Home / Scheme for Development of MSME
Scheme for Development of MSME
The Government of India has introduced Micro, Small and Medium Enterprises Development Act, 2006 for the purpose of developing the Micro, Small & Medium Enterprises in India. This Act seeks to facilitate the following:
- Promotion and development and enhancing competitiveness of these enterprises.
- Statutory consultative mechanism at the national level with wide representation of all sections of stakeholders, particularly the three classes of enterprises; and with a wide range of advisory functions.
- Establishment of specific Funds for the promotion, development and enhancing competitiveness of these enterprises, notification of schemes/programmes for this purpose,
- Progressive credit policies and practices, preference in Government procurements to products and services of the micro and small enterprises,
- Effective mechanisms for mitigating the problems of delayed payments to micro and small enterprises and
- Simplification of the process of closure of business by all three categories of enterprises are some of the other features of this legislation.
The Act provides for classification of enterprises into three categories i.e. Micro, Small & Medium based on the nature of business and investment in their plant and machinery, which is outlined below
| Manufacturing Sector |
| Enterprises |
Investment in plant & machinery |
| Micro Enterprises |
Does not exceed Rs 25 lacs |
| Small Enterprises |
More than Rs 25 lacs but does not exceed Rs 5 Cr |
| Medium Enterprises |
More than Rs 5 cr but does not exceed Rs 10 Cr |
| Service Sector |
| Enterprises |
Investment in equipments |
| Micro Enterprises |
Does not exceed Rs 10 lacs |
| Small Enterprises |
More than Rs 10 lacs but does not exceed Rs 2 Cr |
| Medium Enterprises |
More than Rs 2 Cr but does not exceed Rs 5 Cr |
Process of setting up business:
Setting up Business is an important decision and it involves considering various types of factors and any wrong decision, may affect the business on a long term. Therefore in order to know everything about setting up business in India, please use the “Start Your Business” or click here.
Registration of MSME
The Government of India has provided various schemes for the development of MSME and in order to avail the various schemes, it is necessary to register the unit with the District Industries Department of the place, where the unit is situated by filling an Entrepreneurs Memorandum. It is to be noted that registration is not compulsory except for medium enterprise engaged in the manufacture or production of goods. Form of the Entrepreneurs Memorandum can be downloaded from www.laghu-udyog.com or www.smallindustryindia.com.
The form of Memorandum is in two parts. Any person who intends to establish a micro, small or medium enterprise engaged in providing or rendering of services may file or those who want to establish medium enterprise engaged in the production or manufacture of products shall file Part 1 of the Entrepreneurs Memorandum to District Industries Centre.
Once the above enterprises start production or start providing or rendering services, they should file Part II of the Entrepreneurs Memorandum to District Industries Centre. In case of non-filing of Part II of the Entrepreneurs Memorandum within two years of the filing of Part I, the Memorandum (Part I) filed by the entrepreneur will become invalid.
In case of change in the investment in plant and machinery or in equipment, the enterprises who have already filed Entrepreneurs Memorandum should inform the District Industries Centre of the same in writing within one month of the change in investment.
In case of change of products and that of services or addition in products or services, the enterprises who have already filed Entrepreneurs Memorandum should inform the District Industries Centre of the same in writing within one month of the change.
Nodal Agencies for development of MSME:
Scheme for Development of MSME:
 |
Price Preference Policy |
|
Technology up-gradation & Productivity Enhancement
|
|
Financial Assistance
|
|
Marketing Assistance
|
|
Schemes of NSIC
|
Price Preference Policy
The Price Preference Policy is the Governments efforts towards providing marketing efforts for small scale units. Under the Price Preference Policy, the Director General of Supplies and Disposals, which is the Central Purchasing Organisation of Government of India provides a number of facilities to SSIs under its Government stores Purchase Programs. These include reservation of certain products for exclusive products from the SSIs sector and price preference up to 15 % in the case of selected items, which are produced in both large scale as well as small scale units.
 To know more
Technology up-gradation & Productivity Enhancement
Credit Linked Capital Subsidy Scheme
- The Scheme aims at facilitating technology upgradation by providing upfront capital subsidy to SSI units, including tiny, khadi, village and coir industrial units, on institutional finance (credit) availed of by them for modernisation of their production equipment (plant and machinery) and techniques.
- The Scheme (pre-revised) provided for 15 per cent capital subsidy to SSI units, including tiny units, on institutional finance availed of by them for induction of well established and improved technology in selected sub-sectors/products approved under the Scheme. The eligible amount of subsidy calculated under the pre-revised scheme was based on the actual loan amount not exceeding Rs.40 lakh.
To know more..
ISO 9000/ISO 14001 Certification Reimbursement Scheme
- The Scheme envisages reimbursement of charges of acquiring ISO-9000/ISO-14001/HACCP certifications to the extent of 75% of the expenditure subject to a maximum of Rs. 75,000/- in each case. The Scheme is valid upto 31st March'2012.
- The Permanent Registered Small Scale/ancillary/Tiny/Small Scale Service Business Enterprises (SSSBE) units are eligible to avail the Incentive Scheme.
