Yojana – November 2017

Micro, Small and Medium Enterprises

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 How Yojana will be covered?

Part - 1: Video + PDF

Part - 2: Video + PDF
Part - 3: Video + PDF

MCQs: Document

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 Relevance of this Edition
With Regard to RBI Grade B:

Phase 2 (Paper – II): Economic and Social Issues under ‘Economic Reforms in India’

(Industrial and Labour Policy, Role of Economic Planning), ‘Globalization’ (Opening up of

the Indian Economy) topics.

With Regard to NABARD (Grade A and Grade B)

Phase 1: Economic and Social Issues

Phase 2 (Paper – II): Economic and Social Issues under ‘Opening up the Indian Economy -

Globalisation - Economic Reforms in India’; ‘Industry - Industrial and Labour Policy’ topics.

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 11 crore
Sustain Rural Economies! Employment! people
Generates employment employed and
in the unskilled, semi- contributes to
skilled and skilled genre. around 17% of
Many of the the GDP
products are
developed Reaping
indigenously in Why is MSME Demographic
Labour-
intensive
rural economies!
Sector Dividend!
sector and
best sector to
important? target
employment
Great potential for export! generation!

Can sustain themselves

even in times of economic
Products are unique unstability!
and thus help in
generation of foreign
Very low production
currency!
cost, the capital
requirement is very
low!
Important Facts
What is MSME?

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 Important Facts
Total number of registered MSMEs 5.13 Crore

MSME’s contribution to the Indian Gross Value Added (GVA) at current prices:
Economy 2013-14: 32.26%;
2014-15: 31.86%
2015-16: 31.60%

Gross Domestic Product (GDP) at current prices:

2013-14: 29.76%;
2014-15: 29.39%
2015-16: 28.77%
Source: CSO (Central Statistical Organization)

MSME’s contribution to total employment 11.1 Crore (Source: 4th MSME Census (2006-07)
and Sixth Economic Census (2013), the Annual
Report (2016-17) by Union Ministry of MSMEs in
India.
 Important Facts
MSME’s share in total manufacturing Approximately 45 percent
output

MSME’s share in total export Approximately 40 percent

The Ministry of Micro, Small and Medium Enterprises has been the first to be awarded ISO 9001-
2008 certification, demonstrating the Ministry’s mission of promoting the growth and development
of MSME with dedication and commitment.
How will it help? It would enable the Ministry to identify areas for improvement and also bring in
transparency and accountability in its functioning.

In the Union Budget 2017-18, which was presented on 1st February, 2017, the Corporate Tax for the
MSMEs having a turn-over of less than Rs.50 Crore was brought down from 30 percent to 25
percent.
We shall have a look at the MSME Sector from the perspective
of the following areas:

Technology Upgradation and Enhancing Competitiveness

Accessing Finance

Access to Market

Strengthening Infrastructure

Employment Generation and Skill Development

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 Technology Upgradation and Enhancing Competitiveness

The following schemes help in the Technology Upgradation and Enhancing the
Competitiveness of MSME’s:

National Manufacturing Competitiveness Programme (NMCP)

Credit Linked Capital Subsidy Scheme (CLCSS)

Financial Support to MSMEs in ZED (Zero Defect Zero Effect) Certification Scheme

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 National Manufacturing Competitiveness Programme (NMCP)
• It is an umbrella programme and contains 10 schemes under it.

• Aims to develop the global competitiveness among Indian MSMEs by improving their processes,
designs, technology and market access.

• It envisages substantial investments towards enhancing the entire value chain of the MSME sector.

These include:
 Quality Management Systems and Quality Technology Tools;
 Design Clinic Scheme;
 Building Awareness on IPRs;
 Support for Entrepreneurial and Managerial Development;
 Marketing Support/Assistance to MSMEs;
 Setting up of New Mini Tool Room;
 Lean Manufacturing Competitiveness Scheme.
Credit Linked Capital Subsidy Scheme (CLCSS)

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 ZED (Zero Defect Zero Effect) Certification Scheme
• Envisages to develop an Ecosystem for Zero Defect Manufacturing in MSMEs by promoting
adaptation of Quality tools and Energy Efficient manufacturing.

• Supports Make in India campaign

• MSMEs will have to compete to bag gold, silver or bronze quality certification in order to get
contracts.

• Handholds MSMEs to deliver quality products using clean technology.

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 ZED (Zero Defect Zero Effect) Certification Scheme
• Financial assistance is provided to MSMEs for the activities to be carried out for ZED
certification.

• This includes assessment/rating, gap analysis, handholding and consultancy for

improving the rating of MSMEs by consultants.

