MSME: Entrepreneurship of the New Era
- Employs over 100 million people.
- A $ 5 trillion economy by 2024 – 25.
- Accounts for 45% of manufacturing output as well as more than 40 per cent of the country՚s exports.
- Contributes 29 per cent of the country՚s GDP.
- The estimated number of workers in unincorporated non-agriculture MSMEs in India was 11.10 crore as per the 73rd Round of the National Sample Survey, conducted during 2015 – 16.
- Prime Minister՚s Employment Generation Programme the estimated employment generated (number of persons) in micro-enterprise:
- 3.58 lakh during 2014 – 15
- 3.23 lakh during 2015 - 16
- 4.08 lakh during 2016 - 17
- 3.87 lakh during 2017 - 18
- 5.87 lakh during 2018 - 19
- MSMEs have been the largest job creators over the last 4 years:
- Hospitality and tourism
- Textiles and apparel
- Metal products
- Machine parts and logistics
Economic Reforms Impacting MSMEs
- Aadhaar, the world՚s largest unique digital identity programme.
- India ranks 77 in 2019 in the World Bank՚s Ease of Doing Business rankings.
- Increasing smartphone penetration and connectivity — currently more than 530 million smartphone users — is expected to increase to more than 1 billion users by 2024.
- At present more than 500 million internet users are expected rise to 1.2 billion internet users by 2024.
- Bharat Interface for Money (BHIM) application are giving a massive boost to digital money transactions.
- A portal was launched to approve loans for MSMEs in just 59 minutes for an amount limit of ₹ 1 crore to ensure that physical visits to banks were no longer necessary.
- India Stack-A new digital ecosystem:
- A set of Application Programming
- Allows governments, businesses, start-ups and developers to utilise a unique digital infrastructure
- To solve India՚s hard problems towards presence-less, paperless and cashless service delivery
- e-Marketplace (GeM) is revolutionizing procurement processes.
- Artificial Intelligence is further expected to play a key role in accelerating business performance for MSMEs, especially in the areas of efficiency, innovation and growth.
Percentage of MSME Enterprises in India
States | Percentage (%) |
Uttar Pradesh | 14.2 |
Lakshadweep | 0.0 |
Trade Receivable Electronic Discounting System (TReDS)
- To address the working capital requirements of MSMEs.
- Also to address the working capital requirements of Samadhaan Portal for handling delayed payment issues.
MSME Cluster Development Programme
- More than 24 Common Facility Centres and 25 infrastructure Development Projects were approved.
- 5,46, 127 credit facilities were approved amounting to a guarantee of ₹ 33,381 crore.
- Under the Credit Guarantee Fund Trust for Micro and Small Enterprises.
Technology Centre Systems Programme
- Setting up new 15 tool rooms and technology development centres in the country.
- Upgrading the existing 18 TCs in the country.
- The govt. also aims to make India one of the top five global producers with an annual export target of $ 5 by 2025 with respect to aerospace and Defence manufacturing.
Key Budget Announcements and Allocations
- The government set aside an all-time high sum of ₹ 7,572.20 crore.
- The Ministry of Micro, Small and Medium Enterprises.
Khadi Vikas Yojana and Gramodyog Vikas Yojana
- For developing a sustainable model of Khadi-based enterprises in villages.
- ₹ 391 crore for the MSE-Cluster Development Programme, an increase of 71% from the previous year.
SFURTI
- The Scheme of Fund for Regeneration of Traditional Industries.
- A higher allocation of ₹ 465 crore compared to ₹ 125 crore in the previous year.
- For equipping traditional industries in becoming more productive, profitable and large-scale employment generators for artisans.
- The allocation under the Credit-Linked Capital Subsidy and Technology Upgradation Scheme has been increased to ₹ 805 crore.
- To promote entrepreneurship among Scheduled Castes and Scheduled Tribes, the National Scheduled Caste⟋ Scheduled Tribe Hub has been allocated ₹ 150 crore.
Announcements W. R. T MSMEs in the Union Budget 2020 - 21
- The turnover threshold for a business in the MSME sector.
- Audited by an accountant has been raised from ₹ 1 crore to ₹ 5 crore.
- To reduce the burden of compliance, particularly on smaller traders, retailers and shopkeepers.
- The corporate tax rate has been cut to 15% for new businesses in the manufacturing space.
- The rate for existing companies has been lowered to 22% .
- To enable the expansion of businesses, including through fresh investments.
- The Dividend Distribution Tax has been removed to reduce the tax burden on investors.
- Amendments have been proposed to the Factor Regulation Act, 2011 for enabling Non-Banking Finance Companies to extend invoice financing to MSMEs through TReDS.
- It has been proposed that a scheme for providing subordinate debt in the form of quasi-equity will be introduced.
- Other key budgetary announcements:
- An app-based invoice financing loans product.
- Creation of a unified procurement system through GeM.
- Indirect tax reforms for improving compliance.
- Automation of GST refunds and Aadhaar-based verification of taxpayers.
✍Examrace Team at Aug 21, 2021