MSMEs are among the primary drivers of economic development, innovation, and employment in

India, a country with stark disparities between the rich and poor and high unemployment rate (RBI,
2019). MSMEs sector is characterized by minimal investment, increased job opportunities,
operational flexibility, reduction in regional disparities and import substitution (Grover, 2012).

In India, more than 95% units are engaged in this sector and contribute to approx. 30% Of India GDP,
45 % of manufacturing output, 45.56% of country’s total export (MMSME, 2024) and create 11.10
crore jobs (NSS 73rd round, 2015-16). Contribution of MSME indicate that MSMEs is very important
for every area. In accordance with the provision of MSME’s development act 2006, the MSME
classified into two Categories such as manufacturing enterprises based on their investment in plant
and machinery and service Enterprises based on investment in equipment. Now, as per the revised
definition announced on May 13, 2020, MSME classified on the basis of two criteria: investment in
plant and machinery and annual turnover.

Micro Enterprise : Investment in plant and machinery or equipment does not exceed 1 crore and
turnover does not exceed 5 crore

Small Enterprise: Investment in plant and machinery or equipment does not exceed 10 crore and
turnover does not exceed 50 crore

Medium Enterprise :Investment in plant and machinery or equipment does not exceed 50 crore and
turnover does not exceed 250 crore

According to the Ministry of Micro, Small & