The Micro, Small and Medium Enterprises (MSME) sector is a vital component of the Indian economy. It makes up around 30 per cent of the GDP  and plays a significant role in employment generation, increasing exports, and boosting GDP growth. MSMEs represent the majority of the world's food producers and play critical roles in promoting gender equality by ensuring women's full and effective participation in the economy and society. Despite making significant contributions to the Sustainable Development Goals (SDGs), the COVID-19 pandemic has severely impacted MSMEs, exacerbating the challenges they already faced, such as limited access to finance, technology, skilled workforce, and market linkages. This impact has further constrained their growth and competitiveness. To address these challenges, the Ministry of Micro, Small and Medium Enterprises, the apex executive body for the formulation and administration of rules, regulations and laws relating to MSMEs in India, launched the MSME Champions Scheme for a 5-year period, merging all 6 components of the erstwhile Technology Upgradation Scheme. The scheme aims to unify and converge various interventions and pick up clusters and enterprises to modernize their processes, reduce wastage, and improve their competitiveness. The scheme has 3 components – MSME- Sustainable, MSME-Competitive and MSME-Innovative – and seeks to facilitate the national and global reach and excellence of MSMEs.

The MSME Competitive (Lean) Scheme seeks to enhance the competitiveness of Indian MSMEs through the adoption of lean manufacturing tools and techniques, such as Total Productive Maintenance (TPM), 5S, Visual Control, Standard Operation Procedures (SOPs), Just-in-time, Kanban System, Cellular Layout, and Poka Yoke. At the launch, Union Minister for MSME, Narayan Rane, added that LEAN will not only attempt to improve quality, productivity and performance but also have the capability to change the mindsets of manufacturers and transform them into world-class manufacturers.

Lean manufacturing is a management philosophy that focuses on the elimination of waste, reduction of lead times, and continuous improvement of processes to enhance customer value and profitability. The adoption of lean manufacturing techniques can help MSMEs to improve their quality, productivity, cost efficiency, and delivery performance, thereby enhancing their competitiveness in the domestic and global markets. The main objective of the scheme is to provide financial assistance to MSMEs for implementing lean manufacturing techniques in their production processes, thereby improving their competitiveness and productivity. This Scheme is an extensive drive to create awareness amongst MSMEs about LEAN Manufacturing practices and motivate and incentivize them to attain LEAN levels while also encouraging them to become MSME Champions.

Objectives of the Scheme

The main objectives of the scheme are as follows:

• To encourage MSMEs to adopt lean manufacturing techniques and practices for improving their competitiveness and productivity.
• To provide financial assistance to MSMEs for conducting diagnostic studies, acquiring hardware and software, hiring consultants, and training employees on lean manufacturing techniques.
• To create awareness and capacity building on lean manufacturing techniques among MSMEs and other stakeholders.
• To promote sustainable and inclusive growth of the MSME sector through the adoption of lean manufacturing techniques.

The following activities are a part of the scheme:

• Awareness and training
• International Benchmarking and Learning Best Practices and Foreign Travels/Delegations, International Training related to MSME Competitive (Lean) Certification
• Marketing and Other Initiatives

Implementation Framework

The Ministry of MSME will implement the Scheme with the assistance of Implementing Agencies (IA) and organisations under the administrative control of MoMSME & the office of DC- MSME. The Scheme is proposed to be implemented in 2 Phases: 

MSME Competitive (Lean) Scheme can be attained in three levels (basic, intermediate, and advanced) after registering and taking the Lean Pledge, as shown in the figure below.

Features and Guidelines

The key features of the Lean Manufacturing Competitive Scheme are as follows:

A.    Financial assistance for MSME units: 

1. The Government of India will provide financial support of up to 90 per cent towards the total implementation cost, i.e., up to INR 1,08,000 at the intermediate level and INR 2,16,000 at the advanced level. The remaining 10 per cent is the responsibility of the MSME units who are the beneficiaries.
2. Additionally, MSMEs that are part of SFURTI clusters, owned by women/SC/ST, or located in the Northeastern region will receive an extra 5 per cent contribution from the Government.
3. After completing all levels, MSMEs registering through an Industry Association/OEM will receive an additional 5 per cent contribution from the Government and INR 5,000 per MSME shall be given to OEM/ Association.