• Quality council of India (QCI) is appointed as the National Monitoring and

Implementing(NMIU) for implementing of ZED.

• QCI aims to certify minimum 22,000 MSMEs with the bronze level under the ZED
scheme.

• QCI is set up jointly by the government and industry for establishing a national
accreditation structure and promote standards.

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 Technology Upgradation and Enhancing Competitiveness

• The MSME ministry is focusing on high-end skilling and technical support

through 18 Tool Rooms and Technology Development Rooms across the country.

• The MSME has allocated Rs.2200 crore with funding support from the World
Bank to upgrade some of the existing and establish 15 new Technology Centers
(TCs) under Technology Center Systems Project (TCSP) to improve the overall
productivity of MSMEs.

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 Accessing Finance

We shall discuss the following schemes under this area:

Credit Guarantee Scheme for Micro and Small Enterprises

MUDRA Scheme (Micro-Units Development & Refinance Agency)

Stand-Up India

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 Credit Guarantee Scheme for Micro and Small Enterprises

The CGTMSE has recorded a cumulative 23,23,673 loan guarantees amounting to Rs. 1,08,991 crore till
the end of FY 2015-16.

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MUDRA Scheme (Micro-Units Development & Refinance Agency)

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 MUDRA Scheme (Micro-Units Development & Refinance Agency)

Latest data:
• A total of 3.9 lakh crores of rupees has been disbursed under MUDRA scheme.

• 9.3 crore beneficiaries of MUDRA loans have not only employed themselves,
rather they have created many more jobs.

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 Stand-Up India Scheme

• Launched on 5th April, 2016.

• Objective: Facilitate bank loans between Rs. 10 Lakh to Rs.100 Lakh to at least
one SC or ST borrower and at least one women borrower per bank branch of all
scheduled commercial banks for setting up of a green field project.

• This enterprise may be in the manufacturing, services or the trading sector.

• It is based on the recognition of the challenges faced by SC, ST and women

entrepreneurs in setting up enterprises, obtaining loans and other support
needed from time to time for succeeding in business.

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Yojana (November, 2017) - MSMEs

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Thank You! Happy Learning!

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Yojana – November 2017
Micro, Small and Medium Enterprises

www.edutap.co.in
 How Yojana will be covered?

Part - 1: Video + PDF

Part - 2: Video + PDF
Part - 3: Video + PDF

MCQs: Document

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 Access to Market

We shall discuss the following schemes under this area:

Marketing Assistance Scheme (MAS)

Revised Marketing Assistance and Technology Up-gradation (MATU) Scheme (For

Domestic Market and International Market)

Public Procurement Policy

National SC-ST Hub (NSSH)

Preference in Government Procurement

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 Marketing Assistance Scheme (MAS)
• Aims to help MSMEs to participate in domestic and international
exhibitions/trade fairs/buyers-sellers meets, campaigns/seminars and consortia
formation.

• Implemented through National Small Industries Corporation (NSIC), a public

sector enterprise of the MSME ministry.

• Though the entire MSME sector is catered to, special emphasis is given to
marketing of products and services of Micro and Small Enterprises, in rural as well
as urban areas.

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Marketing Assistance Scheme (MAS)

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 Revised Marketing Assistance and Technology Up-gradation
(MATU) Scheme
Domestic Market:

• Financial support is provided to participate in State/District level local

exhibitions/trade fairs.

• The implementation authority is MSME Development Institute (MSME-DI).

International Market:

Aims to encourage manufacturing Micro and Small Enterprises (MSEs) in their

efforts of tapping and developing overseas markets.

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Revised Marketing Assistance and Technology Up-gradation (MATU)
Scheme
The Scheme comprises of the following activities:

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 Public Procurement Policy
• The Government of India has introduced Public Procurement Policy for MSEs Order
2012.

• It is applicable to all Central Ministries/Departments/Central Public Sector Enterprises

(CPSEs).

• It is effective from April 1, 2012.

• What is this policy? Under this policy, every Central Government Ministry, Department
and Public Sector Undertakings shall procure a minimum of 20 percent of their total
annual value of goods or services from Micro and Small Enterprises (MSEs).

• Out of this 20 percent, it is mandatory to earmark 4 percent for MSEs owned by SC/ST
entrepreneurs.

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 National SC-ST Hub (NSSH)
• Formed to promote the entrepreneurship culture for SC-STs by providing the SC/ST enterprises
with professional support.

• Launched in October, 2016.

• The outlay for the scheme is Rs.490 crore (2016-2020).

