MSME Scheme for COVID:
A. Government Schemes to support in COVID pandemic:
- Distressed Assets Fund – Subordinate Debt Scheme for MSMEs
MSMEs survive on thin margins and come under financial stress at slightest disruption. To support MSME units which have become stressed, there is a need to infuse capital in the MSME unit in the form of equity or sub debt so that they can be revived.
The Distressed Assets Fund–Sub Debt Scheme seeks to extend support to the promoter(s) of the distressed units MSMEs by providing a debt facility of up to 15% of the promoter contribution or Rs 75 lakhs, to the Promoter(s).
MSME Scheme for COVID-Promoter(s) in turn will infuse the amount in the MSME unit as equity and thereby enhance the liquidity and maintain debt-equity ratio.
Guarantee for fund raising for Revival:
GOI will provide guarantee coverage to MSMEs for them to raise funds from Financial Institutions.
= up to 85% for loans up to Rs. 5 lakh and up to 75% for loans beyond Rs 5 lakh.
Salient Features: MSME Scheme for COVID-
The quasi-equity provision with the guarantee balances the risks and rewards between the lender (bank) and the customer. In a situation where an outright loan is too risky, quasi-equity with guarantee will provide the requisite financing to the company.
Subordinate debt will be of substantial help in sustaining and reviving the MSMEs which have either become NPA or are on the brink of becoming NPA.
Who can apply:
Functioning MSMEs which are NPA or are stressed will be eligible
Promoter(s) of such units can apply
How to apply:
Promoter(s) of MSMEs meeting the eligibility criteria may approach scheduled commercial banks to avail benefit under the scheme
- Equity Infusion for MSMEs through Fund of Funds
MSMEs face severe shortage of equity. The Fund of Funds will provide equity funding for MSMEs with growth potential and viability with the ultimate aim of encouraging MSMEs to grow and get listed on stock exchanges. - Growth Funding to MSMEs through equity financing:
GOI will support VC/PE firms in investing in commercially viable MSMEs in meeting their growth requirements. The proposed fund of funds will encourage private sector investments in the MSME sector and leverage Rs.50,000 crore. The actual investment may be even higher. - Funding leverage:
Fund of Funds aims to achieve private funding leverage through the use of professional fund managers with access to funding and strategic performance oversight. This will help attract a wide range of investors, including financial institutions, corporate investors, banks, other government funds, HNW individuals to invest into MSMEs.
Salient Features – MSME Scheme for COVID
Under the scheme, there would be a Mother Fund, where Government of India will be Anchor Investor. The Mother Fund can invest daughter funds who can deploy the investments in targeted MSMEs. This will create a partnership with MSMEs in their growth journey and enable them to grow bigger and get listed on stock exchanges.
Who can apply:
All MSMEs are eligible
How to apply:
Through Investor Funds onboarded and registered with proposed Funds of Funds.
- Collateral free automatic loans for MSMEs
MSME Scheme for COVID- This includes collateral-free automatic loans to MSMEs and credit guarantees to lenders (i.e. the government has promised to repay the debt in case of default.)
To restart businesses, MSMEs to be given emergency credit line of up to 20 percent of entire outstanding credit as on 29 February 2020.
Borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover eligible for the loan.
Loans to have 4-year tenor with a moratorium of 12 months on principal repayment.
100 % credit guarantee cover to banks and NBFCs on principal and interest.
The loan, which will benefit 45 lakh units, can be availed till 31st October 2020 or till an
amount of Rs. 3 Lakhs crores is sanctioned under GECL, whichever is earlier.
Interest Rate shall be capped.
No guarantee fee shall be charged and no fresh collateral will be required.
B. Central Government Schemes (Pre-COVID):
- Financial Support to MSMEs in ZED Certification (ZED)
Objective: To enable MSMEs to adopt Zero Defect Zero Effect manufacturing and assessment of their enterprises for ZED certification (i.e Bronze, Silver, Gold, Diamond, Platinum & Defense).
Assistance provided under the scheme for State/UT/Government: Financial Assistance to MSMEs for the reimbursement only once each for National and International Standards.
Who can apply:
Existing Entrepreneur - Lean Manufacturing Competitiveness
Objective: To increase the competitiveness of the MSME sector by the adoption of Lean Manufacturing techniques through Intervention in Mini Cluster having 4 to 10 MSMEs.
Assistance provided under the scheme for State/UT/Government: Financial assistance to MSMEs upto Rs 36.00 lakh (maximum) per mini cluster of 10 units (Min 4 unit)
Who can apply:
Existing Entrepreneur - Design Scheme for MSME Sector (Design)
Objective: To bring Indian Manufacturing sector and Design expertise/ Design fraternity on to a common platform and to provide expert advice and cost-effective solution on real time design
problems, resulting in new product development.
Assistance provided under the scheme for State/UT/Government:
Financial assistance to the MSMEs for engagement of design consultants for design intervention (for the project range Rs 15.00 lakh to Rs. 40.00 lakh).
Financial assistance of Rs. 1.5 lakh for final year student project done for MSMEs.
Who can apply:
Existing Entrepreneur
- Support for Entrepreneurial and Managerial Development of MSMEs through Incubators (Incubator)
Objective: To promote emerging technological and knowledge-based innovation ventures that seek
the nurturing of ideas from professionals beyond the traditional activities of MSMEs.
