Schemes for MSMEs in India

Promoting manufacturing in india

Overview of Govt. Initiatives on MSMEs

MSMEs are the backbone of the Indian economy, contributing approximately 30% of the country’s GDP (Gross Domestic Product), and providing employment to 11 Cr of India’s population. The share of Micro, Small, and Medium Enterprises (MSMEs) in manufacturing output currently stands at 35.4%. The Government of India has been proactive to ensure that all the benefit of these MSME schemes reaches to the MSMEs in time. In the Union Budget 2024-25, Finance Minister Smt. Nirmala Sitharaman proposed eight key measures to support MSMEs.

Credit Guarantee Scheme for MSMEs in the Manufacturing Sector: For facilitating term loans to MSMEs for purchase of machinery and equipment without collateral or third-party guarantee, a credit guarantee scheme will be introduced for making capital investment in the manufacturing sector with cover up to INR 100 Cr.
New assessment model for MSME credit: Public sector banks will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment and take a lead in developing or getting developed a new credit assessment model.
Credit Support to MSMEs during Stress Period: Credit support will be provided to MSMEs during stress period from a government-promoted fund which is a new mechanism for facilitating continuation of bank credit to MSMEs during their stress period.
Mudra Loans: The limit of Mudra loans will be enhanced to INR 20 Lakh from the current INR 10 Lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category.
Enhanced scope for mandatory onboarding in TReDS: For facilitating MSMEs to unlock their working capital by converting their trade receivables into cash, Turnover threshold of buyers for mandatory onboarding on the TReDS platform to be reduced from INR 500 Cr to INR 250 Cr.
SIDBI branches in MSME clusters: SIDBI will open new branches to expand its reach to serve all major MSME clusters within 3 years, and provide direct credit to them.
MSME Units for Food Irradiation, Quality & Safety Testing: Financial support for setting up of 50 multi-product food irradiation units in the MSME sector will be provided.  Setting up of 100 food quality and safety testing labs with NABL accreditation will be facilitated.  
E-Commerce Export Hubs: To enable MSMEs and traditional artisans to sell their products in international markets, E-Commerce Export Hubs will be set up in public-private-partnership (PPP) mode. These hubs, under a seamless regulatory and logistic framework, will facilitate trade and export related services under one roof.

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Revised Classification applicable w.e.f 1 July 2020

Composite Criteria: Investment in Plant & Machinery/equipment and Annual Turnover

CLASSIFY
Manufacturing Enterprises and Enterprises rendering Services
MICRO
Investment in Plant and Machinery or Equipment: Not more than INR 1 cr and Annual Turnover; not more than INR 5 cr
SMALL
Investment in Plant and Machinery or Equipment: Not more than INR 10 cr and Annual Turnover; not more than INR 50 cr
MEDIUM
Investment in Plant and Machinery or Equipment: Not more than INR 50 cr and Annual Turnover; not more than INR 250 cr