• The hub is currently operational from National Small Industries Corporation (NSIC), a CPSE under
MSME Ministry.

• A Special Credit Linked Capital Subsidy Scheme (SCLCSS) has also been formed under the hub to
facilitate the purchase of Plant and Machinery by existing as well new SC-ST enterprises.

• It envisages the upfront capital subsidy amount of 25 percent.

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 Preference in Government Procurement
A new preferential policy has been made by the government, implemented by making General
Financial Rules (GFR).

What is it?

• In procurement of goods for Rs.50 lakhs and less, and where the Nodal Ministry determines that
there is sufficient local capacity and local competition, only local suppliers will be eligible.

• For procurement valued at more than Rs.50 lakhs (or where there is insufficient local
capacity/competition) if the lowest bid is from a non-local supplier who is within a margin of 20%
of the lowest bid, will be given the opportunity to match the lowest bid.

How will it help?

Procurement of domestic goods would go a long way in encouraging domestic industry in general
and Small Scale Industry in particular.

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 Strengthening Infrastructure
Adopting Cluster based approach:

Why?

Due to lack of capital, the MSEs are generally not in a position to get access to latest tools
and techniques, thereby compromising on the quality of their end product.

How does this approach help?

• Cluster Development programs aim at the creation of tangible assets like Common
Facility Centers (CFC), getting access to latest tools, technology, designs, testing facilities
etc for such enterprises.

• This encourages co-operative behavior, yet infuses a sense of competition amongst the
firms present at the cluster level for doing business.

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 Strengthening Infrastructure

There are two schemes which have been implemented to encourage this cluster
based approach:

• MSE Cluster Development Programme (MSE – CDP)

It envisages soft interventions i.e. diagnostic studies, hard interventions i.e. setting
up of Common Facility Centers and Infrastructure Development in new / existing
industrial estates.

• Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

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 Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
Objectives:

• To organize the traditional industries and artisans into cluster to make them
competitive;

• Provide support for their long term sustainability, sustained employment;

• To enhance marketability of product of such clusters;

• To equip traditional artisans of the associated cluster governance systems with the
active participation of the stakeholders;

• To build up innovated and traditional skills, improved technologies, advanced processes,

market intelligence and new models of cluster based regenerated traditional industries.

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 Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
The nodal agencies include KVIC, Coir Board, IIE Guwahati, NIMSME Hyderabad, NIESBUD
Noida, all MSME Dis and all DICs of State Government.

Major achievements so far include:

71 clusters have been given in-principal approval by Scheme Steering Committee (SSC)
and 32 DPRs have been given Final approval.

As of now, 30438 artisans have been benefitted.

Future target for setting up of 800 clusters of Khadi, Village Industries and Coir with an
outlay of Rs.850.00 crore to cover around 4 lakh artisans.

Assistance from Multilateral Development Bank like ADB (Asian Development Bank) is
being explored to carry out the mandate.

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 Employment Generation and Skill Development

The following are initiatives taken in the field of Employment Generation and
Skill Development:

Prime Minister’s Employment Generation Programme:

• It is a flagship scheme of the Ministry, whereby micro-enterprises are set up

every year creating employment opportunities across the country.

• Major objective is to generate employment opportunities in rural as well as

urban areas of the country through setting up of new self-employment
ventures/projects/micro-enterprises.

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 Employment Generation and Skill Development

Skill Based Training & Entrepreneurship Development Programmes (EDPs):

Various Entrepreneurship Development Programmes (EDPs) and Vocational Training

Programmes have been conducted by Ministry of MSME through the office of
Development Commissioner (MSME) in various sectors and trade.

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 Employment Generation and Skill Development

Skill Centre in North-East

• The Government of Singapore will set up a Skill Centre at Guwahati by the year
2019 which will cater to the entire North-Eastern region.

• The Ministry of Development of North Eastern Region (DoNER), will coordinate in

this initiative.

• An MoU has been formalized between Singapore and the State Government of
Assam in this regard.

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 Employment Generation and Skill Development

TREAD Scheme: (Trade Related Entrepreneurship Assistance and Development

Scheme)

• It envisages the economic empowerment of women through the development of their

entrepreneurial skills in non-farm activities by providing them trade related training,
information and counselling extension activities related to trade, products and services.

• Under this scheme financial loans are provided by nationalized banks and grants by the
government of India at the rate of 30 percent of the loan subject to maximum limit of
Rs.30 lakh through NGOs for capacity building and for undertaking self-employment
ventures.

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Yojana (November, 2017) - MSMEs

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Thank You! Happy Learning!

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Yojana – November 2017
Micro, Small and Medium Enterprises

www.edutap.co.in
 How Yojana will be covered?

