By Confederation of Indian Industry (CII)            

The Ministry of Micro, Small and Medium Enterprises (MSME) is implementing the promotional  schemes for the development of micro, small and medium enterprises in the country.

Promotional Package

In March 2007, the Government announced a comprehensive Package for the Promotion of Micro and Small Enterprises, which comprises of several proposals/schemes having direct impact on the promotion and development of the micro and small enterprises.

These, inter alia, include credit and fiscal support, cluster-based development, infrastructure, technology and marketing support. Capacity building of MSME Associations and support to women entrepreneurs are the other important features of this Package.

Enhanced Credit Flow To The MSE  Sector

For strengthening the delivery of credit to the MSEs, the Government announced a 'Policy Package for Stepping up Credit to Small and Medium Enterprises (SME)' in August 2005 for doubling the credit flow to this sector within a period of five years. This has resulted in a significant increase in the credit flow from Public Sector Banks (PSBs) to the micro and small enterprises (MSE) sector — with the outstanding credit of public sector banks increasing from Rs.58,278 crore at the end of March 2004 to Rs.1,48,651 crore at the end of March 2008.      

Skill Development

The Government has taken up skill development as a high priority area through various measures like enhancing the training capabilities of the Tool Rooms, MSME Development Institutes and other organization under the Ministry of MSME. The agencies under the Ministry of MSME conducted programmes for skill development for nearly 1.8 lakh trainees during 2007-08 and the targets set for 2008-09 is 3 lakh persons. The Ministry of MSME provides all such trainings for SCs/STs, free of cost.  Similar programmes are also being organised for women and other weaker sections of the society free of cost, besides providing a monthly stipend of Rs.500/- per month during the entire period of training.

National Manufacturing Competitiveness Programme

The Government has launched an all-India campaign under the National Manufacturing Competitiveness Programme (NMCP) for the MSMEs, which has specific components that are aimed at enhancing the competitiveness of the enterprise in this sector. There are 10 components of the NMCP, of which 4 have been made operational. These are (i) Quality Management Systems and Quality Technology Tools, (ii) Building awareness on Intellectual Property Rights, (iii) Support for Entrepreneurial and Managerial Development of MSMEs, and (iv) Marketing support/assistance to MSMEs. The remaining 6 components are under various stages of approval.

Credit Linked Capital Subsidy Scheme

To make the Credit Linked Capital Subsidy Scheme (CLCSS) more attractive, the following amendments have been made with effect from 29 September 2005:

(a) the ceiling on loans has been raised from Rs.40 lakh to Rs.1 crore;

(b) the rate of subsidy has been raised from 12 per cent to 15 per cent;

(c) the admissible capital subsidy has now been based on the purchase price of plant and machinery, instead of the term loan disbursed to the beneficiary unit; and

(d) the practice of categorisation of MSEs in different slabs on the basis of their present investment for determining the eligible subsidy has been dispensed with.

MSE-Cluster Development Programme

In the last few years, the Government has been focusing on the strategy of Cluster Development for development of the MSEs - through which different ‘clusters’ and concentrations of enterprises are given the benefit of a whole variety of interventions, ranging from exposure to skill development, from credit to marketing and from technological improvements to better designs and products. About 412 clusters have been approved for interventions under the scheme (including 50 clusters for hard interventions, 152 clusters for soft interventions and 210 clusters for diagnostic studies).

Credit Guarantee Scheme

The Government has set up a Credit Guarantee Fund to provide relief to those micro and small entrepreneurs who are unable to pledge collateral security in order to obtain loans for the development of their enterprises. For making the scheme more attractive to both lenders as well as borrowers, several modifications have been undertaken from time to time, including enhancement in the loan limit from Rs.25 lakh to Rs.50 lakh, reduction in one-time guarantee fee from 2.5% to 1.5%. Efforts made to enhance the awareness have led to increasing the coverage from about 40,000 proposals (for loans of Rs.1000 crore) at the end of March 2004 to more than 1.20 lakh proposals (for loans of over Rs.3500 crore) at the end of October 2008.

