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The micro, small and medium enterprises play a pivotal role in driving the overall economic development of a nation. The sector not only plays a critical role in providing employment opportunities at comparatively lower capital cost but also helps in industrialisation of rural and backward areas and social stability. Hence, today, most parts of the world consider nurturing entrepreneurship among the foremost priorities for overall economic development.

The Indian government over the years has taken initiatives through different policies to support the small scale industries. Despite the various measures offered by the government and the agencies to uplift the small scale industries, the MSMEs were not able to completely benefit from the schemes planned for them and one of the primary reasons is lack of awareness among the enterprises about the prevalence of different schemes for MSMEs.

The report provides a comprehensive overview of different existing policy measures/schemes for the medium and small scale industries. The policies are grouped together under different segments so as to highlight their broad objectives.

Disclaimer: The content on MSME Policies is based on information & data sourced from various reports of the Ministry of MSMEs. While D&B India endeavours to ensure accuracy of information, we do not accept any responsibility for any loss or damage to any person resulting from reliance on it.

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Section I

This section covers the various policies & schemes initiated by the government to facilitate flow of funds to the MSME sector in India:

Institutional ArrangementSmall Industries Development Bank of India (SIDBI) is the principal financial institution for promotion, financing and development of the MSE sector. SIDBI’s major operations are in the areas of (i) refinance assistance (ii) direct lending and (iii) development and support services. State Financial Corporations (SFCs) and twin-function State Industrial Development Corporations (SIDCs) at the state level are the main sources of long-term finance for the MSE sector.

Targets for lending to Micro and Small Enterprises (MSE) sector by Domestic Commercial Banks and Foreign Banks operating in India is set by the Reserve Bank of India (RBI).

Priority Sector Lending Objective: To ensure credit flow to the MSE sector

Salient Features: Banks are required to compulsorily ensure that specified percentage (currently 40% for domestic commercial banks and 32% for foreign banks) of their overall lending is made to priority sectors as classified by Government. These sectors include agriculture, small enterprises, retail trade, etc.

Other Targets for Lending to Micro and Small EnterprisesObjective: To ensure that sufficient credit is available to micro enterprises within the MSE sector.

Salient Features: 60% of the total advances of banks to MSE sector should go to micro (manufacturing) enterprises having investment in plant and machinery up to ` 25 lakh and micro (service) enterprises having investment in equipment up to ` 10 lakh.

Collateral-Free LoansObjective: To provide collateral-free loans to MSMEs

Salient Features: Banks are mandated not to accept collateral security in the case of loans upto ` 10 lakh extended to units in the MSE sector. Banks are also advised to extend collateral-free loans upto ` 10 lakh to all units financed under the Prime Minister Employment Generation Programme of Khadi and Village Industries Commission. Banks may, on the basis of good track record and financial position of the MSE units, increase the limit of dispensation of collateral requirement for loans up to ` 25 lakh (with the approval of the appropriate authority).

Credit Guarantee Fund SchemeObjective: Making available credit to MSEs, particularly Micro Enterprises, for loans up to ` 100 lakh without collateral/third party guarantees.

Salient Features: The guarantee cover provided is up to 75% of the credit facility up to ` 50 lakh (85% for loans up to ` 5 lakh provided to micro enterprises, 80% for MSEs owned/operated by women and all loans to North Eastern Regions [NER]) with a uniform guarantee at 50% of the credit exposure above ` 50 lakh and upto ` 100 lakh. The scheme is being operated by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). As on 31st Mar 14, cumulatively 1,419,807 proposals have been approved for guarantee cover for a total sanctioned loan amount of ` 700.26 billion.

Raw Material Assistance Scheme Objective: The scheme aims at helping MSEs by way of financing the purchase of raw material (both indigenous & imported).

Salient Features: The scheme provides for financial assistance for procurement of raw material upto 90 days, helps MSEs to avail economics of purchases like bulk purchase, cash discount etc. The National Small Industries Corporation (NSIC) takes care of all the procedures, documentation & issue of Letter of Credit (LoC) in case of imports for the MSEs.

Composite Loan SchemeObjective: The scheme envisages sanction and disbursement of working capital and term loan together from a single agency.

Salient Features: A composite loan limit of ` 1 crore can be sanctioned by banks to enable the MSE entrepreneurs to avail of their working capital and term loan requirement through a Single Window.

Finance and credit related schemes

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Micro Finance ProgrammeObjective: Lifting the poor above the level of poverty by providing them increased self-employment opportunities and making them credit worthy.

Salient Features: Under the Scheme, the Government of India provides funds to SIDBI under ‘Portfolio Risk Fund’ (PRF) which is utilized for security deposit requirements of loans from the MFIs/NGOs. At present, SIDBI takes fixed deposit equal to 10% of the loan amount. The funds under PRF are to be utilized for extending loans in the underserved states and underserved pockets/districts of other states. As on 30th Mar 14, cumulative loan amount provided to MFIs/NGOs under the scheme stood at ` 20.59 billion covering approximately 26.33 lakh persons.

Laghu Udyami Credit Card (LUCC) Scheme Objective: Launched by Public Sector Banks for providing simplified & borrower-friendly credit facilities to MSME, tiny enterprises, retail traders & artisans. The credit limit is up to ` 10 lakh for borrowers who have a satisfactory track record.

Credit Linked Capital Subsidy Scheme (CLCSS)Objective: Facilitating technology upgradation of Micro and Small Enterprises.

Salient Features: The revised scheme provides 15% capital subsidy (limited to a maximum of ` 15.00 lakh) for purchase of plant & machinery. Maximum limit of eligible loan for calculation of subsidy under the scheme is ` 100 lakh. Since inception of the scheme, 28,287 units have availed subsidy of ` 16.19 billion till 31st Mar 14.

