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 Indian government has undertaken several policies, strategies, and programs to promote resource efficiency and sustainability in the MSME sector at the national level. Diverse initiatives and schemes undertaken by the Government of India, in collaboration with the Bureau of Energy Efficiency (BEE) operating under the Ministry of Power and the Ministry of Micro, Small and Medium Enterprises, play pivotal roles in fostering the adoption of energy-efficient practices, enhancing sustainability, optimising resource utilisation, and minimising waste generation within the MSME sector.
Our newsletter is an attemppt to provide brief about the developments in MSME Sector on weekly basis.
Our Special Corner
- Share of women MSMEs jumps to 37% in total MSMEs registered on govt’s Udyam portal
The share of MSMEs owned by women entrepreneurs in the total MSMEs registered with the MSME Ministry has jumped. According to the data shared by the Minister of State in the MSME Ministry Bhanu Pratap Singh Verma in a written reply to the Rajya Sabha on Monday, the number of women-owned MSMEs registered on the government’s Udyam portal stood at 1.17 crore – 37.13 per cent of the total 3.16 crore MSMEs registered as of December 4 since the launch of the portal on July 1, 2020, post-Covid.
In comparison, the share of women-owned MSMEs in the total over 2.10 crore units registered as of August 1, 2023, was 19.43 per cent, Verma had informed the Parliament during this year’s monsoon session. The registration count included registrations from the Udyam Assist Platform (UAP) of the government launched in January this year to enable micro enterprises outside the ambit of Goods and Services Tax registration to register with the ministry for the benefit of priority sector lending.
Importantly, under the Udyog Aadhaar Memorandum (UAM), the erstwhile portal for MSME registration between September 2015 and June 2020, women MSMEs represented a 15.67 per cent share in the total UAM registrations during the period, Verma had shared the data, FE Aspire reported earlier. (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 “‘Maharashtra govt to support MSMEs with several schemes’: Deputy CM Devendra Fadnavis at IIM Nagpur’s Zero Mile Samvad”
Devendra Fadnavis, the Deputy Chief Minister of Maharashtra, has laid out a bold vision for India’s economic growth, placing Rural Entrepreneurship, Micro, Small and Medium Enterprises (MSMEs), and Cooperative Ventures at the forefront.
Sharing his views during a session at IIM Nagpur’s ‘Zero Mile Samvad’, Fadnavis said that MSMEs play a pivotal role in the growth of the economy. “If you look at our industrial policy, there has been a huge thirst to help MSMEs and even the central government has come up with most of their schemes to help MSMEs. MSMEs are also helping in creating a lot of jobs,” he said.
On big-ticket projects coming in Maharashtra, Fadnavis revealed that “I always tell bureaucrats here to not be complacent. Also when I meet companies for investments, I tell them to look at our track record of delivery and completion and not fall for a new state that is just promising and does not have anything to show in the past.”
“We are focusing on creating a logistics hub in Nagpur and we will continue to focus on the strengths and work towards the betterment of Maharashtra,” he added.
He further discussed the importance of strategic partnerships among the government, private sector, and NGOs to bolster these sectors and his key points included vital policy reforms, such as tax incentives and streamlined regulations, and the transformative role of digital innovations in empowering rural entrepreneurs and MSMEs.
- Source: Click Here
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- Trade Receivables Discounting System (TReDS) – Part 21
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.
RBI allows all factors to participate as financiers on TReDS platforms
To augment the availability of financiers on TReDS (Trade Receivables Discounting System), the Reserve Bank of India (RBI) on Wednesday, allowed all entities that can undertake factoring business, to participate as financiers on such platforms.
“The Factoring Regulation Act, 2011 (FRA) allows certain other entities / institutions to undertake factoring transactions. Accordingly, all entities / institutions allowed to undertake factoring business under FRA and the rules / regulations made thereunder, are now permitted to participate as financiers in TReDS,” the central bank notified.
TReDS transactions fall under the ambit of ‘factoring business’ and currently only banks, NBFC-Factors and other financial institutions can be financiers.
The RBI also permitted insurance facility for TReDS transactions to aid financiers to hedge default risk. This is because financiers usually place their bids keeping in view the credit rating of buyers, and are not inclined to bid for payables of low rated buyers.
Insurers on TReDS
As a result, insurance players will be now become the fourth participant on TReDS platforms, in addition to MSME sellers, buyers and financiers.