Fiscal Benefits

The Government has worked towards enhancing the level of fiscal incentives available to MSEs. Under the General Excise Exemption Scheme, exemption limit has been raised from Rs.1 crore to Rs.1.5 crore and the turnover eligibility limit to avail the exemption benefits has been enhanced from Rs.3 crore to Rs.4 crore.  With effect from 1st April 2005, small service providers having a turnover of up to Rs.4 lakh has been exempted from service tax. This exemption limit has been gradually raised to Rs.10 lakh. In order to encourage small and medium enterprises to invest and grow, the surcharge on all firms and companies with a taxable income of Rs.1 crore or less has been removed with effect from 1st April 2007.

ISO-9000/ ISO-14001/ HACCP Certification Reimbursement Scheme

The Government introduced an incentive scheme for its technological up- gradation/quality improvement and environment management. The Scheme envisages one time  reimbursement of charges for acquiring ISO-9000/14001/HACCP (or its equivalent) certification to the extent of 75% of the cost subject to a maximum of Rs. 75,000/- in total.

The Scheme is an all India Scheme administered by Development Commissioner (MSME), Ministry of MSME, Govt. of India. The scheme has been decentralized w.e.f. 1.4.2007 and Directors, MSME Development Institutes have been empowered to receive and make reimbursement to the MSMEs following in their jurisdiction. The Government has extended the Scheme upto the 11th Five Year Plan and the scheme has been decentralized w.e.f. 1.4.2007.

Total 18002 number of units amounting to Rs. 88.92 cr. have been reimbursed since inception to the scheme in 1994 & upto  November,  2008. During 2008-09, about 900 units amounting to Rs. 3.76 cr. have been reimbursed upto November 08. “Enabling Manufacturing Sector be Competitive through Quality Management Standards(QMS) and Quality Technology Tools(QTT) – Rs. 40.0 Cr in 4 years”.

National Awards

The Prime Minister Dr. Manmohan Singh presented National Awards to the Micro, Small and Medium Enterprises in New Delhi on 30 August, 2008. The Awards were in three categories: a) Outstanding Entrepreneurs of Micro, Small and Medium Enterprises, Khadi and Village Industries and Coir Industries; b) Special awards to Women and SC/ST Entrepreneurs and c) Banks for excellence in Micro and Small Enterprises Lending. Total 80 Entrepreneurs got awards in various categories. 27 Entrepreneurs received awards from the Prime Minister, while Shri Mahabir Prasad Union Minister for Micro, Small and medium Enterprises presented awards to the rest of the awardees. Besides, 50 entrepreneurs have been given away Special Recognition Awards in a State Level Function.

MSME-EXPO 2008

Micro, Small and Medium Enterprises Exhibition was organized by the Office of the Development Commissioner (MSME) during the IITF from 14-27 November, 2008 in the Pragati Maidan, New Delhi. Exhibits of Micro, Small and Medium Enterprises from all over the country were displayed. In addition to this, NSIC  also exhibited the technical capabilities of the MSMEs through TECH MART in IITF 2008. Products of Khadi and Village Industries were exhibited by the Khadi and Village Industries Commission during IITF from 14-27 November, 2008.

National Small Industries Corporation Ltd.

National Small Industries Corporation, since its inception in 1955 has been working with its mission of promoting, aiding and fostering the growth of micro & small enterprises. It has been working to promote the interest of micro & small enterprises and to enhance their competitiveness by providing integrated support services under Marketing, Technology, Finance and Support services. Marketing Assistance  Scheme aims to promote marketing efforts and enhance the competency of the small enterprises. During the year 2008-09, NSIC has organized / participated in 19 exhibitions / trade fairs/ buyer-seller meets upto September, 2008.  NSIC has also conducted 368 intensive campaigns / marketing promotion seminars all over the country upto November, 2008.

Note: The author is from media desk of Confederation of Indian Industry, New Delhi.

The views expressed by the author in this feature are entirely his/ her own and do not necessarily reflect the views of SME Times.