What’s in the news?

• Micro, Small and Medium Enterprises Ministry has informed that more than one crore two lakh MSMEs were registered in the country within five years.

Significance of MSMEs

• In developing countries like India, where the majority of the population resides in the rural areas, Micro, Small and Medium Enterprises (MSMEs) are crucial – socially and economically. Because these enterprises are widely dispersed across rural areas, they are extremely important for rural economic development and they have the ability to absorb a significant number of workers.
• Further, these enterprises play a key role as a place for entrepreneurship and business skill development, especially in rural areas due to their easy accessibility.
• The MSME sector contributes about 45% of India’s manufacturing sector output and 40 % of the nation’s exports. 
• In the emerging markets, most formal jobs are generated by Small and Medium Enterprises (SMEs), which create seven out of 10 jobs. 

New Definition of MSMEs

• Last year, the government changed the basic definition of MSME and also end the difference between the manufacturing and services sector. 
• Till now, MSMEs are categorised based only on the investment in machinery or equipment. The new classification has raised the investment limit and included annual turnover as an additional criteria.
  • Accordingly, units having investment less than Rs 1 crore and turnover less than Rs 5 crore will be called Micro units. 
  • Investment between Rs 1 and Rs 10 crore and turnover of Rs 5 crore to Rs 50 crore will be categorised as Small Enterprises. 
  • Units having investment between Rs 10 crore but up to Rs 50 crore and turnover between Rs 50 crore and Rs 250 crore will now be known as Medium Enterprises.

Rationale for the move

• It has been a long-standing demand from industry to hike the investment limits, as with inflation, units often cross the threshold that will bring them benefits. To prevent this, they either run their operations at a reduced level or incorporate multiple units so that turnover is distributed in a way that they remain within the threshold that will give them the benefits. 
• With the revised definitions of MSMEs, they will not have to worry about growing their size and can still avail benefits.
• The new definition also excluded exports from counting of turnover which will encourage the MSMEs to export more and more without fearing to lose the benefits of a MSME unit.   

Programmes for the growth and development of the MSME sector 

Prime Minister’s Employment Generation Programme

• This is a credit-linked subsidy programme aimed at generating self-employment opportunities through establishment of micro-enterprises in the non-farm sector by helping traditional artisans and unemployed youth.
• At the national level, the Scheme is being implemented by Khadi and Village Industries Commission (KVIC), a statutory organization under the administrative control of the Ministry of MSME.
• Under the scheme, loans are being provided by all Public Sector Banks, selected Private Sector Banks and Co-operative Banks with margin money subsidy being given by the Ministry of MSME through KVIC.

Scope

• The scheme is applicable to all viable projects in rural as well as urban areas, under the Micro enterprises sector.
• The maximum cost of the project admissible under the manufacturing sector is Rs.25 lakhs and the business/services sector is Rs.10 lakhs.
• Only one person from a family is eligible for obtaining financial assistance under the scheme.
• Assistance under the Scheme is available only for new projects.

Eligible Entrepreneurs / Borrowers

• Any individual, above 18 years of age
• The beneficiaries should have passed at least VIII standard, for setting up of project costing above Rs.10 lacs in the Manufacturing Sector and above Rs. 5 lacs in the business /Service Sector,
• Self Help Groups 
• Institutions registered under Societies Registration Act, 1860
• Production Co-operative Societies
• Charitable Trusts

Solar Charkha Mission

• Launched in 2018 by the Ministry of MSME, it aims to ensure inclusive growth by generation of employment, especially for women and youth, and sustainable development through establishing solar charkha clusters in rural areas. 
• Each spinner will be given two charkhas of 10 spindles each. On an average, it is considered that such clusters will have about 1000 charkhas. A cluster with full capacity will provide direct employment to 2042 artisans.
• These solar charkhas are to be operated using solar power which will help in development of Green Economy and generate sustainable employment for the artisans.
• The scheme also aims to boost rural economy and help in arresting migration from rural to urban areas. It is envisaged to generate direct employment for nearly one lakh persons in the approved 50 clusters across the country.
• The Khadi and Village Industries Commission (KVIC) is implementing the programme.

CHAMPIONS portal

• The CHAMPIONS stands for Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength. The portal is basically for making the smaller units big by solving their grievances, encouraging, supporting, helping and handholding.
• As part of the system a network of control rooms is created in a Hub & Spoke Model. The Hub is situated in New Delhi in the Secretary MSME’s office. The spokes will be in the States in various offices and institutions of the Ministry. 
• The system which utilises modern ICT tools including Artificial Intelligence, Data Analytics and Machine Learning aims at assisting Indian MSMEs march into the big league as National and Global Champions.

Credit Guarantee Scheme for Micro and Small Enterprises (CGMSE)

• Of all the problems faced by the MSMEs, non-availability of timely and adequate credit at a reasonable interest rate is one of the most important.
• CGMSE, launched in 2000, facilitates credit to the MSE units by covering collateral-free credit facility (term loan and/or working capital) extended by eligible lending institutions to new and existing micro and small enterprises. 
• The Ministry of Micro, Small and Medium Enterprises and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the scheme.

Reference:

1. http://newsonair.com/News?title=Over-one-crore-MSMEs-registered-in-country-over-period-of-5-years&id=409680