- MSME in India
MSMEs account for 90% of businesses, 60 to 70% of employment and 50% of GDP worldwide. As the backbone of societies everywhere they contribute to local and national economies and to sustaining livelihoods, in particular among the working poor, women, youth, and groups in vulnerable situations. MSMEs hold the potential to transform economies, foster job creation, and promote equitable economic growth if given adequate support.
Our newsletter is an attemppt to provide brief about the developments in MSME Sector on weekly basis.
Our Special Corner
- “MSME Sector : West Bengal”
West Bengal boosts MSME sector with tax breaks, subsidies, and loan guarantees
The West Bengal government is supporting the MSME (micro, small and medium enterprises) sector by creating an enabling eco-system by way of providing incentives like tax breaks, subsidies and guarantees for loans, an official said here on Thursday.
“The state government is supporting the sector by handholding, creating enabling eco-systems, providing incentives like tax breaks, subsidies, and guarantee for loans among other things,” he said. Pandey said that the MSME landscape in West Bengal is growing rapidly.
The West Bengal Bhabishyat Credit Card Scheme gives collateral-free loans to the MSME sector, while the regulatory environment has been simplified, assistance is provided for gaining market access.
Pandey said that the state ranked second in terms of women-centric enterprises in the MSME space.
He also said that the government is encouraging the conversion of lease-hold to freehold properties, adding that the state is a major handloom textile hub.
The apparel and hosiery industries are thriving and known for its craftsmanship. For the textiles sector to flourish, the state government needs to provide incentives for it to grow and compete in the global market, he added.
- (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.
- Let us have a brief discussion on “MSME Loan: Eligibility, documents required, loan amount, interest rate and other key details”
Entrepreneurs often avail loans for hassle free business operations or to meet fund crunch. Over time, various loans have been rolled out to by banks and NBFCs to support business owners in their entrepreneurial journey. One of the most popular types of entrepreneurial loans is Micro, Small, and Medium Enterprise Loans or MSME loans. These credit facilities financially help MSMEs to run their business and to expand operations.
What is an MSME loan?
The MSME loan offers capital to businesses for their daily operations, such as purchase and maintenance of inventory. These loans can be availed via different banks in the country and the interest rates vary from bank to bank. The MSME loan interest rate starts from 8.75 per cent per annum and the actual applicable rate is decided by the lender.
What is the eligibility criteria for MSME loan?
- An excellent credit score of the business owner and a healthy credit history.
- The business should have a minimum income of Rs 2 lakhs per financial year.
- The authorised signatory should be aged between 21 and 65 years.
- The authorised signatory should have worked for a minimum of one year in the organisation.
- Public limited companies, Private limited companies, Sole proprietorships, Partnership firms, and Limited Liability Partnerships (LLPs) are eligible to avail MSME loans.
- The minimum yearly turnover of the business should be at least Rs 10 lakh.
- The enterprise should be financially stable.
Documents required for MSME loan
- KYC documents of the authorised signatory, such as the PAN card, Aadhaar card, driving licence, voter ID, passport, and utility bills.
- The enterprise’s address proof, including rental agreement, lease agreement, sale deed or utility bills.
- Business’ bank statements of the last six months.
- Business incorporation certificate or establishment certificate.
- Previous two years’ profit and loss account and balance sheet statement.
- Enterprise’s PAN card and income tax return records.
- Any additional document as requested by the concerned bank or NBFC.
Source: Click Here
For eligibility, application process and other process, please get in touch with us.
- Trade Receivables Discounting System (TReDS) – Part 17
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.
- Mastercard partners with M1xchange to offer invoice discounting solution to agri-MSMEs, FPOs
- The digital platform allows credit and working capital access along with connecting farmers and farmer producer organisations (FPOs) directly with buyers, negotiating the best price for their produce and getting paid.
- As part of the collaboration, M1xchange will bring on board its network of agri-businesses and lenders. Sundeep Mohindru, CEO, M1xchange, said the large network of financiers on M1xchange will enhance liquidity flow for buyers and sellers on the Farm Pass platform.
- TReDS offers a unique proposition that discounts invoices raised by FPOs for their end customers based on their credit profile. This makes FPO business scalable as their dependence on credit for working capital financing is removed through invoice discounting.
- As of February 2023, 54.56 lakh invoices involving Rs 1.42 lakh crore were financed by TReDS platforms, according to the data shared by Bhagwat Karad, minister of state in the finance ministry informed Lok Sabha in a written reply to a question in March.