Interest Subsidy Eligibility Certificate (ISEC) SchemeObjective: The scheme is an important mechanism of funding khadi programme to fill the

gap between the actual fund requirements and availability of funds from budgetary sources.

Salient Features: Under the ISEC scheme, credit at a concessional rate of interest of 4% per annum for working capital, is made available as per the requirement of the institutions. The scheme now supports only the khadi and the polyvastra sector.

Rural Industries Service Centre (RISC)Objective: To provide infrastructure support for individual units to upgrade their production, quality, skills, marketing, etc.

Salient Features: Financial assistance up to 90% of the project cost is provided to beneficiaries from North Eastern Region (NER) for projects up to ` 5 lakh and 75% for the projects costing upto ` 25 lakh.

Product Development Design Intervention and Packaging (PRODIP) SchemeObjective: To improve the quality and marketability of khadi and village industries products and also to help them to diversify into new products.

Salient Features: Under this scheme, grants up to ` 2 lakh for institution/up to ` 1 lakh for individual or 75% of the project cost whichever is less, is provided by Khadi and Village Industries Commission (KVIC) to improve the product quality, introduce new designs and better packaging of products.

Scheme of Fund for Regeneration of Traditional Industries (SFURTI)Objective: Khadi, village industries and coir clusters have been taken up for development by providing them with improved equipments, common facility centres, business development services, training, capacity building and design and marketing support, etc.

Salient Features: The guidelines of SFURTI provide that the selection of clusters should be based on geographical concentration of viable number of artisans with at least 10% of the clusters being located in the NER.

Workshed Scheme for Khadi Artisans (WSKA) Objective: To facilitate and empower khadi spinners and weavers essentially belonging to BPL category, to chart out a sustainable path for growth, income generation and better work environment to enable them to carry out their spinning and weaving work efficiently.

Salient Features: Financial assistance for construction of worksheds is provided to those khadi artisans who belong to BPL category through the khadi institutions with which these khadi artisans are associated.

Micro Credit Scheme Objective: To meet the requirement of well managed voluntary agencies that are in existence for at least 5 years; have a good track record and have established network and experience in small savings-cum-credit programmes with Self Help Groups (SHGs) individuals.

Working Capital FinanceSalient Features: Finance for augmenting working capital of viable and well managed units, on selective basis in case of emergent requirements, to enable them to pay off their purchases of consumable stores and spares and production related overheads particularly electricity bills, statutory dues, etc.

The Equipment Leasing SchemeObjective: NSIC to assist small scale units to procure industrial equipment for modernisation, expansion and diversification of their industries.

Salient Features: 100% financing at very liberal terms with easy repayment schedule, simple

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formalities and speedy sanction, single window system for imported equipment, tax rebate on full 5 year lease rental.

Equipment Finance SchemeObjective: SIDBI facilitates in acquisition of machinery/equipment including diesel generator sets which are not related to any specific project.

Mahila Udyam Nidhi (MUN) Scheme Objective: Provides equity support to women entrepreneurs for setting up projects in tiny sector.

Scheme for Assistance to Training Institutions Objective: Develop indigenous entrepreneurship for developing new micro and small enterprises, enlarging the entrepreneurial base and encouraging self-employment in rural and urban areas.

Salient Features: Under the scheme, financial assistance is provided to training institutions in the form of capital grant for creation/strengthening of infrastructure and also to support for conducting entrepreneurship development and skill development programmes. Maximum assistance for creation or strengthening of infrastructure will be ` 1.5 crore on matching basis, not exceeding 50% of project cost. However, for the NER (including Sikkim), Andaman & Nicobar and Lakshadweep, the maximum assistance on matching basis would be ` 2.7 crore or 90% of project cost, whichever is less. Maximum assistance per trainee per hour for entrepreneurship development and skill development programme is ` 50 (` 60 for NER, A&N and Lakshadweep).

Scheme for Strengthening of Training Infrastructure of Existing and New Entrepreneurship Development InstitutionsObjective: To strengthen training infrastructure

Salient Features: Under the scheme, financial assistance is provided to existing and new institutions (EDIs) for improvement in areas like building, training aids/equipment and other support services. The central assistance is only supplementary to the contributions and efforts of the States/UT Governments and other agencies involved in the programme.

Scheme for ‘Supporting 5 selected universities/colleges to run 1200 entrepreneurship clubs per annum’Salient Features: The scheme provides funding support to the selected universities for formation and operation of entrepreneurship clubs. Each university would be required to run 240 clubs per year and each club may have a membership of 50 entrepreneurs.

India Inclusive Innovation FundObjective: To promote grass root innovations with social returns as well as modest economic returns.

Salient Features: This fund operates as a for-profit entity with a social investment focus. The fund supports enterprises developing innovative solutions primarily for citizens who lie in the low half of India’s economic pyramid, with limited physical and institutional access to basic services.

Fund for Venture Capital for MSMEsObjective: In order to create a conducive eco-system for the venture capital in the MSME sector the government, in the Budget for FY15 proposed to establish a ` 10,000 crore fund to act as a catalyst to attract private capital by way of providing equity, quasi

equity, soft loans and other risk capital for start-up companies.

Venture Capital Scheme Objective: To encourage small scale units ventures/sub-contracting units to acquire capital equipment, as also requisite technology for building up of export capabilities/import substitution including cost of total quality management and acquisition of ISO-9000 certification and for expansion of capacity.

State Level Artisan Welfare Fund Trust Objective: Artisans Welfare Funds (AWFs) have been created to provide security and assistance to artisans, and are managed through Artisans Welfare Funds Trusts (AWFTs).