Part - 1: Video + PDF

Part - 2: Video + PDF
Part - 3: Video + PDF

MCQs: Document

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 Other Schemes and initiatives

Let us have a look at some other

important schemes and initiatives.

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 Udyog Aadhaar Memorandum (UAM)
What is it?

• It is a one-page registration form for the Micro, Small and Medium Enterprises to get registered under
MSME.

• It is a replacement of the previous system where lots of documents and details were needed.

• It constitutes a self-declaration format under which the MSME will self-certify its existence and other
minimum information required.

Why the need?

• The MSME need to be registered under the MSME for enjoying the benefits provided under various
government schemes in the industry.

• But because of cumbersome paperwork involved in the process, a large chunk of enterprises are not
registered in India. To make the registration process simpler UAM is constituted.

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 Udyog Aadhaar Memorandum (UAM)

The Salient Features of the UAM are:

Single Page Online Registration-Mobile Friendly

Self Certification

No Documents required

No fees for Udyog Aadhar

The MSME Ministry has set up the infrastructure i.e the Udyog Aadhar Portal (UA
Portal) for online filing of UAM by enterprises located anywhere in the country.

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 National Institute for Micro, Small and Medium Enterprises (NI-
MSME)

• It is the nodal training, research and consultancy wing under the aegis of Ministry
of Micro, Small and Medium Enterprises.

• It was earlier set up in the year 1960 as Central Industrial Extension Training
Institute (CIETI) in New Delhi.

• Later after 2007 it came to be known as NI-MSME.

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National Institute for Micro, Small and Medium Enterprises (NI-
MSME)

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 SIDBI’s (Small Industries Development Bank of India) Role in
promoting MSMEs

SIDBI Foundation for micro-credit (SFMC):

• It was setup with a mission to create a network of strong, viable and sustainable
Micro Finance Institutions (MFI) for providing Micro Finance Services to the
economically disadvantaged sections of the society.

MUDRA (Micro Unit Development Refinance Agency Limited) has been set as a
wholly owned subsidiary of SIDBI:

• The main aim of MUDRA limited is to refinance the Micro Lending Institutions.

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 SIDBI’s (Small Industries Development Bank of India) Role in
promoting MSMEs
 ASPIRE Scheme: (A Scheme for Promoting Innovation and Rural Entrepreneurship)

• Launched in 2015 by the MSME Ministry.

Planned outcomes of the scheme are:

 Setting up Technology Business Incubators (TBI)

 Livelihood Business Incubators (LBI)

 Creation of fund of funds for such initiatives with SIDBI

• So, a fund of fund of Rs.60 Crore has been created by SIDBI.

• The fund would invest in various venture capital funds with investment focus on start-ups and
early stage enterprises in the areas of Rural and Agro Industries.

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 Relief for Small and Medium Enterprises by GST Council
Composition Scheme: The Composition scheme shall be made available to taxpayers having an
annual aggregate turnover of up to Rs. 1 crore as compared to the current turnover threshold of Rs.
75 lakh.

**The upper limit has again been revised to Rs.1.5 Crore (As per the decision taken on 10th
November, 2017.

Composition Scheme: Under this scheme, a taxpayer will pay tax as a percentage of his/her
turnover during the financial year without the benefit of Input Tax Credit. The floor rate of tax
for CGST and SGST shall not be less than 1%. A taxpayer opting for composition scheme will not
collect any tax from his/her customers.

When the eligible taxpayer is opting for the Composition Scheme under GST, a taxpayer has to file a
summarized returns on a quarterly basis, instead of three monthly returns (as is applicable for
normal businesses).
 Relief for Small and Medium Enterprises by GST Council
Facilitating Ease of Doing Business:

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 Way Forward

• To help India sustain a growth rate of 8-10 percent, a strong and vibrant MSME
sector is required.

• MSME Sector has shown an average growth of 18% over the last five years.

What is required?

Sensitization and handholding of MSMEs at various level is required.

Indian MSMEs have the potential to become global enterprises. To manifest this,
MSMEs need to invest in quality certifications and R&D.

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 Way Forward
There is a need to redefine MSMEs:
• In 2015, the Government did move a bill in Parliament to amend the MSMED
Act, 2006.
• The bill is still pending in the Parliament.
• The existing limits under the MSMED Act were fixed almost 11 years ago.
• Since then there has been a significant increase in the price index and cost of
inputs.
• There has also been change in the business environment as many of the MSMEs
have become a part of the global value chain.

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Yojana (November, 2017) - MSMEs

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Thank You! Happy Learning!

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