This Weekly E- Newsletter (The Friday Journal) aims to increase awareness regarding various news / updated and activities that have been taken place for the MSMEs and to provide information about the various schemes and programmes along with latest updations from time to time. It is a digital tool used to share relevant and valuable information with the Readers. MSMEs are an important sector for the Indian economy and have contributed immensely to the country’s socio-economic development. MSMEs produce and manufacture a variety of products for both domestic as well as international markets. MSMEs have played an essential role in providing employment opportunities. MSMEs have driven India to new heights through requirements of low investment, flexible operations, and the capacity to develop appropriate native technology. This newsletter has been released with an aim to educate MSMEs on various facets of business development.
- MSME in India
The MSME sector is a critical component of India’s economy, contributing significantly to GDP, employment, and exports. To ensure continued growth and development of this sector, a strategic approach is essential. The MSME sector is vital to India’s economy.
It’s often called the “engine of growth” because of its significant contributions:
- GDP: MSMEs contribute roughly 30% to India’s GDP, a substantial portion of the nation’s economic output.
- Employment: They are the second-largest employer in India after agriculture, providing jobs to millions of people and playing a crucial role in reducing unemployment.
- Exports: MSMEs contribute significantly to India’s exports, helping to earn foreign exchange and boost the country’s trade balance.
To ensure this sector continues to thrive, a strategic approach is indeed necessary. This involves:
- Addressing Challenges: MSMEs face various challenges such as access to credit, infrastructure limitations, technology adoption, and market access. A strategic approach needs to tackle these issues effectively.
- Leveraging Opportunities: The changing economic landscape and technological advancements present new opportunities for MSMEs. A strategic approach should help them capitalize on these opportunities.
- Promoting Sustainable Growth: The focus should be on promoting sustainable and inclusive growth of the MSME sector, ensuring that it benefits all sections of society and contributes to environmental sustainability.
By implementing a well-defined strategy, India can unlock the full potential of its MSME sector and drive inclusive and sustainable economic growth.
Our newsletter is an attemppt to provide brief about the developments in MSME Sector on weekly basis.
- Our Special Corner
- “Budget Wishlist 2025: MSMEs seek policy reforms, credit boost, and infrastructure investments for growth”
The MSME sector, a cornerstone of the Indian economy, is eagerly awaiting the Union Budget 2025 with a wish list focused on policy reforms, enhanced credit access, and robust infrastructure investments.
Policy Reforms:
- Streamlined Regulations: MSMEs are seeking a reduction in the compliance burden through simplified regulations and a more efficient regulatory framework. This would free up valuable time and resources for businesses to focus on growth and innovation.
- Improved Ease of Doing Business: Further reforms aimed at improving the ease of doing business for MSMEs are crucial. This includes streamlining business registration processes, reducing delays in obtaining licenses and permits, and enhancing access to government services.
- Enhanced Export Incentives: To boost exports, MSMEs are calling for an increase in export incentives and support for market access in foreign countries. This would help them tap into global markets and enhance their competitiveness.
Credit Boost:
- Easier Access to Finance: MSMEs often face challenges in accessing affordable credit. The sector is seeking measures to improve access to finance, such as increasing credit guarantees, reducing interest rates, and simplifying loan application processes.
- Focus on Digital Lending: Promoting digital lending platforms can help MSMEs access credit more efficiently and transparently. This can also help reach underserved regions and segments within the MSME sector.
Given this, the MSME sector, which has already sent its demands to the Union Finance Ministry and other top government departments, is expecting an easing of compliance burdens and policy interventions to make it easier for them to avail credit for expansion and become part of the value chain.
The upcoming Union Budget offers a critical opportunity to bridge the gap between policy intent and implementation. Adequate fiscal allocation and targeted interventions are necessary to expand and reform the CGTMSE scheme and develop SME-specific industrial zones. Alongside this, it is essential to strengthen the enforcement of payment obligations and redresses systemic inefficiencies in the GST mechanism.
