Micro small and medium-sized enterprises (MSMEs) play a vital role in the growth of a nation. It is often said that small units are highly responsible for driving innovation and competition in various economies. Presently, the sector is accounted for 17 per cent in Indian GDP, which is expected to grow to 22 per cent by 2012.
Indian economy gets 45 per cent of manufacturing output and 40 per cent of exports from the SMEs as per the ministry estimates. Not only this, the sector employs 60 million people, creates 1.3 million jobs every year and caters to both national and international markets with the production of more than 8000 quality products.
Having been the key growth driver of the country economy, the MSME sector lacks the required cooperation from the government which in turn confines the growth of the sector in the domestic and global markets.
However, there is a slew of government schemes and sops offering enhancement and support to the business activities of the small units, but a majority of small traders fail to avail them due to lack of mindfulness and awareness about the schemes.
Here are five key financial assistance schemes being offered by the government to intensify the growth of the small scale units.
1. Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE)
The Ministry of MSME and Small Industries Development Bank of India (SIDBI) have instituted a trust named Credit Guarantee Fund Trust Micro and Small Enterprises (CGTMSE) for the implementation of Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE), which was formally launched on 30th August, 2000 and became operational from 1st January, 2000.
The scheme is aimed at providing collateral-free credit to both existing and new micro and small enterprise (MSE). The plan covers term loans and working capital facilities of up to Rs 100 lakh per borrowing unit and can be prolonged without any collateral security or third party guarantee to a new or existing MSE.
In case those units covered under this scheme go sick due to the factors beyond their control, the scheme also allows the lender to stretch the rehabilitation assistance. If the credit facility surpasses Rs 50 lakh, it may still be covered, but the guarantee cover will be extended for credit assistance of Rs 50 lakh only.
2. Credit Link Capital Subsidy Scheme for Technology Upgradation
Credit Linked Capital Subsidy Scheme (CLCSS) provides technology upgradation assistance to the SMEs primarily in the small scale industries (SSI). All entities, including sole proprietorship, partnership, cooperative, private and public limited companies, are eligible for the scheme.
The maximum limit of eligible loan for SMEs under the scheme is Rs 1 crore. It comprises a subsidy rate of 15 per cent.
The scheme was first launched in October, 2000 and was revised in September 2005. Under the revised scheme, the admissible capital subsidy is calculated with reference to purchase price of the plant and machinery.
3. Mini tools room and training centre scheme
In an endeavour to assist the manufacturing sector, the Government of India provides assistance to the state governments in setting up the tool room facilities, the backbone of the manufacturing sector as they create dies, tools, moulds, jigs, fixtures, gauges and precision components which are the essential elements for the operations of the production units.
Indian economy gets 45 per cent of manufacturing output and 40 per cent of exports from the SMEs as per the ministry estimates. Not only this, the sector employs 60 million people, creates 1.3 million jobs every year and caters to both national and international markets with the production of more than 8000 quality products.
Having been the key growth driver of the country economy, the MSME sector lacks the required cooperation from the government which in turn confines the growth of the sector in the domestic and global markets.
However, there is a slew of government schemes and sops offering enhancement and support to the business activities of the small units, but a majority of small traders fail to avail them due to lack of mindfulness and awareness about the schemes.
Here are five key financial assistance schemes being offered by the government to intensify the growth of the small scale units.
1. Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE)
The Ministry of MSME and Small Industries Development Bank of India (SIDBI) have instituted a trust named Credit Guarantee Fund Trust Micro and Small Enterprises (CGTMSE) for the implementation of Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE), which was formally launched on 30th August, 2000 and became operational from 1st January, 2000.
The scheme is aimed at providing collateral-free credit to both existing and new micro and small enterprise (MSE). The plan covers term loans and working capital facilities of up to Rs 100 lakh per borrowing unit and can be prolonged without any collateral security or third party guarantee to a new or existing MSE.
In case those units covered under this scheme go sick due to the factors beyond their control, the scheme also allows the lender to stretch the rehabilitation assistance. If the credit facility surpasses Rs 50 lakh, it may still be covered, but the guarantee cover will be extended for credit assistance of Rs 50 lakh only.
2. Credit Link Capital Subsidy Scheme for Technology Upgradation
Credit Linked Capital Subsidy Scheme (CLCSS) provides technology upgradation assistance to the SMEs primarily in the small scale industries (SSI). All entities, including sole proprietorship, partnership, cooperative, private and public limited companies, are eligible for the scheme.
The maximum limit of eligible loan for SMEs under the scheme is Rs 1 crore. It comprises a subsidy rate of 15 per cent.
The scheme was first launched in October, 2000 and was revised in September 2005. Under the revised scheme, the admissible capital subsidy is calculated with reference to purchase price of the plant and machinery.
3. Mini tools room and training centre scheme
In an endeavour to assist the manufacturing sector, the Government of India provides assistance to the state governments in setting up the tool room facilities, the backbone of the manufacturing sector as they create dies, tools, moulds, jigs, fixtures, gauges and precision components which are the essential elements for the operations of the production units.
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