Salient Features: Khadi institutions registered with Khadi and Village Industries Commission (KVIC) and State Khadi and Village Industries Boards (KVIBs) are required to contribute 12% of wages of artisans to AWFs. In the case of death of an artisan, the entire amount to his credit is paid to his legal heir or nominee. An artisan who has been subscribing to the fund for at least one year can withdraw the amount standing to his credit to meet a variety of expenses such as children’s education, marriage, medical treatment, housing, purchasing equipment, child birth, buy khadi on festivals, death rites, etc. As on 31st Mar 14, 31 institutions have been registered as members and ` 35.54 lakh has been deposited for the year FY14.

National Equity Fund Scheme Objective: Provides equity support to small entrepreneurs setting up projects in tiny sector.

Salient Features: Provides equity type assistance at 5% service charge.The scope of this scheme was widened in FY01 raising the limit of loan from ` 6.25 lakh to ` 10 lakh and project cost limit from ` 25 lakh to ` 50 lakh.

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Performance & Credit Rating Scheme for Small EnterprisesObjective: The objective of the scheme is to create awareness amongst micro & small enterprises about the strengths and weaknesses of their operations and also their credit worthiness. The scheme is implemented by NSIC and rating under the scheme is being carried out through empanelled rating agencies. The rating serves as a trusted third party opinion on the unit’s capabilities and credit worthiness.

Salient Features: Under this scheme, rating fee payable by Micro and Small Enterprises is subsidised for the first year upto 75% of the rating fee upto a maximum of ` 40,000. The enterprises are at liberty to select any of the rating agencies empanelled with NSIC.

Bill FinancingSalient Features: Bills drawn by small scale units for the supplies made to the reputed and well established enterprises and duly accepted by them will be financed/discounted by NSIC for a maximum period of 90 days.

Factoring ServicesObjective: Factoring services make available the much neeeded working capital to small scale enterprises and is likely to induce customers to make timely payments for fear of adverse “customer-image” in the market.

Direct TaxesSalient Features: With effect from 1st Apr 00, deduction in respect of profits and gains for new small scale units which have commenced production between 1st Apr 95 and 31st Mar 02 is available under Sec. 80IB. The deduction allowed is 25% of profits for 10 years. For units in the NE & specified backward states, the deduction allowed is 100% for first five years & 25% for the next five years. State Governments offer incentives to small scale units in respect of Sales Tax. Some give a tax holiday for

periods ranging from 5 to 10 years while others offer deferment of tax.

Tax Holiday SchemeSalient Features: Small units setting up establishment in the north-east and in specified backward states do not have to pay any direct taxes for the first five years.

Specialised MSME branchesObjective: To facilitate easy access to credit and reduction in transaction costs

Salient Features: Public sector banks have been advised to open at least one specialised branch in each district. Further, banks have been permitted to categorise their MSME general banking branches having 60% or more of their advances to MSME sector in order to encourage them to open more specialised MSME branches for providing better service to this sector as a whole. As of Mar 13, there are 2,032 specialized MSME branches.

FDI policy An industrial undertaking, i.e., a company with interests in industry can invest upto 24% equity in a MSME unit. However, if the equity goes beyond 24%, the industrial unit loses its MSME status.

• No restriction on the extent of equity that can be held by a Non-resident Indian (NRI) as an individual/partner in a MSME unit.

• Under automatic procedures, foreign technology agreements are being permitted in respect of industries that are designated as high priority industries.

• Automatic permission is given for foreign technology agreements up to certain ceilings covering the same high priority areas.

• Equal treatment in payment of royalty under foreign technology collaboration: - Irrespective of the extent of foreign equity in the shareholding, who have

entered into foreign technology collaboration agreements may henceforth be permitted on automatic approval route to make royalty payments at 8% on exports and 5% on domestic sales without any restriction on the duration of the royalty payments. The ceiling on payment of lump sum fee/ royalty on the automatic route would continue to apply in all cases.

Debt Restructuring Objective: A debt restructuring mechanism for units in the MSME sector has been formulated and advised to all commercial banks. The detailed guidelines have been issued to ensure restructuring of debt of all eligible SMEs. Prudential guidelines on restructuring of advances have also been issued which harmony the prudential norms over all categories of debt restructuring mechanisms (other than those restructured on account of natural calamities).

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Productivity and competitiveness

Section II

The policies or schemes adopted by the government to enhance productivity, develop quality products and improve awareness of Intellectual Property Rights (IPRs) and hence overall competitiveness of the small scale industries are summarised in this section:

The National Manufacturing Competitiveness Programme (NMCP) Objective: It is the nodal programme of the Government of India to develop global competitiveness among Indian MSMEs, conceptualised by the National Manufacturing Competitiveness Council (NMCC). There are eight components under the NMCP targeted at enhancing the entire value chain of the MSME sector. These components are described below:

Salient Features:

1. Entrepreneurial and Managerial Development of SMEs through Incubators: Provides early stage funding for nurturing innovative business ideas (new indigenious technology, processes, products, procedure etc.) which could be commercialized in a year.

2. Scheme for Building Awareness on Intellectual Property Rights (IPRs) for the MSMEs: Various activities/initiatives on IPR are being implemented under this scheme which provides

the MSMEs more information, orientation and facilities for protecting their intellectual property.

3. Lean Manufacturing Competitiveness Scheme for MSMEs: The objective of the scheme is to enhance the manufacturing competitiveness of MSMEs through application of various Lean Manufacturing Techniques viz Total Productive Maintenance (TPM), Visual Control, Standard Operating Procedures, Just in Time, Kanban System, Cellular Layout, Poka Yoke, etc.

4. Enabling Manufacturing Sector to be Competitive through Quality Management Standards (QMS) and Quality Technology Tools (QTT): To sensitize MSMEs on Quality Management Standards/Quality Technology Tools and related DC-MSME schemes.