TReDS platform operators will need to specify the stage at which insurance facility can be availed. Further, no insurance premium can be levied on MSME sellers, and collection of premium and related activities will be enabled through National Automated Clearing House (NACH) system.
Factoring units
While TReDS guidelines provide for discounted or financed factoring units to have a secondary market, it has still not been introduced. Given the experience gained so far, TReDS platform operators may, at their discretion, enable a secondary market for transfer of FUs within the same TReDS platform, the central bank said.
TReDS platform operators have also been permitted to settle all factoring units—financed, discounted or otherwise —using the NACH mechanism, with specified timelines for funds settlement. This is to overcome the inconvenience caused to MSMEs and for better reconciliation, as around 17 per cent of factoring units uploaded are not discounted or financed and buyers need to pay MSME sellers outside the system.
Three entities — A.TREDS (Invoicemart), Receivables Exchange of India (RXIL) and Mynd Solutions (M1 exchange) operate the three TReDS platforms in the country; whereas C2FO Factoring Solutions has been given in-principle authorisation.
- Source: Click Here
- MSME Corporate News:
- How research and forecasting can fast forward growth of fashion and textile MSMEs
MSMEs have a significant role to play in India’s textile and apparel trade. It is estimated that this sector employs about 45 million people directly and nearly 60 million people indirectly. This labour-intensive industry is also the second largest provider of employment in India.
Today India ranks third in the export of textile and readymade apparel in the world, contributing up to 4.6 per cent share in the global trade. However, there is a story of growth unfolding in the Indian domestic industry that is very exciting. The Indian textile and apparel market size reached $172.3 billion in 2022. Looking forward, the market is expected to reach $387.3 billion by 2028, exhibiting a growth rate (CAGR) of 14.59 per cent during 2023-2028, as per a report by IMARC Group.
There are many factors contributing to this change. The undisputed increase in disposable income of the middle class with a surge in spending on fashion and accessories has been a game changer. Further, the rise of e-commerce platforms has transformed the retail landscape as they have made it easier for customers to access a wide range of fashion products. The expected rise of 110 million middle-income households will fuel this further. This opportunity is facilitating the entry of MSMEs into this market with varied products.
Consumer buying is stimulated by both subliminal and obvious influences. From the buzz in celeb lifestyle or designer community, social media content being consumed to travel, politics, F&B, home interiors and global initiatives, there are multiple sources of influences on the fashion that we consume. Only predictive analysis of consumer preferences through research can point towards latent and future consumer wants.
MSMEs shouldn’t shy away from collaborations and partnerships with designers, artisans or other industry stakeholders. Further customization and personalization in products will allow the companies to connect with the consumer at a more intimate level and stand out in a competitive market.
A point to note is the increased awareness of consumers towards sustainable and eco-friendly products. The modern consumer now understands that the production process too needs to be sustainable, which is slowly becoming a factor in purchase decisions. While organic cotton has always been popular, recycled fibres are being preferred now along with biodegradable materials and waterless dyeing techniques. And manufacturers should endeavour to deliver in this realm.
- (To read more – Click Here)
- TN government sets sights on Rs 5L cr investments during GIM 3.0
CHENNAI: The state government has set a target `5 lakh crore during the third edition of Global Investors Meet (GIM) scheduled to be held on January 7 and 8, 2024. This comes as the state is keen on generating high-value jobs and helping its transition into the knowledge economy during the third edition of GIM.
The Industries department alone is planning to woo Rs 3 lakh crore.
Tamil Nadu attracted investments worth Rs 3.004 lakh crore during the second edition of GIM held in 2019 by signing 12,664 memoranda of understanding, which include 12,360 MoUs from Micro, Small and Medium enterprises (MSMEs). During the first edition, the state managed to woo Rs 2.42 lakh crore investment.
The third edition of the investors meet is being held after a gap of four years. Initially, the third edition of the event was scheduled for 2021 but due to the Covid-19 pandemic, it had to be postponed. Sources said apart from the industries department, the state is targeting to woo Rs 75,000 crore in housing and urban development, Rs 1.20 lakh crore in energy sector and Rs 40,000 crore in MSME sector.