- Source: Media News (Click Here)
- MSME Corporate News:
- Amid Complaints Over Made-in-India Medicines, Govt Rolls Out Workshops to Handhold MSME Drugmakers
With small and medium-sized pharmaceutical companies facing increased scrutiny from global regulators due to recurring lapses, the Narendra Modi government is planning to handhold these drugmakers.
The central government has designed “capacity-building workshops” to assist drugmakers in navigating the regulatory requirements effectively.
The concept of the workshop was proposed by the Ministry of Commerce and Industry’s pharmaceutical export wing, Pharmexcil, which has been working with the Ministry of Health and Family Welfare to improve the good manufacturing practices of MSME drugmakers.
The workshop will be conducted in collaboration with the country’s apex drug regulatory agency, the Central Drugs Standard Control Organization (CDSCO), an arm under the Health Ministry which regulates the quality and standard of drugs in India.
The one-day regional workshop, which will be held in hybrid mode, will be launched in more than 10 locations across India with the inaugural workshop starting in Delhi on Friday, September 15. The other planned locations include Ahmedabad, Hyderabad, Chandigarh, Indore, Chennai, Bangalore, Mumbai, Sikkim, Visakhapatnam and Goa. The second workshop is planned for September 16 in Baddi and Hyderabad.
WHY DO MSMES NEED HANDHOLDING?
The move is triggered by complaints over the quality of Made-in-India medicines raised by multiple global health regulators, including the World Health Organisation, Uzbekistan, the Gambia, the United States, Marshall Islands and Micronesia.
“With the recent WHO Medical alerts and back-to-back reporting of cases involving fatalities brought on by supply of contaminated medications by some of the Indian companies have surfaced the non-compliance by these units to the GMP and the product quality norms,” Uday Bhaskar, director general, Pharmexcil told News18.
ENSURE MAXIMUM PARTICIPATIO, DCGI REQUESTS DRUGMAKERS
The letter written by the Drug Controller General of India (DCGI), chief of CDSCO, dated September 14, informs all drug manufacturing associations about the schedule of planned workshops across India.
“It is decided to conduct a one-day regional workshop across India for dissemination of Revised Schedule M requirements to all stakeholders… The tentative schedule of the workshop to be held at Delhi, Ahmedabad, Mumbai, Hyderabad, Kolkata and Baddi in the month of September 2023 is annexed,” said the letter seen by News18.
- (To read more – Click Here)
- MSMEs seek financial aid to revive sick units
Tamil Nadu Boiler Association has sought a financial support from the Union and state governments to prevent the closure of sick micro, small, and medium-scale enterprises (MSME) units in Trichy. Members said the units in the engineering and fabrication sectors are not getting fresh orders even as banks are demanding the owners to repay loans.
Members said many units have become non-performing assets since 2016 due to various economic factors and falling work orders from BHEL. The Covid-19 pandemic also wrecked a havoc as around 150 of the 450 units in Trichy have become defunct during the period. After waiting for 4-5 years, banks have started to pursue legal actions against indebted MSME units by auctioning them. A few unit owners had approached the Madras high court and have obtained an interim stay on banks’ actions for eight weeks. To help units stay afloat and to diversify their focus areas to the defence and railway sectors, the governments should provide a rehabilitation package for the sick units, they said.
United States sanctions 150+ businesses and persons from foe Russia to Nato member TurkiyeThe US has announced sanctions on over 150 businesses and individuals from countries including Russia, Turkey, the UAE, and Georgia. These sanctions aim to crack down on evasion and deny the Kremlin access to technology, money, and financial channels that support Russia’s war in Ukraine. The package also targets countries that sell Western technology to Russia, hobbles Russia’s energy sector, and aims to reduce its liquidity. Both Turkey and the UAE have condemned Russia’s invasion of Ukraine but have not joined Western sanctions. In response, Russia has declared two US diplomats as “persona non grata.103676122
YEIDA to auction 38 commercial units in OctThe Yamuna Expressway Industrial Development Authority (YEIDA) in Uttar Pradesh is planning to auction several commercial properties, including fuel filling stations and commercial shops, in October. The e-auction will be held until 5pm, with the application process closing on October 16. Additionally, the authority is set to acquire 306 hectares of land for the development of industrial parks. In another development, the Delhi government is planning to require energy audits for its buildings, malls, and commercial high-rises with a sanctioned load of 500 kilowatts and above.
- (To read more – Click Here)
- Private labels offer Indian MSMEs an export pathway
India’s strategic focus on linking Micro, Small and Medium Enterprises (MSMEs) to global value chains, as highlighted at G20 meetings and through our Foreign Trade Policy, 2023, is undeniably a step in the right direction. The MSME sector is one of our largest employers, accounting for 29.2% of GDP and 36.2% of manufacturing output in 2021-22. However, the share of MSMEs in our exports has declined from 49.4% in 2020-21 to 43.6% in 2022-23. While the Indian economy is on a fast-growth trajectory, considering the global economic outlook, MSME exports are going through a tough time.