5. Technology and Quality Upgradation Support to MSMEs: The scheme focuses on two important aspects, namely, enhancing competitiveness of MSME sector through energy efficiency and product quality certification. Under this scheme, a capital subsidy of 25% of the project cost subject to a maximum of ` 10 lakh is provided to the registered MSME units. While 25% of the project cost is provided as

subsidy by the Government of India, the balance amount is funded through loan from SIDBI/banks/financial institutions. The minimum contribution as required by the funding agency is made by the MSME unit.

6. Marketing Assistance and Technology Upgradation Scheme for MSMEs: The objective of this scheme is to enhance MSMEs’ competitiveness in the national as well as international markets through various activities. Financial assistance of ` 29.88 million has been provided to 1,987 MSME units under the Scheme up to 31st Mar 14.

7. Design Clinic Scheme for MSMEs: To provide expert advice and solutions on real time design problems, resulting in new product development, continuous improvement and value-addition for existing products. It also aims at value added cost effective solutions.

8. Promotion of Information & Communication Tools (ICT) in MSME Sector: To motivate MSMEs to adopt ICT tools and applications in their production & business processes with a view to improve their competitiveness.

Policy of ReservationObjective: The policy has two objectives a) Ensure increased production of consumer goods in the small scale sector and b) Expand employment opportunities through setting up of small scale industries.

Salient Features: Reservation of items for exclusive manufacture in MSME sector statutorily provided for in the Industries (Development and Regulation) Act, 1951. Non-MSME units can undertake manufacture of reserved items only if they undertake 50% export obligations. 605 items are presently reserved for exclusive manufacture in the MSME Sector.

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Integrated Infrastructural Development (IID) SchemeObjective: The aim of the IID scheme is to provide developed sites with infrastructural facilities like power distribution network, water, telecommunication, drainage and pollution control facilities, roads, banks, raw materials, storage and marketing outlets, common service facilities and technological back up services etc. The scheme covers rural as well as urban areas with a provision of 50% reservation for rural areas and 50% industrial plots to be reserved for tiny sector. The scheme also provides for upgradation/strengthening of the infrastructural facilities in the existing old industrial estates. The scheme covers districts which are not covered under the Growth Centres scheme.

Scheme for Enhancing Productivity & Competitiveness of Khadi Industries and ArtisansObjective: To make khadi industry more competitive with more market driven, profitable production and sustained employment for khadi artisans and related service providers by replacement of obsolete and old machinery and equipment and repairs to/renovation of existing/operational machinery and equipment.

Salient Features: The scheme aims to provide financial assistance to 200 of the ‘A plus’ and ‘A’ category khadi institutions of which 50 institutions would be those which are managed exclusively by beneficiaries belonging to Scheduled Castes (SCs)/ Scheduled Tribes (STs).

Strengthening of Infrastructure of Existing Weak Khadi Institutions and Assistance for Marketing Infrastructure Objective: The scheme has been formulated in order to facilitate the need-based support towards the khadi sector for nursing the sick/problematic institutions elevated from D to C category as well as

those whose production, sales and employment have been declining while they have potential to attain normalcy and to support creation of marketing infrastructure in other identified outlets.

Salient Features: Under this scheme, financial assistance is provided to existing weak khadi institutions for strengthening their infrastructure and for renovation of selected khadi sales outlets.

Development of Production Infrastructure Scheme - Coir BoardObjective: Financial assistance provided for setting up new coir units and modernization of existing units.

Salient Features: Provision of 25% of the project cost subject to a maximum of ` 6 lakh for setting up of defibering unit, ` 4 lakh for automatic spinning unit and ` 5 lakh for others, including coir pith unit. Financial assistance limited to ` 2 lakh is also provided for modernization of existing units.

Khadi Reform and Development ProgrammeObjective: The ‘Khadi Reform and Development Programme (KRDP)’ aims to revitalize the khadi sector with enhanced sustainability of khadi, increased incomes and employment for spinners and weavers, increased artisans’ welfare and achieve synergy with village industries. Under KRDP, funds to the tune of US$ 150 million from Asian Development Bank are being provided in four tranches spread over a period of three years beginning Feb 10 and will be released to Khadi and Village Industries Commission as ‘grants-in-aid’ under budgetary allocation through the Ministry of MSME.

Khadi/VI S&T and Scheme for Promotion of Khadi as an Exclusive Heritage and Green product (SPOKE) (new component)Objective: To improve the Khadi and Village industries products

for holistic promotion of KVI items as heritage and green products to harness its USP.

Salient Features: The funds under the scheme are provided for setting up of projects to improve the Khadi and V.I products and for Promotion of Khadi as an Exclusive Heritage and Green Product.

Appropriate incentives are provided for encouraging the development and protection of new technology, machinery, processes, products, etc. in the KVI sector. The incentive may be in the form of some one-time assistance towards the cost of development of new technology products etc, the cost of filing applications for IPR, GI registration, community trade mark, etc.

Scheme for Implementation of R&DObjective: KVIC undertakes research and development activities through in-house research and also by sponsoring projects to other R&D organisations. The main objectives of the R&D programme are: increase in productivity and wages of the workers; improvement in quality; efficient use of local skills and local raw materials and reduction of human drudgery.

Schemes of Surveys, Studies and Policy ResearchObjective: The main objectives of the Scheme are (i) to periodically collect relevant and reliable data on various aspects and features of MSMEs (ii) to study and analyze, on the basis of empirical data or otherwise, the constraints and challenges faced by MSMEs as well as the opportunities available to them in the context of liberalization and globalization of the economy,and (iii) to use the results of these surveys and analytical studies for policy research and designing appropriate strategies and measures of intervention by the Government.

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Technology up-gradationSection III

The policies which have been directed towards assisting the MSMEs to develop their technological capabilities will be highlighted in this section.

Scheme for ISO 9000/ISO 14001/HACCP Certification Reimbursement Objective: An incentive scheme for the technological upgradation/quality improvement and environment management of the MSME sector.

