Govt Schemes for MSME Sector Post COVID-19 are they enough ?

Govt Schemes for MSME Sector Post COVID-19 are they enough ?

The COVID-19 pandemic has caused unprecedented disruptions to businesses across the world, with micro, small, and medium enterprises (MSMEs) being one of the worst affected. In India, MSMEs contribute significantly to the economy and provide jobs to millions of people. To support them during these difficult times, the Indian government has launched several schemes and initiatives to revive the MSME sector.

One of the most significant schemes is the Atmanirbhar Bharat Abhiyaan, launched by the government in May 2020. The scheme aims to make MSMEs self-reliant by providing them with financial aid and other forms of support. The scheme has several components, including collateral-free loans, equity infusion, and technology upgradation.

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Collateral-Free Loans :

Under the Atmanirbhar Bharat Abhiyaan, the government has announced a collateral-free loan scheme for MSMEs. The scheme is aimed at providing much-needed liquidity to the businesses that have been affected by the pandemic. The loans are being provided through banks and non-banking financial companies (NBFCs), with the government providing a 100 percent guarantee to the lending institutions.

The loans are available to MSMEs that have a turnover of up to Rs 250 crore and have an outstanding debt of up to Rs 25 crore as of February 29, 2020. The loans can be used to cover operational expenses, repayment of existing debt, and other business purposes.

Equity Infusion :

The Atmanirbhar Bharat Abhiyaan also includes a scheme for equity infusion in MSMEs. Under this scheme, the government will provide equity support to viable MSMEs that have growth potential. The equity infusion will be provided through the Small Industries Development Bank of India (SIDBI), which will operate a Fund of Funds with a corpus of Rs 10,000 crore. The Fund of Funds will provide equity funding to MSMEs through venture capital and private equity funds. The government will contribute 10 percent of the corpus, with the rest being raised from institutional investors such as Multi-National Development Banks (MNDBs), pension funds, and corporations. The equity infusion will enable MSMEs to expand their operations and enhance their competitiveness in the market.

Technology Upgradation :

The pandemic has highlighted the importance of technology in business operations, and the Atmanirbhar Bharat Abhiyaan also includes a scheme for technology upgradation in MSMEs. Under this scheme, the government will provide support to MSMEs to adopt digital technologies and improve their competitiveness. The scheme will be implemented through the Technology Centre Systems Programme, which is a flagship scheme of the Ministry of MSMEs. The programme aims to establish new technology center's and upgrade the existing ones to provide high-quality technology services to MSMEs. The government will provide financial assistance of up to 70 percent of the project cost for setting up new technology center's and up to 50 percent of the project cost for upgrading existing ones.

Other Schemes and Initiatives :

Apart from the Atmanirbhar Bharat Abhiyaan, the Indian government has launched several other schemes and initiatives to support MSMEs post COVID19. Some of these schemes include:

1.    MSME Sampark: This is an online platform that enables MSMEs to connect with other MSMEs and with government agencies for information, advice, and support.

2.    Champions: This is a portal launched by the Ministry of MSMEs to resolve problems faced by MSMEs. The portal provides a single window system for grievance redressal and query resolution.

3.    Aatmanirbhar Bharat Rozgar Yojana: This scheme provides incentives to MSMEs for hiring new employees. The government will contribute 12 percent of the employer's contribution towards the Employees' Provident Fund (EPF) for the first three years of employment for new employees.

4.    Emergency Credit Line Guarantee Scheme: This scheme provides additional credit to MSMEs impacted by COVID-19. The scheme provides a 100 percent credit guarantee to lending institutions, enabling them to provide up to 20 percent additional credit to existing borrowers.


The COVID-19 pandemic has created unprecedented challenges for MSMEs in India. To support these businesses, the Indian government has launched several schemes and initiatives aimed at providing financial assistance, technology upgradation, and other forms of support. These initiatives are expected to help revive the MSME sector, enabling the businesses to recover from the impact of the pandemic and emerge stronger in the post-COVID world. With the right support and intervention, the MSME sector in India has the potential to become a vital contributor to the country's growth and development.

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