- MSME in India
MSME is initiated and managed under the Ministry of MSME (MoMSME) are entities engaged in the production, manufacturing, processing, or preservation of goods and commodities.The term Micro Small and Medium Enterprise (MSME) was launched to become an integral part of the supply chain for products and services and; moreover, a creator of large-scale employment opportunities in rural India. MSME sector is considered the backbone of the Indian economy.
- MSME Schemes:
The government has introduced many schemes to encourage the micro and small industries. Through schemes such as Micro Units Development Refinance Agency Bank (MUDRA) and Credit Linked Capital Subsidy Scheme for Technology Upgradation (CLCSS), the Central government is boosting the credit availability for the MSMEs.
- Let us have a brief discussion on Micro & Small Enterprises Cluster Development Programme(MSE-CDP) Scheme:
Objective:
- To support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills & amp; quality, market access, etc.
- To create/upgrade infrastructural facilities in the new/ existing Industrial Areas/Clusters of MSEs.
- To set up Common Facility Centres (for testing, training, raw material depot, effluent treatment, complementing production processes, etc).
- Promotion of green & sustainable manufacturing technology for the clusters.
Benefits:
- Creation of Common Facility Centers including Plug & Play Facilities
- Support for Infrastructure Development Projects including Flatted Factory Complexes.
- Scheme applicable for:
- Existing Entrepreneurs [in form of a Special Purpose Vehicles (SPVs)]
- How to apply: https://cluster.dcmsme.gov.in/
For eligibility, application process and other process, please get in touch with us.
MSME Budget 2023:
Budget provisions to deal with delayed payments to MSMEs may need tweaks
- Industry has hailed Finance Minister Nirmala Sitharaman’s measures in Budget 2023 to expedite payments by private companies to MSMEs, but the silence on defaulting government departments has raised concerns.
- Considering that various government departments do bulk purchases from MSMEs, the finance ministry should bring all the government departments also under this rule, said industry stakeholders.
- The budget proposed an amendment to Section 43B of the Income Tax Act. It ensures that the buyers can claim deduction in income tax only on payments made to a MSME supplier. In short, a company can’t claim the expense under the act until the payment has actually been made to the seller. The proposal was made to resolve the long-standing delayed payments’ problem of MSMEs and provide them a much-needed liquidity boost.
- But there is no clarity on the payments made by government departments and these can also be among the major defaulters.
- The budget had also proposed the extension of the Credit Guarantee Scheme to help the liquidity-starved MSME sector, along with an additional infusion of Rs 9,000 crore. The government expects the infusion to enable collateral-free credit of Rs 2 lakh crore to small businesses. It had introduced the Emergency Credit Line Guarantee Scheme (ECLGS) in 2020 after the Covid pandemic began. The scheme’s deadline was later extended to March 2023 from March 2022.
- Source: read more at: Click Here
MSME Corporate News:
- Pidge pilots logistics technology for MSME growth
Pidge, a leading logistics firm, announced the launch of its self-service logistics technology SaaS, which will enable MSMEs, Enterprises and Third-party players across India to grow their business by increasing the efficiency of captive fleets, ensuring zero unfulfilled demand through the Pidge Network Partners, lowering delivery costs and enabling a superior customer experience that helps drive customer loyalty.
Customers can download the Pidge app suite or use the web-based dashboard from any device and start delivering. With a pay-as-you-go model, the company ensures that its customers have zero onboarding costs.
Pidge’s SaaS solution is relevant both to businesses with their own captive delivery riders (1PL) and those that outsource delivery (3PL). The platform leverages artificial intelligence (AI) and proprietary algorithms for an unprecedented combination of faster and more efficient commerce. Businesses with their own delivery fleet can leverage the technology backbone Pidge SaaS offers, while businesses that leverage third-party logistics providers, can choose specific modules to improve overall delivery and customer experience.
Pidge plans to evolve as India’s first transaction-based logistics technology platform, making hybrid fulfilment possible. Customers can control and optimise their own fleet and delivery staff, with guaranteed support for unfulfilled demand through Pidge Network Partners. Pidge is strongly positioned to ensure growth for its clients, minimise costs, and deliver a superior customer experience.
Founded in 2019, Pidge is India’s first transaction-based logistics SaaS company, which makes hybrid fulfilment possible. Pidge has enabled over 5 million deliveries and has 400,000+ network users. (To read more – Click Here)
- Direct Benefit Transfer: Funds transferred under MSME min’s DBT schemes jump 18% till Dec in FY23
Key Direct Benefit Transfer (DBT) schemes of the MSME ministry have transferred Rs 1,975.64 crore till December in the current financial year, up 18.3 per cent from Rs 1,668.99 crore during the corresponding period last fiscal.
According to the FY23 annual report released by the MSME Ministry recently and the FY22 report, the highest amount of Rs 1,505.61 crore was transferred under the Prime Ministers Employment Generation Programme (PMEGP) between April-December in the current fiscal vis-a-vis Rs 1,601.92 crore transferred during April-December FY22.
