MSME: All Past & Present Benefits

1. BENEFITS TO MSME

1. Central Government reserved three hundred fifty (350) items for purchase from MSMEs, under the Government Stores Purchase Programme.

2. MSE sector now has greater access to credit as a result of its classification as a priority lending sector. The banks are required to compulsorily ensure that specified percentage of their overall lending is made to priority sectors.

2. SME Division Scheme

• Credit Guarantee Scheme- Collateral free loans up to a limit of Rs.50 lakh – for individual MSEs
• Credit Linked Capital Subsidy (CLCS) for Technology Upgradation – Replacement of existing equipment/technology with same equipment/technology will not qualify for subsidy under this scheme, nor would the scheme be applicable to units upgrading with used machinery
• MSEs can get a capital subsidy (15%) on credit availed for technology upgradation

3. Scheme for ‘Marketing Assistance and Technology Up-gradation of MSMEs’- an NMCP Scheme – Provide marketing platform to manufacturing MSMEs through enabling their participation in State/ District level exhibitions being organized by State/District Authorities/Associations.

Reimbursement of 50% of to and from actual fare by shortest distance/direct train (limited to AC II tier class) from the nearest railway station/bus fare to the place of exhibition and 50% space rental charges for MSMEs (General category entrepreneurs).

4. Reimbursement of registration fee for Bar coding – The financial assistance is provided towards 75% reimbursement of only one-time registration fee and 75% of annual recurring fee for first three years paid by MSEs to GS1 India for using of Bar Coding

5. Funding support for ‘Product Certifications. – The objective is to provide subsidy to MSME units towards the expenditure incurred by them for obtaining product certification licenses from National Standardization Bodies or International Product Certifications.

6. Loan related assistance to women. – Mudra Yojana Scheme, TREAD (Trade Related Entrepreneurship Assistance and Development) scheme, Mahila Udyam Nidhi Scheme, Annapurna Scheme…etc

7. Fewer Electricity Bills – This concession is available to all the Enterprises that have the MSME Registration Certificate by providing an application to the department of the electricity along with the certificate of registration by MSME.

8. Protection against Payments (Delayed Payments)

• In case, if any MSE registered enterprise supplies any goods or services to a buyer then the buyer is required to make the payment on or before the agreed date of payment or within 15 days from the day they had accepted the goods and services from MSE or SCI registered business (if there is no mention of the date of payment).
• If the buyer delays the payment for more than 45 days after accepting the products or services then the buyer has to pay compound interest along with interests (monthly) on the amount that was agreed to be paid. The interest rate is three times the rate that is notified by the Reserve Bank of India.
• Interest is payable if dues not paid within the stipulated period.
• Interest rate 3 times of bank rate notified by RBI. (Bank Rate 4.25% w.e.f 22-05-2020)
• Interest is to be calculated monthly compounded.
• Buyer to deposit 75% if he goes to court against the order

9. Benefits to MSME Disclosure requirements of unpaid dues to MSME

• Disclosures in annual audited statement of accounts (audit may be under any law)
• Principal & interest payable at the year end
• Principal & interest paid during the year in case of delayed payments
• Interest payable but not paid
• Interest paid to MSME for delayed payments is not allowable as expenditure under I.T. Act (Sec 23 of MSMED Act)

10. CGTMSE Credit Guarantee Trust for Micro and Small Enterprise

• This scheme not available for Medium Enterprises
• Under this scheme loans upto Rs.2.00 crores can be obtained without collateral security from financial institutions
• Credit guarantee for loans upto Rs. 2 crore, without collateral and third party guarantee.
• Guarantee coverage ranges from 85% (Micro Enterprise up to Rs 5 lakh) to 75% (others).
•  50% coverage is for retail activity.
• Useful for the young entrepreneurs who have good business idea but no collateral security
• https://www.cgtmse.in/About_us.aspx

REVISED MSME CLASSIFICATION

As part of new definition, Exports will not be counted in turnover for any enterprises whether micro, small or medium.