Salient Features: The scheme envisages one time reimbursement of charges for acquiring ISO 9000/14001/HACCP certification in MSEs to the extent of 75% of the cost subject to the maximum of ` 75,000. The Permanent Registered Micro Small Enterprises (MSEs) units are eligible to avail the incentive scheme.

Technology Development & Modernisation Fund Scheme (TDMF)Objective: Providing finance to existing small scale units for technology up-gradation/modernization.

Salient Features: Assistance for meeting the expenditure on purchase of capital equipment acquisition of technical know-how, up-gradation of process technology and products with thrust on quality improvement, improvement in packaging and

cost of TQM and acquisition of ISO-9000 series certification. SIDBI in July 1996 had permitted SFCs and promotional banks to grant loans for modernisation projects costing upto ` 50 lakh. Coverage of the TDMF scheme has been enlarged w.e.f. 1st Sep 97. Non-exporting units and units graduating out of small scale sector are also eligible to avail assistance under this scheme.

Setting up Mini Tool Room & Training Centres under the PPP ModeObjective: The objective of the scheme is to develop more tool room facilities i.e. technological support to MSMEs, by creating capacities in the private sector for designing and manufacturing quality tools and also to provide training facilities in the related areas.

Salient Features: Setting up of Mini Tool Rooms under PPP mode for creating tooling and training facilities in private sector. Entrepreneurs and associations would be selected through competitive bidding to set up Mini Tool Rooms. The Government will support maximum of 40% of the project cost not exceeding ` 9.00 crore.

Technology Up-gradation Fund Scheme (TUFs)Objective: TUFS was introduced in 1999 to catalyze investments in

technology in all the sub-sectors of textiles and jute industry by way of 5% interest reimbursement. The scheme has been extended with further modifications and restructuring. The scheme has been re-launched as Revised Restructured Technology Upgradation Fund Scheme (RR-TUFS) w.e.f April 1, 2013 to March 31, 2017.

Salient Features: RR-TUFS has been introduced with an overall plan allocation of ` 119.53 billion including the committed liabilities of the spinning sector.

Rejuvenation, Modernisation and Technological Upgradation of Coir Industry (renamed as Coir Udyami Yojana – CUV)Objective: The scheme is a major initiative to modernize and achieve technological upgradation of the coir industry.

Salient Features: Under this scheme, assistance is provided to groups of spinners and tiny sector workers for replacement of outdated ratts/looms and for constructing worksheds so as to increase production and earnings of such workers.

Scheme of Science and Technology of the Coir BoardObjective: Modernization of production processes, development of machinery and equipments, product development and diversification, development of environment friendly technologies, technology transfer, incubation, testing and service facilities, incentive for using natural dyes and incentive for IPR in coir sector.

In-House Test Laboratory SchemeObjective: To create testing facilities in Khadi and Village Industries for the analysis of raw materials and products and to establish standards for KVI products.

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Marketing and sales promotion

Section IV

Assistance for marketing and sales promotion whether for the domestic market or global has been addressed by the government through some of the measures taken in the recent period. This section provides a synopsis of the various schemes taken by the government:

Vendor Development Programme (VDP) for AncilliarisationObjective: VDPs are aimed at creating awareness on Public Procurement Policy to make SMEs understand the requirements of goods/services for various CPSUs and to display the strength of SMEs in the form of exhibition. VDPs help to achieve faster and inclusive growth, expanding production in a regionally balanced manner and in generating widely dispersed employment.

Salient Features: The MSME-DI organizes national-level VDPs-cum-Exhibitions and state-level VDPs. VDPs provide common platform for SMEs and large public sector institutions to interact with each other to identify emerging demands of the buyer organizations, while also providing the SMEs with an opportunity to showcase their capabilities and industrial ventures.

Enable Participation of MSMEs in State/District Level Trade Fairs and Provide Funding Support (Sub-scheme under Marketing Assistance and Technology Upgradation Scheme)Objective: Provide marketing platform to manufacturing MSMEs through enabling their participation in State/District level exhibitions.

Salient Features: Free registration for participating in trade fairs; reimbursement of 50% of to and fro 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); For Women/SC/ST Entrepreneurs & Entrepreneurs from NER, Government of India will reimburse 80% of items listed above.

Marketing Assistance Scheme (NSIC)Objective: To enhance marketing capabilities and showcasing the competencies of MSMEs, updating about the prevalent market scenario, facilitating the formation of consortia of MSMEs for marketing of their products and services, disseminating/propagating various programmes of the Government, NSIC provides different marketing support to MSMEs.

Salient Features: Organizing international technology exhibitions in foreign countries and participation in international exhibitions/trade fairs, organizing domestic exhibitions and participation in exhibitions/ trade fairs in India, support for co-sponsoring of exhibitions organized by other organisations/ industry associations/agencies, organizing buyer-seller meets, conducting intensive campaigns and marketing promotion events etc. provides financial assistance of up to 95% of the airfare and space rent of entrepreneurs. Assistance is provided on the basis of size and the type of the enterprise. Financial assistance for co-sponsoring would be limited to 40% of the net expenditure, subject to maximum amount of ` 5 lakh.

Single Point Registration Scheme and other Services Objective: NSIC operates a single point registration scheme under the Government purchase programme, wherein the registered small scale units get purchase preference in Government purchase programme. Under this, 358 items are reserved for exclusive purchase from MSME by Central Government. Other facilities include availability of tender sets free of cost, exemption from payment of earnest money deposit, exemption from payment of security deposit and price preference upto 15% in Central Government purchases for individual MSMEs.

Public Procurement Policy Objective: To improve the market access and competitiveness of MSEs and encourage linkages between MSEs and large enterprises.

