims to generate self-employment for unemployed youth and traditional artisans through micro-enterprise establishments in the non-farm sector. It provides government subsidies through designated banks for eligible individuals.
13. Credit Link Capital Subsidy Scheme (CLCSS): MSMEs investing in technology upgradation can avail a 15% subsidy for an additional investment of 1 crore. The scheme is facilitated by 12 designated nodal banks/agencies.
14. Equity infusion for MSME through Fund of Funds: To address the equity shortage faced by MSMEs, the Fund of Funds provides equity funding for commercially viable MSMEs with growth potential and viability.
15. Credit Guarantee Scheme for Subordinate Debt (CGSSD): This scheme supports stressed MSMEs by providing credit equal to 15% of their stake, with the government providing a 90% guarantee to banks.
16. SIDBI Make in India Loan for Enterprises (SMILE): This loan scheme supports MSMEs in participating in the Make in India campaign, offering soft loans and financing options to meet debt equity requirements and pursue growth opportunities.
These initiatives and schemes collectively aim to foster the growth and development of MSMEs in India.