Atmanirbhar Bharath Abhiyan

1. Loans to promoters of NPA accounts

• This loan will be given to promoters of NPA or stressed units.
• In turn promoters infuse that amount as equity in the units.
• These loans will be partially guaranteed by CGTMSE to an extent of 25%.
• Liquidity Rs.20,000 crore (subordinate debt)

2. Purchase of 15% equity

• Government will invest upto 15% of the equity of good MSME units maximum of Rs.75.00 Lacs
• Rating will be given to MSME units based on the turnover, exports, profits and gst payments.
• will setup up a fund with Rs.10,000cr.
• It will become easier for the units to raise equity from capital markets Rs.40,000cr. (1:4 criteria)
• Total liquidity Rs.50,000cr (Fund of funds)

3. No global tenders upto Rs.200Cr.

• This rule is applicable for all Central Government projects.
• Foreign companies are not allowed to participate in the projects worth upto Rs.200Cr.
• General Financial Rules will be amended accordingly.

4. e-market linkage

• Fairs and Exhibitions may not happen in the near future.
• As an alternative e-market linkage for MSME units will be promoted.
• Based on the sales in the e-market, banks will lend.

CHAMPIONS:

To manage all the benefits mentioned above, a new ICT based system called CHAMPIONS has been launched. The portal is not only helping and handholding MSMEs in the present situation, but is also providing guidance to grab the new business opportunities in the long run, become national and international Champions.

Detailed objectives of CHAMPIONS:

• Grievance Redressal: To resolve the problems of MSMEs including those of finance, raw materials, labor, regulatory permissions etc particularly in the Covid created difficult situation;
• To help them capture new opportunities: including manufacturing of medical equipments and accessories like PPEs, masks, etc and supply them in National and International markets;
• To identify and encourage the sparks: e. the potential MSMEs who are able to withstand the current situation and can become national and international champions

Benefits offered to MSME by RBI:

• Priority Sector Lending for MSME – MSME are considered in priority sector and there is a reduction in rate to the extent of 1%.

Priority sector lending include only those sectors as part of the priority sector, that impact large sections of the population, the weaker sections and the sectors which are employment-intensive such as agriculture, and Micro and Small enterprises. Detailed guidelines on Priority sector lending are available in our Master Direction on Priority sector lending no. FIDD.CO.Plan.1/04.09.01/2016-17 dated July 7, 2016

1. Interest Subvention Scheme – GST registered MSMEs can get 2% interest subvention from Government for incremental loans of Rs 1 crores under the MSME Credit Scheme. SIDBI has been nominated as the nodal agency. Operational guidelines issued. SIDBI has written to all the Scheduled Commercial Banks and NBFCs to operationalize the order. Launch of 59-minute loan portal to enable easy access to credit for MSMEs. In-principle approval of loans up to Rs. 1 crore through the portal. Portal link through GST portal.

2. Increase in interest rebate from 3% to 5% for exporters who receive loans in the pre-shipment and post-shipment period

Trade Receivables Discounting System (TReDS)

• It is an electronic platform that allows auctioning of trade receivable. The process is also commonly known as ‘bills discounting’, a financier (typically a bank) buying a bill (trade receivable) from a seller of goods before it’s due or before the buyer credits the value of the bill. In other words, a seller gets credit against a bill which is due to him at a later date. The discount is the interest paid to the financier.
• TReDS is a digital platform for MSMEs to auction their trade receivables at competitive rates through online bidding by Financiers
• The objective is to address the critical needs of MSMEs
  • Promptly finance trade receivables
  • Financing trade receivables based on Buyers credit rating
• Settlement
  • Settlement through NACH supports many-to-many situation
  • Reversal of unsettled transactions handled automatically and resolves issues related to reconciliation of payments

In terms of our circular RPCD.SME&NFS.BC.No.79/06.02.31/2009-10 dated May 6, 2010, banks are mandated not to accept collateral security in the case of loans upto Rs 10 lakh extended to units in the MSE sector

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. The observations of the author are personal views and the authors do not take responsibility for the same and this cannot be quoted before any authority without the written permission of the Author.

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