Among other welfare and subsidy schemes with DBT enabled were SFURTI (Soft Interventions), which promotes cluster development in the khadi sector, transferring Rs 384.50 crore till December in the current fiscal in comparison to Rs 8.01 crore till December FY22, Coir Vikas Yojana (Rs 45.78 crore), Market Promotion and Development Assistance (MPDA) scheme for khadi institutions (Rs 29.45 crore), and International Co-operation scheme (Rs 6.87 crore) which provides financial assistance to industry associations to participate in international exhibitions abroad and organize International conferences in India for MSE exports.
In terms of beneficiaries, SFURTI had the highest beneficiary count of 20.8 lakh followed by the MPDA scheme for khadi institutions (86,990), PMEGP (46,808), Entrepreneurship and Skill Development Programme (6,312), ATI scheme (1,674), Coir Vikas Yojana (775) and International Co-operation scheme (56), the FY23 annual report showed. (To read more – Click Here)
- Central Bank of India, Moneywise Financial Services tie up for MSME loans
Central Bank of India (CBoI) has entered into a co-lending partnership with Moneywise Financial Services Pvt Ltd for lending to micro, small and medium-sized enterprises (MSMEs).
This will result in expanded portfolio for both entities, CBoI said in a regulatory filing. Under the arrangement, Moneywise Financial Services (a non-banking financial company focused on MSME lending) will process MSME loan proposals as per jointly formulated credit parameters and eligibility criteria, while CBoI awill take into its books 80 per cent of the MSME loans under mutually agreed terms.
Moneywise Financial Services will service the loan account throughout its lifecycle. As at December-end 2022, Moneywise Financial Services’ ‘asset under management’ stood at about ₹800 crore. (To read more – Click Here)
- DBS Bank India partners with eSamudaay to provide financial solutions to MSMEs through ONDC
DBS Bank India announced its partnership with a SaaS-based solutions provider, eSamudaay on Wednesday to offer cash management solutions to MSMEs that are conducting business through Open Network for Digital Commerce (ONDC), as per an official statement released by the bank.
The rationale is to leverage data from eSamudaay digital solutions and analyse the end users’ requirements to offer MSMEs customised credit and cash management products for managing collections, payments, payroll, liquidity management, and financial products, the statement added. The new offering will be piloted in South Indian cities of Udupi, Thanjavur, Mangalore and Mysore this year. The plan is to offer these solutions to MSMEs in 24 cities across India and manage cash flows of the entire supply chain.
Meanwhile, the financial services group, DBS recently partnered with Gofrugal Technologies to help SMEs catalogue their products and expand their sales channels through ONDC. Earlier, the bank launched a digital and paperless trade financing solution for freight forwarders that leverages Electronic Way (eWay) bill verification for digitalising and simplifying trade transactions.. (To read more – Click Here)
- Important Industry Update:
PRESS RELEASE
GST on assignment of lease of land and building in SIDCs
MSMEs are getting disturbed with the action taken by GST department in some of the areas of MIDC in Maharashtra by giving summons and asking them to pay GST on the total value of the assignment of lease.
We have received representations from our member as well as affiliate associations from Gujarat, Madhya Pradesh, Punjab, Odisha and Tamil Nadu for the same alongwith associations from Maharashtra covering 289 MIDC areas from 36 districts of the State. So this is a pan India issue for all MSMEs having their factories taken on lease from State Industrial Development Corporations (SIDCs).
The intention of GST was also to reduce cost of production and inflation in the economy to make the industries competent domestically and internationally and to contribute for the growth of the economy. This was supposed to be ‘One nation one tax’ and even after subsuming all the State & Central tax, the GST rate was supposed to be equal or less than earlier regime. It should be noted that the assignment of lease also attracts 6% stamp duty in Maharashtra further adding to the over all tax liabilities.
During the Service Tax regime, assignment of lease was not treated as “service” for the reason that definition of term “service” under the erstwhile Finance Act, 1994 has excluded transfer of rights in immovable property. Unfortunately, in the CGST Act, the definition of the term “service” is kept very wide as well as use of phrase “sale of land” specifically restricts the scope of “supply of service” to include assignment of rights in leased land and thus taxable to 18% GST as per the department. Hence the basic spirit of the GST Act (not to increase the total subsumed tax burden) is done away with due to this situation.
Our Association argues that the activity of assignment of lease hold rights in land should also qualify as sale of land as all the rights in land and building and interest of a person are transferred to another person and therefore the same should fall in schedule III of the CGST Act with retrospective effect from 1st July, 2017.
Chamber of Small Industry Associations (COSIA) has taken up this issue with the Finance Minister of Maharashtra, the Union Finance Minsitry and GST Council for consideration and clarification to save the MSMEs in this era of ease of doing business and Make in India.
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- How we can help MSMEs?
- Choose Best Business model
- Choose suitable business form
- to choose the most suitable source of funding
- Claims / recovery matters filings
- Agreement / contracts vetting & preparation
- to approach financial institutions to get funds keeping in view their specific schemes.
- Evaluate and compare the terms and conditions, including rate of interest and repayment period of loan offered by the different financial institutions
- Select the financial institution, which offers funds at minimum interest rate as per Entrepreneurs repayment plans.
- Arrange / Prepare set of documents as required for getting Loan.
- Prepare application in prescribed proforma and has to be submitted along with project report including proof of ownership/availability of land/building, proof of residence, collateral securities (wherever applicable) etc.
Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information. Many sources have been considered including newspapers (ET, BS & HT etc.)
