Introduction of topic

From a worldwide perspective, it has been recognized that micro, small and medium enterprises (MSMEs) play a vital role in economic development, as they have been the primary sources of job/employment creation and output growth, not only in less developed countries but also in developed countries. MSMEs have been accepted as the engine of economic growth and for promoting equitable development.

Like other sectors of the Indian economy, MSMEs have been hit badly due to lockdown imposed by the government to tackle Covid-19 pandemic. However, even before the current crisis, MSMEs growth has been marred by several challenges.

In order to revive the Indian economy amidst Covid-19 pandemic, the government has come up with various benefits and packages for the MSME sector which may help to scale up the businesses of such micro, small and medium enterprises with the spirit of “Aatmanirbhar Bharat” or “self-reliant India”.

Meaning of MSME-

MSME stands for Micro, Small, and Medium Enterprises. In accordance with the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006, the enterprises are classified into two divisions:

Manufacturing enterprises – engaged in the manufacturing or production of goods in any industry

Service enterprises – engaged in providing or rendering services

New MSME Definition

The revised definition of MSME will benefit the large number of enterprises to conform under the definition of MSME and get entitled to the benefits being awarded to MSMEs. 

 Revised MSME Classification

Composite Criteria: Investment and Annual Turnover
Classification Micro Small Medium
& Services
Investment < Rs. 1 cr.
Turnover < Rs.5 cr.
Investment< Rs. 10 cr.
Turnover < Rs.50 cr.
Investment < Rs. 50 cr.
Turnover < Rs.250 cr.

How and where to register?

Obtain udyog aadhar at with the help of Aadhar number.

Benefits of MSME Registration

  • Avail various schemes introduced by government for MSMEs
  • Protection against the delay in payment from Buyers i.e. maximum period for payment for purchase from MSME shall not exceed 45 days, in case of delay, the buyer is liable to pay interest to the supplier, at 3 times of bank rate
  • 50% reduction in fee for filing patents and trademarks
  • Exemption provided while applying for government tenders
  • Under bank loan, 15% import subsidy on fully automatic machinery (capital subsidy for modern technology)
  • Financial support for participating in foreign business exposure from the Government of India
  • Becomes easy to get licenses, approvals and registrations, irrespective of field of business
  • Compensation of ISO certificate expenditure
  • Loans without guarantee, low-interest rates on loan
  • Concession in electricity bills
  • Registered MSMEs gets tariff subsidies and tax and capital subsidies
  • Gets exemption under Direct Tax Laws

Some Government initiatives to promote newly MSMEs

Recently introduced CHAMPIONs portal

It has been felt necessary to put up and promote a unified, empowered, robust, bundled and technology driven platform for helping and promoting the Micro, Small and Medium Enterprises (MSMEs) of the country. As the name suggests it will aim at Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength. Accordingly, the name of the system is CHAMPIONS. This is basically for making the smaller units big by helping and handholding.

Three basic objectives of the CHAMPIONS:

  • To help the MSMEs in this difficult situation in terms of finance, raw materials, labour, permissions, etc.
  • To help the MSMEs capture new opportunities including manufacturing of medical items & accessories.
  • To identify the sparks, i.e., the bright MSMEs who can withstand at present and become national and international champions.

It is a one stop solution for everything related to MSME starting from MSME registration to procuring resources, seeking guidance, giving suggestions and registering grievances.

  • MSME Samadhan
  • MSME Sambandh
  • MSME Sampark
  • Enterpreneurship and Skill Development programs
  • MSME Databank
  • PMEGP e-portal
  • Infrastructure Development programs

Some Government schemes to promote MSMEs

Who provides MSME/SME Loans?

Entities registered under MSME can avail loans from following:

  • Small Industries Development Bank of India (SIDBI)
  • National Small Industries Corporation (NSIC)
  • Regional Rural Banks (RRBs)
  • Scheduled Commercial Banks (SCBs)
  • North Eastern Development Finance Corporation (NEDFi)
  • Other banks and NBFCs

Certain measures by government for businesses (including MSMEs) – a step towards AATMANIRBHAR BHARAT:

  • Rs. 3 lakh crores collateral free automatic loans for businesses including MSMEs
    • Borrowers with upto Rs. 25 crore outstanding and Rs. 100 crore turnover are eligible to avail such loan
    • Loans to have 4 year tenor with moratorium of 12 months on principal repayment
    • Interest to be capped
    • 100% credit guarantee cover to Banks and NBFCs on principal and interest
    • Scheme can be availed till 31st October, 2020
    • No guarantee fee
    • No fresh collateral
  • Rs. 20,000 crores subordinate debt for for MSMEs
    • Functioning MSMEs which are NPA or are stressed will be eligible
    • Promoters of MSME will be given debt by banks, which will then be infused by promoter as equity in the unit.
    • Government will provide a support of Rs. 4000 crores to CGTMSE
    • CGTMSE will provide partial credit guarantee support to banks
  • Rs. 50,000 crores equity infusion through MSME fund of funds
    • Funds of funds (FoF) with corpus of Rs. 10,000 crores will be set up
    • Provide equity funding for MSMEs with growth and potential viability
    • FoF will be operated through Mother fund and few Daughter funds
    • Will help to expand MSME size as well as capacity
    • Will encourage MSMEs to get listed on main board of Stock exchanges
  • Rs. 45,000 crores partial credit guarantee scheme 2.0 for NBFCs
    • NBFCs / HFCs / MFIs with low credit rating require liquidity to do fresh lending to MSMEs and individuals
    • Existing PCGS scheme to be extended to cover borrowings such as primary issuance of bonds / CPs of such entities
    • First 20% of loss will be borne by the guarantor i.e., Government of India
    • AA paper and below including unrated paper will be eligible for investment
  • Revision of MSME Definition (revised definition of MSME as mentioned above)
    • Investment limit to be revised upwards
    • Additional criteria of turnover being introduced
    • Distinction between manufacturing and service sector to be eliminated
  • Global tenders to be disallowed upto Rs. 200 crores
    • Indian MSMEs and other Companies have often faced unfair competition from foreign companies. Therefore, global tenders will be disallowed in government procurement tenders upto Rs. 200 crores
    • It will help MSMEs to increase their business
    • It will be a step towards self-reliant India and support Make in India
  • Other measures
    • E-market linkages for MSMEs to be promoted to act as a replacement for trade fairs and exhibitions
    • Fintech will be used to enhance transaction based lending using data generated by the e-marketplace
    • MSME receivables from Government and Central Public Sector Undertakings (CPSEs) to be released in 45 days
    • 30,000 crores special liquidity schemes for NBFCs / HFCs / MFIs


Being the fastest growing economy, we shall create more awareness about MSME sector and focus on generating more employment, improved industrialization, decrease in imports, increase in exports, updation of technology, competitive businesses, knowledge development, wealth creation and economy growth. By registering and availing the benefits and schemes under MSME will help to achieve the growth and economies of scale.


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May 2021