In this uncertain global scenario, the role of MSMEs as drivers of India’s growth and employment cannot be undermined. To enhance their output, enable exports and bolster their overall contribution to India’s economy, multiple steps can be taken. For example, while many MSMEs operate as contract manufacturers at present, sourcing by private labels from India has space for growth. India is under-represented globally and such exports can be increased through policy support. A private label product is one that a retailer or e-commerce company can get manufactured by a third party (usually an MSME) to sell under its own store brand name. The private label market in India is on the rise, driven by the emergence of organized retail formats, both physical stores and online platforms. This growth is fuelled by consumer preferences for distinctive, high-quality products at affordable prices. With the rise in disposable incomes and consumer aspirations, users of unbranded products are shifting to branded versions. This offers an opportunity for companies to launch private labels as affordable alternatives to dearer branded equivalents. Shoppers Stop, Reliance Retail, Spencer’s, Ajio, Amazon, Big Basket, Nykaa, Flipkart, Pepperfry and Tata CliQ et al have effectively used their stores or web platforms to expand their private label offerings, giving consumers greater choice. Private labels have flourished across categories from food and apparel to cosmetics. By one estimate, the share of private labels in the Indian online beauty and personal care market, for example, has increased to over 12% this year. This trend is not only changing consumer shopping habits but also offering a lifeline to MSMEs, helping them overcome challenges like achieving brand appeal and reaching customers in today’s competitive business landscape.
To meet current demand, it is imperative for the government and companies to forge partnerships and collaborations aimed at onboarding a greater number of MSMEs onto e-commerce platforms, aligning this effort with a core G20 objective and India’s Foreign Trade Policy 2023. This will not only enhance their presence in the domestic market, but also strengthen their integration into global value chains. A limited view will stymie efforts to increase exports and we must explore all opportunities that the world offers our MSME manufacturers.
- (To read more – Click Here)
- RBI launches innovative program to revolutionize credit access for MSMEs
The Reserve Bank of India (RBI) has embarked on a groundbreaking initiative aimed at transforming the landscape for Micro, Small, and Medium Enterprises (MSMEs) in the country.
T Rabi Sankar, Deputy Governor of the RBI, unveiled the program, highlighting its potential to revolutionize credit access for MSMEs. The RBI has initiated a comprehensive program focused on evaluating the feasibility of a ‘Public Tech Platform for Frictionless Credit.’
This pioneering endeavour seeks to streamline and enhance credit delivery by financial institutions, ultimately contributing to greater financial inclusion in India.
Developed under the aegis of the Reserve Bank Innovation Hub (RBIH), the Public Tech Platform for Frictionless Credit is set to become an end-to-end digital solution with an open architecture, open application programming interfaces (APIs), and standardized protocols that all banks can seamlessly connect to in a “Plug and Play” model.
The primary goal of this public tech platform is to simplify the credit appraisal process, making it more accessible and efficient for both lenders and borrowers. By consolidating all the necessary information in one place, this initiative aims to eliminate friction in the credit access journey for MSMEs.
The introduction of the Public Tech Platform for Frictionless Credit signifies a significant step toward creating a more robust and accessible credit ecosystem for MSMEs in India.
It reflects the RBI’s dedication to leveraging technology and innovation to empower businesses, promote financial inclusion, and foster economic growth.
As this transformative program takes shape, it holds the potential to unlock new opportunities for MSMEs, enabling them to access the credit they need to expand, innovate, and thrive in an increasingly competitive landscape.
- (To read more – Click Here)
- SIDBI partners with Tata Power for MSME solar rooftop financing
The Small Industries Development Bank of India (SIDBI) and Tata Power have collaborated to offer financing to Micro, Small, and Medium Enterprises (MSMEs) for the installation of solar rooftops. Sudatta Mandal, Deputy Managing Director at SIDBI, announced this partnership during the Global SME Finance Forum-2023 in Mumbai on September 13. According to Mandal, “We have signed an MoU with Tata Power, under which they will refer their SME customers to us. We will assess these customers and provide them with credit for their solar rooftop projects.”
This collaboration is primarily set to promote solar energy adoption among MSMEs. Financial support will be provided to enterprises looking to acquire Rooftop Solar PV Plants or other related services from Tata Power or its authorized channel partners across India.
To simplify the process for MSMEs, an online application system has also been established to enable businesses to avail of the scheme, furthering India’s national solar mission goals. (To read more – Click Here)