- The Scheme shall provide one time reimbursement only against a Entrepreneurship Memorandum Number. The amount of incentive/subsidy/grant already availed for acquiring ISO 9000 or ISO 14001/HACCP Certification under any Central Govt. (including DC(MSME) Incentive Scheme)/State Govt. /Financial Institution shall be adjusted against the entitlement of reimbursement.
It means the total entitlement of reimbursement of acquiring one or more than on certifications shall be up to the maximum limit of Rs. 75,000/- only. In case a unit has received reimbursement/subsidy/grant from Central Govt./State Govt./Financial Institution against any one of the certifications for an amount less than maximum limit of Rs. 75,000/-, the unit shall be eligible to receive the balance amount only.
To know more..
Financial Assistance
Credit Guarantee Fund Scheme
- The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) was launched by the Government of India to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme.
- The Ministry of Micro, Small and Medium Enterprises and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises
- The credit facilities which are eligible to be covered under the scheme are both term loans and working capital facility up to Rs.100 lakh per borrowing unit, extended without any collateral security or third party guarantee, to a new or existing micro and small enterprise.
- The guarantee cover available under the scheme is to the extent of 75 per cent of the sanctioned amount of the credit facility. The extent of guarantee cover is 80 per cent for (i) micro enterprises for loans up to Rs.5 lakh; (ii) MSEs operated and/or owned by women; and (iii) all loans in the North-East Region.
To know more..
Composite Loan Scheme
- The Scheme envisages sanction and disbursement of working capital and term loan together from a single agency. The limit for composite loans has been enhanced to Rs. 25 lakhs in the Comprehensive Policy Package.
- The Scheme is operated both by banks and financial institutions. State Financial Corporations under Single Window Scheme provide working capital loan along with term loan to new tiny and small scale sector units so as to overcome the initial difficulties and delays faced by them to start production expeditiously.
- Eligibility Criteria
- Debt-equity Ratio
3:1 in the total venture of outlay (i.e., cost of the project plus working capital requirement) after taking into account the amount of investment/subsidy/incentive available for the project.
- Promoter's Contribution As may be required to arrive at the Debt Equity ratio of 3:1
- Margin for Term Loan -All backward areas in the State 25% - Other areas and Municipal limits of all cities of the state 30%
- Interest rate is around 12-15%
- Repayment Working Capital Component - Not exceeding 10 years (including moratorium upto 13 years)
- Term Loan Component - Not exceeding 8 1/2 years (including moratorium of 18 months)
Security
Corporation will have first charge on fixed assets and hypothecations of the current asset. Corporation may also ask for Collateral Security against Working Capital Loan.
Marketing Assistance
Market Development Assistance Scheme
- The scheme offers funding for participation by manufacturing Small & Micro Enterprises in International Trade Fairs/ Exhibitions under MSME India stall.
- Unit having valid permanent registration with Directorate of Industries/ District Industries Centre are eligible participate in this scheme.
- The selection of small/ micro manufacturing units would be done by MSME-DIs as per display product profile, theme of the fair and space availability.
- Micro & Small manufacturing enterprise can avail this facility only once a year
- Only one person of the participating unit would be eligible for subsidy on air fare.
To know more..
Financial Assistance on Barcode
Bar codes are the series of black lines and white spaces printed on product packages or attached as tags which you would have noticed on consumer products. Information on a product or a consignment like its item code or serial number, expiry date, consignor/ consignee etc., can be represented through such bar codes. When these bar codes are scanned using a scanner, it enables instantaneous data capture with 100% accuracy and at great speeds.
Guidelines for financial assistance:
- Providing 75% of one time registration fee and annual recurring fee (for first three years) paid by MSEs to GS1 India.
- MSEs who have Entrepreneurial Memorandum Part-II acknowledgement number from Directorate of Industries/ District Industries Centers and also have registration with GS1 India for use of Bar Codes are eligible for 75% reimbursement of one-time registration fee and annual recurring fee (for first three years) paid by them to GS1 India.
To know more..
Schemes of NSIC
Bank Credit Facilitation Scheme
NSIC has tie up with commercial banks namely Central Bank of India, Axis Bank, Yes bank, Bank of Maharashtra, Oriental Bank of Commerce, HSBC, United Bank of India, and Chinatrust Commercial Bank for sanction of term and working capital facilites as per the requirement of Micro,Small & Medium Enterprises.
To know more..
Export Credit Insurance
NSIC in its new role of facilatators to small and medium enterprises has initiated a new action by entering into an arrangement with ECGC of India Ltd.
To know more..
Credit Rating
Need of a Performance and Credit Rating Mechanism for SSIs was highlighted in Union Budget’04-05. A scheme for SSIs has been formulated in consultation with Indian Banks’ Association (IBA) and Rating Agencies. NSIC has been appointed the nodal agency for implementation of this scheme through empanelled agencies.
Benefits of Performance and Credit Rating
- An independent, trusted third party opinion on capabilities and credit-worthiness of SSIs
- Availability of credit at attractive interest
- Recognition in global trade
- Prompt sanctions of Credit from Banks and Financial Institutions
- Subsidized rating fee structure for SSIs
- Facilitate vendors/buyers in capability and capacity assessment of SSIs
- Enable SSIs to ascertain the strengths and weaknesses of their existing operations and take corrective measures.