In addition to this, the statutory 45-day payment mandate under the MSMED Act remains largely ineffective, with government agencies and public sector enterprises among the primary defaulters. To address this, stakeholders call for the implementation of stringent enforcement mechanisms, such as penalties for non-compliance and real-time payment tracking systems. Such reforms are imperative to uphold fiscal discipline and ensure liquidity within the SME value chain.
- (Source: Click Here)
- MSME Schemes:
The government has introduced many schemes to encourage the micro and small industries. Through many schemes, the Central government is boosting the credit availability for the MSMEs. MSME (Micro, Small and Medium Enterprises) schemes are initiatives launched by the Government of India to support and promote the growth and development of small businesses in the country.
- “Nirmala Sitharaman’s Budget 2025: 5 national schemes likely to get major boosts”
As the countdown to Budget 2025 begins, Finance Minister Nirmala Sitharaman faces the challenge of balancing fiscal discipline with addressing key voter concerns, while navigating the complexities of a coalition government. Although Election Commission restrictions may limit region-specific initiatives for poll-bound Delhi, the government could focus on bolstering prominent national schemes. Here are five major schemes that may receive increased funding or improvements in Budget 2025:
1. PM Awas Yojana (PMAY)
The PMAY, a key housing initiative, continues to be central to the government’s welfare agenda. In the 2024 Budget, an investment of Rs 10 lakh crore was announced for the scheme. Given the ongoing urban housing shortage of 10.1 million units, and growing demand in tier-1 and tier-2 cities, a further boost in allocation for urban housing could be expected.
This may include additional subsidies for affordable housing and simplified loan processes for young professionals and first-time homebuyers.
2. Ayushman Bharat
Pradhan Mantri Jan Arogya Yojana (PMJAY) With healthcare remaining a critical concern, particularly post-pandemic, the government may expand coverage under Ayushman Bharat. Recently, the Centre included senior citizens above 70 in the health insurance scheme.
A higher allocation could allow more families to be included and expand coverage for non-communicable diseases and mental health services.
PM Gram Sadak Yojana (PMGSY)
The PMGSY, aimed at improving rural road connectivity, could see a significant funding increase in Budget 2025. The government’s push for rural infrastructure development may include new targets to connect remote villages and upgrade existing roads. Last year, the scheme received Rs 16,100 crore, a 10% increase from the previous year.
PM-Kisan Samman Nidhi Yojana
Farmers’ welfare is expected to be a key focus in Budget 2025. With demands from agricultural stakeholders for cheaper long-term credit and tax relief, the PM-Kisan scheme may see an increase in the annual income support from Rs 6,000 to Rs 12,000 to address inflation concerns. Faster disbursement and a larger cash transfer amount could be on the cards.
MSME Support Schemes
MSMEs are the backbone of India’s economy, and Budget 2025 is likely to include measures to strengthen this sector. Enhancements in credit guarantees, lower loan interest rates, and initiatives to support digitization could be announced. Simplified GST compliance for MSMEs may also be part of the government’s agenda.
- Source: Click Here
For eligibility, application process and other process, please get in touch with us.
- Trade Receivables Discounting System (TReDS) – Part 61
Trade Receivables electronic Discounting System (TReDS) is an online electronic platform and an institutional mechanism for factoring of trade receivables of MSME sellers. It enables discounting of invoices through an auction mechanism to ensure prompt realization of trade receivables.
The Trade Receivables electronic Discounting System (TReDS) was released by the Reserve Bank of India in 2018 to help small businesses resolve cash flow issues.
FAQS on TReDs
1. How does the process work?
In the TReDS platform, the process begins when the seller uploads an invoice, which is then listed as a factoring unit (FU) on the platform. The buyer accepts the FU, making it available for financiers to bid. The seller selects the most favourable bid and receives a payment, typically 80-90% of the invoice value, at the agreed financing rate. On the payment due date, the buyer settles the full amount with the financier.
2. What is the eligibility criterion for an enterprise to use TReDS for bill financing?
Enterprises in the manufacturing or services sector are eligible if they have an investment in plant and machinery up to Rs 50 crore and a turnover not exceeding Rs 250 crore, as per the updated MSME definition of 2020.
