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Prime Minister Launches New Schemes to Strengthen MSME Sector

  • Published
    2nd Jul, 2022
Context

Recently, the Prime Minister has announced the Rs.6,000 crore funded ‘Three’ Schemes for boosting MSME sector during Udyami Bharat programme.

About

What are MSMEs?

  • The MSME sector involves micro, small and medium Enterprises that are involved in the production, manufacturing, and processing of goods and commodities.
    • This criterion was first introduced by the government of India through the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006
  • The central government in 2020 changed the definition of MSMEs (Micro, Small and Medium Enterprises)
  • New MSME definition based on investment and turnover (2020)

Updated MSME Definition

Type of enterprise

Investment

Turnover

Micro

Rs 1 crore

Rs 5 crore

Small

Rs 10 crore

Rs 50 crore

Medium

Rs 50 crore

Rs 250 crore

 

Highlights of the Event

  • About: The Scheme named Raising and Accelerating MSME Performance’ (RAMP) will be the major one among all three.
  • Two more schemes got focused in the event,
    • Capacity Building of First-Time MSME Exporters’ (CBFTE) scheme
    • Prime Minister’s Employment Generation Programme’ (PMEGP)
  • Features:
  • No global tenders would be undertaken for orders up to Rs.200 crore.
  • The Micro, Small, and Medium Enterprises (MSMEs) are firstly to be registered on the GeM portal as the government can access this portal and purchase MSME products.

About the Schemes

Scheme

Benefits

Raising and Accelerating MSME Performance (RAMP) Scheme

  • It aims to scale up the coverage and implementation capacity of MSMEs in all the states, with an impact enhancement of the existing MSME schemes.
  • This scheme will complement the Aatmanirbhar Bharat Abhiyan.
  • Encouraging ideas, fostering innovation, incubating new entrepreneurship and business by improving practices and processes.
  • Developing quality standards, deploying technological tools, and
  • Enhancing market access for making MSMEs self-reliant and competitive. 

Capacity Building of First-Time MSME Exporters (CBFTE) Scheme

  • It aims to encourage MSMEs to offer services and products of international standards for the global market.

 

  • Ease the export process for first-time exporters in terms of monetary support, certification-related support, etc.
  • It will help the MSMEs realise their export potential.

Prime Minister’s Employment Generation Programme (PMEGP)

  • A new feature has been launched of the already available scheme PMEGP.
  • The new features include an increase in the maximum project cost to
    • o   Rs.20 lakh (from Rs.10 lakh) in the service sector
    • o   Rs.50 lakh (from Rs.25 lakh) for the manufacturing industry. 
  • Enhance MSMEs’ capacity for job creation. 
  • PMEGP applicants from Aspirational districts and transgenders would nowbe treated as the Special Category applicants to be entitled to higher subsidies.

Significance of MSMEs

  • Employment: It is the second largest employment generating sector after agriculture. It provides employment to around 120 million persons in India.
  • Contribution to GDP: MSME ministry has set a target to up its contribution to GDP to 50% by 2025 as India becomes a $5 trillion economy.
  • Exports: It contributes around 45% of the overall exports from India.
  • Inclusive growth: MSMEs promote inclusive growth by providing employment opportunities in rural areas especially to people belonging to weaker sections of the society.
  • For example: a Khadi and Village industry require low per capita investment and employs a large number of women in rural areas.
  • Financial inclusion: Small industries and retail businesses in tier-II and tier-III cities create opportunities for people to use banking services and products.
  • Promote innovation: It provides opportunity for budding entrepreneurs to build creative products boosting business competition and fuels growth.

Some other Schemes for MSMEs are:

  • Emergency Credit Line Guarantee Scheme
  • MUDRA Yojana
  • Scheme of Fund for Regeneration of Traditional Industries (SFURTI) 
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