The Centre is likely to be operational by January 2024 in line with the GIM, former Industries Minister Thangam Thennarasu had announced in the state assembly earlier this year. Industries Minister TRB Rajaa held deliberations with business leaders in August where the focus was on technology adoption and innovation, industry-academia engagement, and sustainable production.
- (To read more – Click Here)
Read more at: Steps taken by Government to improve flow of credit to MSME sector
- GIM 2024: Tiruppur poised to attract investments worth ₹6,603 crore in MSME sector
Against the target of investments worth ₹6,551 crore in the MSME (Micro, Small and Medium Enterprises) sector set for Tiruppur in the run-up to the Global Investors’ Meet (GIM) 2024 at Chennai during January, the district is poised to attract investments to the extent of ₹6,603 crore.
Agreements were signed with 439 investors in Tiruppur by the Industries Department at a meeting addressed by Ministers M.P. Saminathan (Information and Publicity), N. Kayalvizhi Selvaraj (Adi Dravidar Welfare), District Collector N. Christuraj, Honorary Chairman of Tiruppur Exporters Association A. Sakthivel and several other dignitaries and senior officials.
The investments would pave the way for generation of 20,612 jobs, in conformity with the State government’s vision to transform into a one trillion US dollar economy by 2030, Mr. Saminathan said.
Approvals for the investors through various departments would be fast-tracked, he said. The State government had sanctioned ₹10 crore for Tiruppur under the Town of Export Excellence scheme, the Minister said. (To read more – Click Here)
- Govt approved Credit Guarantee to nearly 80 lakh MSMEs
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) since its inception in 2000 till November 30, 2023, has approved and extended guarantees to 79,53,694 Micro and Small Enterprises amounting to Rs 5,33,587 crore under the scheme.
The highest amount was provided to Maharashtra at Rs 62,807 crore followed by Uttar Pradesh at Rs 52,998 crore, Karnataka at Rs 43,120 crore, Tamil Nadu at 42,270, and Gujarat at Rs 42,162 crore among others.
CGTMSE provides for guarantee for the credit extended by Member Lending Institutions (MLIs) to Micro and Small Enterprises (MSEs), without collateral and third-party guarantee.
Research and development promoted in MSME sector:
The MoS further highlighted that the government has taken several initiatives to promote Research and Development (R&D) activities in MSME Sector. These inter alia include MSME Innovative Scheme of Ministry of MSME, Atal Innovation Mission (AIM) of NITI Aayog, NIDHI-inclusive Technology Business Incubator (NIDHI-iTBI) Programme of Department of Science and Technology (DST), Regulatory Sandbox of Reserve Bank of India (RBI).
The ministry is implementing MSME Innovative (Incubation) Scheme, a component under MSME Champions scheme for nurturing and development of ideas. Under the Incubation component of MSME Innovative Scheme of this Ministry, 533 ideas have been approved for nurturing and development with an amount of Government of India grant sanctioned of Rs 43.30 crore during the last three years 2021-22, 2022-23 and 2023-24.
- (To read more – Click Here)
About the Author: Lalit Rajput is a Company Secretary and Commerce Graduate, having 8+ years of post-qualification experience in the Corporate Compliance Management & Advisory Services. He has worked with Listed, Unlisted, Risk Advisory Firms, Corporate Secretarial and Chartered Firms etc. He has a keen interest in the Corporate Governance and Compliance Management. He has authored many articles at various social media platforms and ICAI / ICSI Newsletters & has taken seminars / webinars for professional institutes including ICSI / ICAI/ LPU etc. He has participated in many quiz / competitions and received recognitions at various platforms.
He is also a part of MAHARERA Study Group Experts Panel. The WIRC – ICAI honoured for his contribution in “Quick Referencer to Companies Act, 2013” and MAHARERA Law Manual. He has also written articles in many Corporate Magazines, Taxmann and Books etc. Published article at Corporate Magazine of “Merchants’ Chamber of Commerce and Industry” named “The Legal Eagle”.
He has contributed as Author in many Books and also publishing his own Newsletters on various matters which includes: Weekly Taxation Newsletter, Weekly Corporate Affairs Newsletter, Monthly Corporate Compliance Tracker, Monthly Food Law Newsletter, Monthly RERA Newsletter, Monthly Tech – Torch Newsletter – A light to the Safe Tech Environment and many more. Received many certificates on Quiz and programms organized at various platforms
Read more at: Unlocking Financial Opportunities with Domestic Factoring