3. What is the criterion for a buyer to get on TReDS?
In this year’s budget, Finance Minister Nirmala Sitharaman had reduced the turnover criteria to Rs 250 crore from Rs 500 crore for buyers to get on TReDS. The minister had said this would lead to the onboarding of 22 more central public sector enterprises (CPSEs) and 7,000 more companies on TReDS.
How long does it take for an invoice to be financed?
Typically, it takes 2-3 days for MSMEs to receive early payment against their invoices through TReDS.
Do MSMEs need to register with TReDS to discount invoices?
Yes, MSMEs must register on the TReDS platform, providing necessary documentation such as a master agreement, business certificate, KYC documents, board resolution, and balance sheet.
- Source: Click Here
- MSME Corporate News:
- Budget 2025-26: MSME ministry pitches for higher Mudra loan limits
In the proposal sent to the finance ministry, the MSME ministry has suggested raising the Shishu category limit to Rs 5 lakh and the Kishore category to Rs 10 lakh
The Union Ministry of Micro, Small and Medium Enterprises (MSME) has recommended increasing loan limits for Shishu and Kishore categories under the Pradhan Mantri Mudra Yojana in the FY26 Budget to be presented on February 1.
In the proposal sent to the finance ministry, the MSME ministry has suggested raising the Shishu category limit to Rs 5 lakh and the Kishore category to Rs 10 lakh, according to a senior government official who spoke on condition of anonymity.
“The MSME ministry has submitted multiple recommendations, and increasing the limit of other categories of Mudra scheme is one of them. (To read more – Click Here)
- As Punjab industry takes to AI, government sees opportunity for MSME sector
From the bustling textile mills of Ludhiana to the farms of Malwa, artificial intelligence (AI) is gradually weaving its way into the heart of various industries across Punjab. While AI-driven machines are enhancing precision and efficiency in the textiles sector, AI tools are optimising crop management and yield predictions in the field of agriculture.
“With changing times, we need to catch up with the market. AI helps in quality control in my unit. Though we are adopting it gradually, in a few sections, we have started operations using AI…like checking errors in the product. AI-based sensors help in quicker detection as compared to the human eye. Machines are switched on or off using AI…,” said Upkar Singh, Managing Director, New Swan Enterprises, an auto parts and agriculture equipment manufacturing unit in Ludhiana.
Singh is also the president of the Chamber of Industrial and Commercial Undertakings (CICU), an organisation that represents the trade and industry sector in the state. “We are in the process of setting up a laboratory in a tie-up with IIT Ropar at CICU to guide people on using AI in the automobile engineering industry,” he added.
As AI trend catches on, government offers assistance
D P S Kharbanda, the CEO of Invest Punjab and Secretary, Investment Promotion, Punjab, agreed that the AI trend was catching on in the state. “Punjab industry is adopting AI and we are acting as a facilitator. We are here to answer their queries whenever they are stuck,” Kharbanda told The Indian Express.
The department, he said, is seeking the advice of consultants like Rini Singh, author, academician and business strategy consultant, to understand AI-driven solutions better.
- Read more – Click Here
- Government Pushes MSME Reforms as Leaders Highlight Key Lending Gaps
The PHD Chamber of Commerce and Industry (PHDCCI) marked a significant milestone with its 1st MSME Banking & NBFC Excellence Sammaa: 2025 event. The conference brought together policymakers, industry leaders, and financial experts to discuss the pivotal role of Micro, Small, and Medium Enterprises (MSMEs) in India’s economic development and the need for financial reforms to support this vital sector.
Addressing the gathering, Minister of State for Finance, Pankaj Chaudhary, praised the PHDCCI for completing 120 years and its efforts in fostering economic growth. He reiterated the government’s commitment to “Sabka Saath, Sabka Vikas, Sabka Prayas,” emphasizing inclusive development in line with the vision of Viksit Bharat @2047.
Speaking exclusively to ETV Bharat, Sahchindra Nath, Chair of the BFSI Committee, highlighted gaps in MSME financing. He proposed introducing a credit guarantee scheme for NBFCs lending to MSMEs to address liquidity issues.
- (To read more – Click Here)
