Empowering India's Growth Engine: The Strategic Role of MSMEs and the Atmanirbhar Stimulus
In the mix of all the industries and businesses that boost India's growing economy, the Micro, Small, and Medium Enterprises (MSMEs) are like the hidden stars. Often called the main support of the Indian economy, they play a big part in guiding how the country's economy moves forward.
The Rise of MSMEs: Catalysts for Economic Growth
MSMEs play a pivotal role in India's economy. Not only do they help it grow, but they also contribute significantly to the country's taxes. When you look at employment, almost half of the people working in the industrial sector have jobs because of MSMEs. Furthermore, when it comes to exporting goods from India to other countries, half of it comes from these enterprises.
Their diversity is particularly impressive. With over 6000 different products coming from MSMEs, it's evident that they're a hub of creativity and innovation. Whether it's traditional crafts or modern tech products, MSMEs cover a wide range. This variety plays a crucial role in meeting the diverse needs of both domestic and international markets.
Moreover, the MSME sector is a major source of entrepreneurship, driven by individual creativity and innovation. This sector not only ensures the widespread distribution of wealth and income but also helps in the effective utilization of resources like manpower, technology, and capital available in the country.
Udyog Aadhaar MSME Registration: A Gateway for Startups
For startups, the key to harnessing the potential of the MSME sector lies in obtaining the Udyog Aadhaar MSME Registration. This registration has emerged as a beacon of hope for startups grappling with the perennial issue of delayed bill realizations, especially from large corporate entities and government organizations. The MSME SAMADHAAN initiative, established under the Micro, Small and Medium Enterprises Development Act of 2006, serves as a protective measure against payment delays. This provision ensures that buyers who delay payments beyond 45 days face a penalty in the form of compounded interest, set at three times the bank rate as notified by RBI. For more insights and dispute settlements related to delayed payments, startups can reach out to the Micro and Small Enterprise Facilitation Council (MSEFC). Learn more about this here.
Support for MSMEs: Fostering Innovation
Recognizing the untapped potential and creativity of individuals, the government has initiated support for Entrepreneurial and Managerial Development of MSMEs through Incubators. This initiative welcomes innovative business ideas at the cusp of commercialization. The scheme aims to foster the adoption of the latest technologies in manufacturing and knowledge-based innovative MSMEs. You can dive deeper into this scheme here.
There are no specific qualifications required to become an incubatee. However, MSME should have valid Udyog Aadhar Memorandum (UAM) and individuals should have Aadhar card number.
- Financial assistance up to 15 lakh for developing and nurturing an idea.
- Financial assistance up to 1.00 Cr. for procurement and installation of Plant and Machines in BI in order to strengthen the technology related R&D activities of BI.
- Financial assistance of up to 1.00 Cr. as grants in aid for the seed capital support to HIs/BIs for converting deserving ideas in to start-ups
Other Benefits
- MSME registration helps in getting government tenders
- Under bank loan, 15% import subsidy on fully automatic machinery
- Becomes easy to get licenses, approvals and registrations, irrespective of field of business
- Compensation of ISO certificate expenditure
- Helps in getting low interest rates
- Registered MSMEs benefit from tariff subsidies, as well as tax and capital subsidies.
- Gets exemption under Direct Tax Laws
- Guarantee free and collateral free loans amounting to total Rs. 3.00 Lakh crores have been announced. It is also good that there will be a moratorium of 12 months on payment of Principal with Tenor for 4 years and Scheme can be availed till 31st Oct 2020.
- In Government procurement, there would be no global tendering upto Rs. 200 crores. This will help domestic companies in general and on the other hand it will also help the MSMEs of the country in particular.
- It is mandatory for the Departments of Government of India and the CPSEs (Central Public Sector Enterprises) to pay the receivables to MSMEs within the next 45 days. This will greatly help easing the situation of working capital of the MSMEs.
- To generate leads and business E-market linkage for MSMEs to be promoted to act as a replacement for trade fairs and exhibitions.
- Fintech will be used to enhance transaction based lending using the data generated by the e-marketplace.
99% of the startups will come under new definition of MSME.
MUDRA Loan: Empowering Entrepreneurs Dreams
To further enhance the financial capabilities of MSMEs, the government has introduced the MUDRA loan scheme. This scheme offers three categories of loans:
- Shishu - Loans up to Rs. 50,000.
- Kishor - Loans ranging from Rs. 50,000 to Rs. 5 lakh.
- Tarun - Loans ranging from Rs. 5 lakh to Rs. 10 lakh.
Typically, banks provide loans up to 10 lakhs to Micro Small Enterprises without requiring collateral. Learn more about this here
National Portal for MSME Registration
Last but not least, the Udyog Aadhaar is a 12-digit unique identification number provided by the Ministry of Micro, Small and Medium Enterprises. This initiative, launched in 2015, aims to foster and promote MSMEs across India. For a detailed look into the registration process, visit this link.