B.    Eligibility: 

1. All MSMEs registered with the UDYAM registration portal (of the MoMSME) will be eligible to participate in the MSME Competitive (Lean) Scheme and avail of related benefits/incentives. 
2. The eligible MSMEs would be required to form a Group of Enterprises (GoE) for applying for intermediate and Advanced Levels 
3. The scheme is also open to Common Facilities Centers (CFCs) under SFURTI (Scheme of Fund for Regeneration of Traditional Industries) and Micro & Small Enterprises - Cluster Development Program (MSE-CDP) Schemes.

C.    Application process: 

1. Every MSME that embarks on the journey of Lean Scheme will have to take the “Lean Pledge” before submitting its application.
2. After taking the “Lean Pledge”, MSME can apply for the implementation of Lean Tools and Techniques. Every MSME embarking on the journey of Lean Scheme must submit an undertaking.

D.    Implementation period: 

The implementation period for the project is a maximum of 12 months from the date of approval.

E.    Monitoring and evaluation: 

A combination of virtual and on-site monitoring mechanisms will be employed throughout all three stages to verify the achievement of targets.

To ensure the effective implementation of the scheme, a Project Monitoring and Advisory Committee (PMAC) has been established. The PMAC will oversee the planning, screening, and identification of interventions/projects, as well as other necessary functions.
Additionally, a Project Monitoring Unit (PMU) will be created to facilitate, implement, and monitor the scheme, involving Implementing Agencies (IAs) in accordance with established procedures.

F.    Scheme Validity: 

The financial support, incentives, benefits & other provisions contained in the scheme herein will be valid till March 31, 2026.

Benefits of the MSME Competitive Lean Manufacturing Scheme

The adoption of lean manufacturing techniques through the MSME Competitive Lean Manufacturing Scheme offers several benefits to MSMEs, such as:

Improved quality: The adoption of lean manufacturing techniques can help MSMEs to improve their product quality by eliminating defects, reducing rework, and enhancing customer satisfaction.

• Increased productivity: The adoption of lean manufacturing techniques can help MSMEs to reduce cycle time, increase throughput, and optimize resource utilization, thereby improving their productivity.
• Cost efficiency: The adoption of lean manufacturing techniques can help MSMEs to reduce their operating costs by eliminating waste, optimizing inventory levels, and minimizing downtime.
• Enhanced delivery performance: The adoption of lean manufacturing techniques can help MSMEs to improve their delivery performance by reducing lead times, improving on-time delivery, and increasing customer satisfaction.
• Competitive advantage: The adoption of lean manufacturing techniques can help MSMEs to enhance their competitiveness in the domestic and global markets by improving their quality, productivity, cost efficiency, and delivery performance.
• Capacity building: The MSME Competitive Lean Manufacturing Scheme provides MSMEs with an opportunity to develop their capacity and knowledge on lean manufacturing techniques, which can help them to sustain their competitiveness in the long run.

MSME Competitive (Lean) Scheme beneficiaries are eligible for the interoperability offered by the MSME Champions Scheme of the Ministry of Micro, Small, and Medium Enterprises, provided they meet the necessary conditions and requirements. Some benefits include:

• Advanced-level certificate holders under the MSME Competitive (Lean) Scheme are exempt from the Daily Works Management parameter under the MSME Sustainable (ZED) Silver Level Certification.
• Advanced-level certificate holders under the MSME Competitive (Lean) Scheme are exempt from the Daily Works Management and Waste Management (Muda, Mura, Muri) parameters under the MSME Sustainable (ZED) Gold Level Certification.

Conclusion

The MSME Competitive Lean Manufacturing Scheme is a timely and welcome initiative by the MSME Ministry to promote the adoption of lean manufacturing techniques among Indian MSMEs. The scheme provides MSMEs with financial assistance and capacity-building support to implement lean manufacturing techniques, which can help them to enhance their competitiveness and sustainability in the domestic and global markets. The success of the scheme will depend on effective implementation, monitoring, and evaluation mechanisms, as well as the active participation and commitment of MSMEs. Therefore, it is important to create awareness and highlight the benefits of lean manufacturing techniques among MSMEs, while ensuring the availability of adequate resources and infrastructure for the successful implementation of the scheme.

For more details, visit https://msme.gov.in 
 

The blog has been Co-authored by Bhavya Tyagi & Hasil Tewari.