Salient Features: The policy mandates that 20% of procurement of annual requirement of goods and services by all Central Ministries/Public Sector Undertakings will be from the MSEs. The policy also mandates that a sub target of 4% out of the 20% to be procured from MSEs owned by SC/ST entrepreneurs.

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Export promotionSection V

Since MSMEs account for about 40% of India’s total exports, the government has over the years taken a number of measures to support the sector to realize their export potential. The section presents a compilation of the different schemes available for the sector.

Marketing Assistance and Technology Upgradation Scheme for MSMEsThis scheme aims to enhance MSME’s competitiveness in the national and international markets through various activities such as technology up-gradation in packaging, skills upgradation/development for modern marketing techniques, competition studies of threatened products, special components for North Eastern Region (NER), identification of new markets through state/district level, local exhibitions/trade fairs, corporate governance practices, marketing hubs and reimbursement to ISO 18000/ 22000/27000 Certification.

Sub-schemes:a. Funding support for setting up of ‘Marketing Hubs’Objective: Marketing hubs are being set up to provide facilities for B2B meeting among MSMEs, wholesale and retail marketing of MSME products, exploring the export opportunities for the MSME products, to attract new customers

and enhance the marketing reach of the MSMEs.

Salient Features: Financial assistance is provided for infrastructure development.

b. Funding support for conducting skill development programs on ‘Modern Marketing Techniques’Objective: It aims to impart training for upgrading the skills of cluster/product group members on modern marketing techniques.

Salient Features: It provides skill development training.

c. Funding support for conducting awareness workshops on ‘Packaging Techniques’Objective: It aims at raising awareness on technology upgradation in packaging and building capacities and related DC-MSME schemes through organising workshops for MSMEs.

Salient Features: It provides funding support for conducting awareness activities.

d. Funding support for conducting trade competition studiesObjective: It aims to conduct studies to identify sectors in which the products are threatened by international competition due

to issues related to marketing/branding strategies.

Salient Features: It provides funding support for conducting market research and analytical studies.

Scheme for Market Development Assistance for MSME Exporters Objective: The scheme aims to encourage SME exporters at tapping & developing overseas markets; increase participation at international trade fairs/exhibitions; enhance exports of small/micro manufacturing enterprises; popularize adoption of bar coding.

Salient Features: The scheme offers funding for participation by manufacturing SMEs in international trade fairs/exhibitions under MSME India stall; sector specific market studies by industry associations/export promotion councils/Federation of Indian Export Organisation; initiating/contesting anti-dumping cases by MSME associations; and reimbursement of 75% of one time registration fee (w.e.f. Ist Jan-2002) and 75% of annual fees (recurring) (w.e.f. 1st Jun-2007) paid to GSI by small & micro units for the first three years for bar code.

Export Development FinanceObjective: Finance for export development to export oriented units for meeting their emergent requirements. Pre and post shipment finance is also to be provided to such units at usual terms & conditions.

Scheme for ‘Providing financial assistance on International Cooperation’Objective: The scheme covers deputation of MSME business delegations to other countries for exploring new areas of technology infusion/upgradation, facilitating joint ventures, improving market of MSMEs products, foreign collaborations, etc; participation by Indian MSMEs in international

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exhibitions, trade fairs and buyer-seller meets in foreign countries and India, in which there is international participation; and holding international conferences & seminars on topics & themes of interest to MSMEs.

Export Incentive Scheme to assist exporters of KVI productsSalient Features: Provision of providing incentive in the form of 5% FOB value of direct export of products of Khadi and Village Industries.

Scheme for Providing Financial Assistance to Coir units for Export Objective: The Coir Board implements the Export Market Promotion Scheme for adoption of strategic & aggressive product-specific & market-specific promotional programmes for popularising coir & coir products in markets abroad, supporting the export-oriented industry on modernisation programme and to assist the entrepreneurs to participate in international fairs/product promotion programmes/seminars etc through export market development assistance scheme.

Salient Features: Financial assistance of up to ` 2 lakh is provided to the eligible coir exporters to participate in the international fairs/product promotion programmes etc. Assistance for publicity material up to 25% of the production cost with overall ceiling of ` 15,000 is also admissible.

Scheme for Trade and Industry Related Functional SupportObjective: Strengthening of Coir Trade Information Centre, setting up of an exclusive IT department, engaging an IT expert at Head Office, upgrading of hardware component, updation of software, regular interaction with other national/international data sourcing agencies and sourcing of information at global level pertaining to product development,diversification, marketing, funding support etc. through interaction with agencies like Inter Governmental Group on Hard Fibres of the FAO, IECA (International Erosion Control Association) etc. are envisaged under the programme. Infrastructure and administration form part of this scheme.

Market Promotion (including Export Promotion) & Publicity (inclusive of a new component of marketing complexes / plazas) and Modified MDAObjective: For marketing and publicity activities for Khadi and village industries (KVI)

Salient Features: This is an umbrella scheme for existing marketing and publicity activities as well as marketing plaza/ permanent exhibition space leveraging the land available and identified for the purpose, promotion of exports. Under this scheme, about 20 or so top KVI exporters will be given intensive and comprehensive handholding support to enable them to specialize in KVI exports.

Marker development Assistance (MDA) which has been introduced with effect from April, 2010 would be taken out from Khadi/VI Grant, modified and would be merged into this scheme. The component envisages financial assistance of 20% on value of production of khadi and polyvastra, which will be shared among artisans, producing institutions and selling institutions in the ratio 25:30:45.

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Around 12 million enter the labour force annually in India and MSMEs play a pivotal role in employment generation in our country. The recent initiatives taken by the government to impart skill development of the working class population will be broadly covered in this section.

Prime Minister’s Employment Generation Programme (PMEGP)Objective: PMEGP aims to generate continuous & sustainable employment opportunities in rural and urban areas; provide continuous & sustainable employment to a large segment of traditional & prospective artisans, rural and urban unemployed youth through setting up of micro enterprises; and facilitate participation of financial institutions for higher credit flow to micro sector.