Benefits to Banks and Financial Institutions
Availability of an independent evaluation of the strength and weaknesses of an SSI unit seeking credit and thereby enabling banks and financial institutions manage their credit risk
To know more..
Raw material assistance
Raw Material Assistance Scheme aims at helping Small Scale Industries/Enterprises by way of financing the purchase of Raw Material (both indigenous & imported). This gives an opportunity to SSI to focus better on manufacturing quality products.
Benefits of the Scheme:
- Financial Assistance for procurement of Raw Material upto 90 days.
- SSI helped to avail Economics of Purchases like bulk purchase; cash discount etc
- NSIC takes care of all the procedures, documentation & issue of Letter of credit in case of imports.
To know more..
Exports
NSIC is a recognized Export House. NSIC, on behalf of small industries, is exporting products and projects around the globe. The major areas of operation are:
- Export of Indian products like handicrafts, leather items, hand tools etc.
- Supply of Small Industry Projects on turnkey basis.
- Export of IT solutions from India.
- Export of Relief supplies from India to UN and other International Agencies.
To know more..
Bill Discounting Scheme
The Scheme covers purchase / discounting of bills arising out of genuine trade transactions i.e. purchase of supplies made by small scale units to reputed Public Limited Companies / State and Central Govt. Departments / Undertakings.
To know more..
Government Stores purchases program
The Government is the single largest buyer of a variety of goods. With a view to increase the share of purchases from the small-scale sector, the Government Stores Purchase Programme was launched in 1955-56. NSIC registers SSI units under Single Point Registration scheme for participation in Government Purchases.
Benefits of Registration
- Issue of tender sets free of cost.
- Advance intimation of tenders issued by DGS&D.
- Exemption from payment of earnest money.
- Waiver of security deposit up to the monetary limit for which the unit is registered.
- Issue of competency certificate in case the value of an order exceeds the monetary limit, after due verification.
To know more..
Exhibitions
NSIC organises and participates in domestic and specialised product & technology related international exhibitions to help SSIs in marketing their products and projects in both national and international arenas. Besides this, NSIC has its own state-of the-art Exhibition Ground in New Delhi(Okhla Ind Estate). The ground has 1500 sq. mtrs of covered sapce and about 15000 sq. mtrs of open space in addition to ample parking for about 1000 vehicles. The facilities at the ground are available to exhibition/event organisers.
Objective of Exhibitions:
- Marketing of products and projects of SSIs
- Closer interaction between technology seekers and offerers.
- Development of mutual contact to discuss all issues involving technology transfer, technical collaboration etc.
To know more..
Infomediary Services
Information today is becoming almost as vital as the air we breathe. We need it every minute of our working lives. And with the increase in competition and melting away of international boundaries, the demand for information is reaching new heights.
Keeping in mind the information needs of small industries NSIC has launched "Infomediary Services". A one-stop, one-window bouquet of aids that will provide information on business, technology and finance, and also exhibit the core competence of Indian SMEs in terms of price and quality-internationally, as well as domestically.
NSIC's Infomediary Services use a professionally managed HR base and modern technology for dissemination of vital information-websites, sector-specific newsletters (both print and electronic), and e-mails. Potential beneficiaries would be entrepreneurs-both existing and aspiring-R&D labs, SME seeking business collaboration and co-production opportunities, joint ventures, exporters and importers, and those looking for technology transfer.
Salient Features
- Tender Information in your e-mail box and web based browsing
- Banner display on NSIC's website
- Concessions on Apollo Hospitals Medical Facilities.
- Concessions on hotel reservation in select hotels.
- Access to a wide rang of technologies from India and abroad.
- Access to national and international business leads, JV opportunities and trade information.
- Information on Trade and events.Comprehensive information on Government policies, rules and regulations, schemes and incentives. Access to industrial databases and members' directory.
- Access to NSIC's Business Centre with facilities such as conference hall, fax, telephone, photocopy and A/V aids etc.
To know more..
Tender Marketing
The Corporation participates in bulk global tender enquiries and local tenders of Central & State Government and Public Sector Enterprises on behalf of small scale units. It is aimed to assist SSIs with ability to manufacture quality products but which lack brand equity & credibility or have limited financial capabilities. Under this scheme, the Corporation has identified large number of items for which it actively participates in tenders of these Departments and Enterprises. On receipt of the orders, Corporation farms out these orders to the units on whose behalf it has quoted. This assistance has enabled a large number of small units to compete for the orders which are normally out of reach of the individual units because of the bulk requirement.
To know more..
Technology
NSIC provides technical support to SSIs through 'NSIC Technical Services Centres' and a number of extension and sub centres spread across the country. The range of technical services provided through these centres include training in Hi-Tech as well as conventional trades, testing, common facilities, toolkits, energy audit, environment management etc.
In addition to this access to latest information in connection with technology upgradation and its transfer is provided to SSIs through the 'Technology Transfer Centre' at New Delhi.
To know more..
| 
