Government subsidies offered to MSMEs: PMMY, PMEGP, CGT MSE, ASPIRE, etc

To help over 65 million MSMEs grow and prosper, the Government of India has various schemes that offer financial assistance.

7 Government subsidies offered to small businesses (MSME)

MSMEs (Micro, Small and Medium Enterprises) are the backbone of the Indian economy. They contribute to 33% of the country’s manufacturing output, as well as 45% of the overall exports. Not only that, they help employ over 120 million people, providing livelihood to people across the nation. However, MSMEs need funding to start up, ensure smooth day-to-day running, and grow. To provide a fillip to the millions of MSMEs in the country, the government has launched schemes that extend credit facilities to them. 

Let's take a look at some of the well-recognised MSME loan schemes of 2020 that helped businesses disrupted due to COVID-19. 

Pradhan Mantri Mudra Yojana (PMMY)

The PMMY scheme provides loans up to Rs 10 lakh to small and micro enterprises. These are specifically for non-corporate and non-farm entities. There are three schemes under PMMY: Shishu (offers loans till Rs 50,000), Kishor (offers loan from Rs 50,000 to Rs 5 lakh), and Tarun (offers loans from Rs 5 lakh to Rs 10 lakh). This is offered based on the stage of development and the funding need of the enterprise. 

Prime Minister’s Employment Generation Programme (PMEGP)

This scheme helps generate self-employment opportunities among the unemployed youth and traditional artisans of the country. Any individual aged 18 and above are eligible. To qualify, they need to have passed at least the 8th standard. The maximum cost of the project admissible is Rs 10 lakh for the business sector and Rs 25 lakh for the manufacturing sector.

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Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT MSE)

This scheme provides financial assistance by extending credit to SMEs. Individuals do not need third-party guarantee or collateral to leverage this scheme. It is available to both new and existing enterprises. The Trust acts as a guarantor for the credit availed of up to a specified percentage of the sanctioned amount. The guarantee ranges from 50%, 75%, 80% to 85% depending on eligibility.

Development of Khadi and Coir Industries

This is a consolidation of schemes such as Revamped Scheme of Fund for Regeneration of Traditional Industries and Coir Vikas Yojana, aimed at boosting the khadi sector and other traditional industries. Its objective is to help artisans, enable skill development, provide sustainable employment to them, and help them market their products. It also helps them establish new units, upgrade current ones, and leverage the export market. 

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A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE)

ASPIRE aims to boost economic development by giving entrepreneurs the tools they need to succeed. It works towards promoting the entrepreneurship culture in India, which in turn can create new jobs and reduce unemployment. It also aims to facilitate innovation among MSMEs so they can become more efficient, productive, and competitive. ASPIRE does this by setting up business and innovation incubators that can mentor and guide entrepreneurs in their journey.

Equity Infusion for MSMEs through Fund of Funds

Many MSMEs face shortage of funds at the growth stage. This scheme fills that need gap and provides equity funding to MSMEs that demonstrate growth potential. Commercially viable startups can get funding from investor funds onboarded and registered with the Funds of Funds. The Funds of Funds aims to encourage private sector investments to the tune of Rs 50,000 crore.

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Technology Awareness, Support, and Innovation

Under the National Manufacturing Competitiveness Programme (NMCP), the government helps MSMEs across a variety of functions. It provides credit-linked capital subsidy for technology upgradation, promotes awareness of intellectual property rights, and more. It also helps the manufacturing sector undertake digital transformation, build lean capabilities, and gain design expertise. 

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