Salient Features: This programme provides 15% subsidy for entrepreneurs of urban areas; 25% subsidy for entrepreneurs of rural areas; and 5% of project cost as beneficiaries’ contribution & balance 95% loan from banks. There is no income ceiling for setting up of projects; assistance is available only to new units to be established; existing units or units who have already availed any government subsidy are not eligible; per capita investment should not exceed ` 1 lakh in plain

Skill development, Employment generation and Promoting entrepreneurship

Section VI

areas and ` 1.5 lakh in hilly areas; and maximum project cost of ` 25 lakh in manufacturing sector and ` 10 lakh in services sector.

Vocational and Educational TrainingObjective: These services help the industry to become more productive and competitive.

Salient Features: The Regional Testing Centers, Field Testing Stations and Autonomous bodies like Tool Rooms and Technology Development Centers (TDCs) of the Ministry of MSME conduct long term, short term, trade/field-specific and industry-specific tailor-made courses and vocational training programmes.

In order to upgrade and expand TDCs, currently known as MSME Technology Centres a Progrmme entitled Technology Centre Systems Programme (TCSP) is being implemented. TCSP is being implemented with an estimated cost of Rs 22 billion including World Bank funding of USD 200 million. The programme is in advance stage of implementation.

Skill Upgradation and Quality ImprovementObjective: Consists of (a) Skill Upgradation, (b) Quality Improvement and (c) Mahila Coir Yojana (MCY).

Salient Features: Train personnel in the cadres of supervisors/

instructors/artisans, help in transfer of technology to non-traditional areas, help women empowerment through MCY and provision of coir yarn spinning equipment at subsidised rate, provide self-employment to rural woman artisans and encourage new entrepreneurs both in traditional and non-traditional areas.

Export Promotion (Training Programme in Packaging for Exports)Objective: This scheme imparts training to MSMEs/exporters on packaging technology, scientific packaging techniques, latest designs of packaging, improving their packaging standards and overall appearance, durability, value of products and highlighting the importance of packaging in marketing.

Salient Features: All existing and potential entrepreneurs from MSMEs are eligible for training under this scheme. Women, SC & ST and physically handicapped participants are exempted from payment of participation fee for these training programmes.

Promoting EntrepreneurshipFostering entrepreneurship relevant to current and emerging market is a priority that has been rightly focused upon by the current government. The MSMEs are the section which reduces regional imbalances and assures more equitable distribution of national income and wealth. The current section outlines the various measures taken so far to encourage entrepreneurship.

Entrepreneurship Development Programmes (EDPs)Objective: To nurture the talent of youth by enlightening them on various aspects of industrial activity required for setting up MSEs.

Salient Features: These EDPs are generally conducted in ITIs, Polytechnics and other technical

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institutions. The course contents of such programmes are designed to provide useful information on product/process design, manufacturing practices involved, testing and quality control, selection and usage of appropriate machinery and equipments, project profile preparation, marketing avenues/techniques, product/service pricing, export opportunities, financial and financial institutions etc.

Entrepreneurial Skill Development Programme (ESDP)Objective: To upgrade skills of prospective entrepreneurs, existing workforce and also develop skills of new workers and technicians of MSEs by organising various technical cum skill development training programmes.

Salient Features: This programme covers training across 60 disciplines. The kind of training programmes conducted by MSME-DIs include motivation campaigns, entrepreneurship development programmes, entrepreneurship skill development programme and management development programmes which cover diverse skill set need of new and existing entrepreneurs.

Management Development Programmes (MDPs)Objective: To improve the decision-making capabilities of existing & potential entrepreneurs.

Salient Features: Inputs on a variety of topics of managerial functions are provided to the participants in short duration training programmes by experts, which aim at dissemination of knowledge of scientific/modern management techniques/practices. This programme covers training across 60 disciplines. The curriculum is designed based on the needs of the industry and are customized, if required by the clients. 20% of the targeted training programmes are conducted exclusively for the weaker sections of the society.

Industrial Motivation Campaigns (IMCs)Salient Features: Industrial Motivation Campaigns (duration of 1 day or 2 days) are organized to identify and motivate traditional/non-traditional entrepreneurs having potential for setting up MSEs so as to lead them towards self-employment. 2,711 IMCs have been conducted up to Mar 14 to motivate 178,464 persons.

Trade Related Entrepreneurship Assistance and Development (Tread) Scheme for WomenObjective: The scheme envisages economic empowerment of women through development of their entrepreneurial skills in non-farm activities.

Salient Features: There are three major components of the scheme a) Government’s grant upto 30% of the total project cost to the Non-Government Organisations (NGOs) for promoting entrepreneurship among women. b) Government’s grant upto ` 1 lakh per programme to training institutions/NGOs for imparting training to the women entrepreneurs c) Need-based Government’s grants upto ` 5.00 lakh to National Entrepreneurship Development Institutions and any other institution of repute for undertaking field surveys, research studies, evaluation studies, designing of training modules etc.

Rajiv Gandhi Udyami Mitra Yojana Objective: The objective of the scheme is to provide handholding support and assistance to the potential first generation entrepreneurs, who have already successfully completed Entrepreneurship Development Programmes (EDPs)/Skill Development Training Programme (SDPs)/Entrepreneurship-cum-Skill Development Training Programme (ESDPs)/Vocational Training Programmes (VTs), through the selected lead agencies i.e. ‘Udyami Mitras’, for the establishment and management of the new enterprises, in dealing with various

procedural and legal hurdles and in completion of various formalities required for setting up and running the enterprise.

Salient Features: The Ministry has recently launched a MSME Call Centre (known as ‘Udyami Helpline’) which provides basic information on how to set up an enterprise, various schemes being implemented for the promotion of MSMEs, accessing loans from banks, etc.

