12 MSME Schemes | Latest Burning Issues

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PM LAUNCHES HISTORIC SUPPORT AND OUTREACH INITIATIVE FOR MSME SECTOR

The Prime Minister Narendra Modi on November 2, 2018 launched the Micro, Small and Medium Enterprises (MSME) Support and Outreach Programme at Vigyan Bhavan in New Delhi.

NOTES

- The Prime Minister said that the 12 decisions that he is announcing today, will mark a new chapter for the MSME sector.

Noting that MSMEs are one of the principal employment generators in India, the Prime Minister recalled the glorious Indian traditions of small scale industry, including Ludhiana’s hosiery, and Varanasi’s sarees.

BASICS

The Prime Minister said that the success of economic reforms launched by the Union Government, can be gauged from the rise in India’s “Ease of Doing Business Rankings,” from 142 to 77 in four years. The Prime Minister said that there are five key aspects for facilitating the MSME sector. These include access to credit, access to market, technology upgradation, ease of doing business, and a sense of security for employees. He said that as a Diwali gift for the sector, the 12 announcements he is making, will address each of these five categories.

ACCESS TO CREDIT PART – 1

59 minute loan portal to enable easy access to credit for MSMEs. Loans upto Rs. 1 crore can be granted in-principle approval in just 59 minutes through GST Portal. The Prime Minister also said that the GSTregistered MSMEs will get 2 per cent rebate on an incremental loan of up to Rs 1 crore.

ACCESS TO CREDIT PART – 2

The Prime Minister mentioned the second announcement as a 2 percent interest subvention for all GST registered MSMEs, on fresh or incremental loans. For exporters who receive loans in the pre-shipment and post-shipment period, the Prime Minister announced an increase in interest rebate from 3 percent to 5 percent

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DETAILS

ACCESS TO CREDIT PART 3

All companies with a turnover more than Rs 500 crore will now compulsorily be brought on the Trade Receivables e-Discounting System (TReDS).
It will enable entrepreneurs to access credit from banks. This will resolve the problems of cash cycle.

TRADE RECEIVABLES DISCOUNTING SYSTEM OR TREDS

Trade Receivables Discounting System or TReDS is an initiative undertaken by Reserve Bank Of India to safeguard the interest of micro, small and medium enterprises (MSMEs) that, because of large organizations, always finds it very hard to convert their trade receivables into liquid funds in short period.
RBI thus by undertaking Trade Receivables Discounting System (TReD) an electronic platform, has mechanized the financing of trade receivables of MSMEs from corporate buyers through two or more financiers is known as Trade Receivables Discounting System wherein all registered MSMEs can discount their bills of exchange or invoice through TReDS with a quoted price.

ACCESS TO MARKETS

Public sector companies will now need to compulsorily procure 25 percent, instead of 20 percent of their total purchases from MSMEs.
Out of the 25 percent procurement mandated from MSMEs, 3 percent will now be reserved for women entrepreneurs.
All public sector undertakings of the Union Government must now compulsorily be a part of GeM (Government eMarketplace)

TECHNOLOGY UPGRADATION

Coming to technological upgradation, the Prime Minister said that tool rooms across the country are a vital part of product design.
His seventh announcement was that 20 hubs will be formed across the country, and 100 spokes in the form of tool rooms will be established.

EASE OF DOING BUSINESS

- Clusters will be formed of pharma MSMEs. 70 percent cost of establishing these clusters will be borne by the Union Government.

The return under 8 labour laws and 10 Union regulations will now need to be filed only once a year.
Establishments to be visited by an Inspector will be decided through a computerised random allotment.
Ordinance has been brought under which, for minor violations under the Companies Act, the entrepreneur will no longer have to approach the Courts, but can correct them through simple procedures.