Assistance provided under the scheme for State/UT/Government:
Financials support for nurturing and development of ideas: max up to Rs 15 lakhs.
Financials support for plant and machinery for deserving ideas: max up to Rs 1 Cr.
Financials support for SEED capital for deserving ideas: Rs 1 Cr.
Who can apply:
Existing Entrepreneurs/Aspiring Entrepreneurs - Intellectual Property Rights (IPR) for MSMEs
Objective: To enhance awareness of MSMEs on Intellectual Property Rights (IPR) like Patents, Trademarks, Industrial Designs, Copyrights and Geographical Indications (G.I) through IPFCs established across the country.
Assistance provided under the scheme for State/UT/Government:
Financial support to Rs 1 Cr for consultancy for filing IP and legal services.
Reimbursement for acquiring patent, Trademark, Geographical Indications (G.I) Patent:
A. Indian Patent up to Rs.1 Lakh
B. Foreign Patent up to Rs. 5 Lakhs Trademark up to Rs. 0.10 Lakh GI Registration Rs. 2 Lakhs
Who can apply:
Existing Entrepreneurs - Digital MSME (Digital)
Objective: To make MSMEs digitally empowered and motivate them to adopt ICT tools and application in their business.
Assistance provided under the scheme for State/UT/Government: Assistance to MSMEs for business solution software like ERP, etc. through e-Platform and for E-marketing through awareness programme.
Who can apply:
Existing Entrepreneurs
- Procurement and Marketing Support (PMS) scheme
Objective: To marketing support for participation of Individual MSEs in domestic Trade Fair/ Exhibition.
Assistance provided under Capacity building of MSMEs in Modern Packaging Technique / Development of Marketing Haats, Organizing Domestic Trade Fair& Exhibition/ Vendor Development Programs/ National & International Workshops & Seminars/ Awareness programs
Who can apply:
Existing Entrepreneurs - Interest Subvention Scheme for MSMEs-2018
Objective: The scheme aims at encouraging both manufacturing and service enterprises to increase productivity and provides incentives to MSMEs for onboarding on GST platform which helps in formalization of economy, while reducing the cost of credit.
Assistance provided under the scheme for SIDBI: Assistance to MSMEs for 2% interest subvention on fresh or incremental loans, for all GST registered MSMEs having valid Udyog Aadhaar Number.
Who can apply:
Existing Entrepreneurs - Credit Linked Capital Subsidy Component
Objective: To upgrade their plant & machinery with state-of-the-art technology, with or without expansion and also for new MSEs which have set up their facilities with appropriate eligible and proven technology duly approved under scheme guidelines.
Assistance provided under the scheme aims at facilitating technology up-gradation by providing 15% up front capital subsidy to MSEs, including tiny, khadi, village and coir industrial units, on
institutional finance availed by them for induction of well-established and improved technologies.
Who can apply:
Existing Entrepreneurs/ Aspiring Entrepreneurs
C. Other Schemes:
Government had launched other various schemes for development of respective MSMEs. A few such schemes are as under:
- Prime Minister Employment Generation Programme and Other Credit Support Schemes
1.1. Prime Minister Employment Generation Programme (PMEGP)
1.2. Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE)
1.3. Interest Subsidy Eligibility Certificate (ISEC) - Development of Khadi, Village and Coir Industries
2.1. Science and Technology Scheme
2.2. Market Promotion & Development Scheme (MPDA)
2.3. Revamped Scheme Of Fund for Regeneration Of Traditional Industries (SFURTI)
2.4. Coir Vikas Yojana (CVY)
2.4.1. Coir Industry Technology Upgradation Scheme (CITUS)
2.4.2. Science and Technology (S&T) for Coir
2.4.3. Skill Upgradation & Mahila Coir Yojana (MCY)
2.4.4. Export Market Promotion (EMP)
2.4.5. Domestic Market Promotion Scheme (DMP)
2.4.6. Trade and Industry Related Functional Support Services (TIRFSS)
2.4.7. Welfare Measures (Pradhan Mantri Suraksha Bima Yojana (PMSBY)) - Technology Upgradation and Quality Certification
3.1. Financial Support to MSMEs in ZED Certification Scheme
3.2. A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE)
3.3. National Manufacturing Competitiveness Programme (NMCP)
3.3.1. Credit Linked Capital Subsidy for Technology Upgradation
3.3.3. Marketing Support/Assistance to MSMEs (Bar Code)
3.3.4. Lean Manufacturing Competitiveness for MSMEs
3.3.5. Design Clinic for Design Expertise to MSMEs
3.3.6. Technology and Quality Upgradation Support to MSMEs
3.3.7. Entrepreneurial and Managerial Development of SMEs through Incubators
3.3.8. Enabling Manufacturing Sector to be Competitive through QMS&QTT
3.3.9. Building Awareness on Intellectual Property Rights (IPR) - Marketing Promotion Schemes
4.1. International Cooperation
4.2. Marketing Assistance Scheme
4.3. Procurement and Marketing Support Scheme (P&MS) - Entrepreneurship and skill Development Programme
5.1. Entrepreneurship Skill Development Programme (ESDP)
5.2. Assistance to Training Institutions (ATI) - Infrastructure Development Programme
6.1. Micro & Small Enterprises Cluster Development (MSE-CDP)