In the Union Budget for FY15, the government has proposed the following measures to encourage entrepreneurship

• Proposal to set up “Start Up Village Entrepreneurship Programme” with an initial corpus of ` 1 billion for encouraging rural youth to take up local entrepreneurship programs.

• Proposal to set up a fund with a corpus of ` 2 billion to establish a technology centre network to promote innovation, entrepreneurship and agro-industry.

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MiscellaneousSection VII

MSE Cluster Development ProgrammeObjective: For holistic and integrated development of micro and small enterprises.

Salient Features: Support is provided for diagnostic study; Soft interventions like general awareness, counseling, motivation and trust building, exposure visits, market development including exports, participation in seminars, workshops and training programmes on technology upgradaion etc; Hard interventions like setting up of Common Facility Centers (Common Production/Processing Centre, Design Centre, Testing Centre etc.) and creation/upgradation of infrastructural facilities in the new/existing industrial areas/clusters of MSEs.

Khadi Karigar Janashree Bima YojanaObjective: To provide insurance cover to khadi artisans, a scheme of group insurance in the name of Khadi Karigar Janashree Bima Yojana (JBY) was launched on 15 Aug 03. This scheme was formulated by KVIC in association with the Life Insurance Corporation of India (LIC).

Salient Features: Since FY06, the premium paid for the insurance is ` 100 which is shared as ` 50 by the Central Government from Social Security Fund, ` 25 by khadi Institution and ` 12.50 each

by khadi Artisan and KVIC. The compensation payable under this scheme are ` 30,000 in case of natural death, ` 75,000 in case of accidental death, ` 75,000 in case of full permanent disability due to accident and ` 37,500 in case of part permanent disability due to accident.

Coir Workers’ Group Personal Accident Insurance SchemeSalient Features: An amount of ` 50,000 is paid for accidental death, ` 50,000 for total permanent disability and ` 25,000 for permanent partial disability. A provision is provided for finger cut depending upon the finger and limited to applicable percentages of capital sum insured of ` 50,000 as per the personal accident policy conditions.

Relaxation of Prime Ministers Rojgar Yojana (PMRY) NormsSalient Features: The PMRY would be expanded in scope to cover areas of horticulture, piggery, poultry, fishing, small tea gardens, etc. so as to cover all economically viable activities. PMRY would have a family income ceiling of ` 40,000 per annum for each beneficiary along with his/her spouse and upper age limit will be relaxed to 40 years. Projects costing upto ` 2 lakh in other than business sectors will be eligible for assistance.

No collateral will be insisted for projects costing upto ` 1 lakh. Group financing upto ` 5 lakh will be eligible. Scheme will have a subsidy component @ 15% with an upper ceiling of ` 15,000. The margin money may vary from 5% to 12.5% of the project cost to make the subsidy and margin contribution at 20% of the project cost. PMRY would continue to have Entrepreneurship Training Component as per the existing rate.

Scheme for North East Region:- Integrated Infrastructural Development (IID) Scheme Salient Features: Special dispensation is given to small industries in the North East Region. As per relaxed funding pattern of the government central grant up to 80% to a maximum of ` 4.0 crore is provided and the remaining amount could be taken as a loan from SIDBI/banks/financial institutions or the state funds.

Development of Village & Small Industries (VSI) SectorSalient Features: Weaver’s Service Centres (WSCs) in NE region and Indian Institute of Handloom Technology at Guwahati would be suitably strengthened to provide technology and training support to the weavers. National Handloom Development Corporation will give priority in supply of hank yarn to the NE region. All the four varieties of silk would be covered under the Mill Gate Price Scheme. Priority would be given to the NE region in scheme for setting up of market complexes and permanent exhibition facilities.

To upgrade the skill of artisan, advance training programme through master craftsmen would be organised. New emporia will be set up and financial assistance for renovation of existing emporia will be provided. The Central Silk Board will give priority to NE region in implementation of its schemes.

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A new design centre for development of handicraft would be set up in NE region.

North East Industrial and Investment Promotion Policy (NEIIPP), 2007: Salient Features: All new units as well as existing units which go for industrial expansion located anywhere in North Eastern Region, which commence commercial production within 10 years period from the date of notification of NEIIP, 2007 will be eligible for incentives for a period of 10 years from the date of commercial production. Benefits have been extended to the service sector as well. Other provisions under the scheme are:

• Central Capital Investment Subsidy Scheme: Capital investment subsidy @ 30% of the value of plant and machinery, without any upper ceiling.

• Central Interest Subsidy Scheme: Interest subsidy @ 3% on working capital loan taken by an industrial unit where loan is provided for a maximum period of 10 years from the date of commencement of commercial production.

• Central Comprehensive Insurance Subsidy Scheme: Provides for 100% reimbursement of insurance premium paid by an industrial unit.

• Other incentives include excise duty exemption based on “Value addition” norms specified by the Department of Revenue and 100% income tax exemption.

Freight Subsidy Scheme (Jan 13)Salient Features: Subsidy on the transport cost for transportation of raw material and finished goods to and from the location of the unit and the designated rail-head. For North East states, J&K and UTs, subsidy is 90%. For Himachal Pradesh, Uttarakhand and Darjeeling Districts of West Bengal it is 75% of transport cost. However, for the movement of goods within NER, the subsidy is 50% on finished goods and 90% on raw material. No subsidy is available for intra state movement of goods.

Scheme for ‘National Awards’Objective: To recognize the achievements of successful entrepreneurs in MSMEs in the area of outstanding efforts in Entrepreneurship (manufacturing & services), R&D, Innovation, Quality Products and Lean Manufacturing Techniques. The scheme is applicable to all MSMEs with EM (Entrepreneur Memorandum) registration.

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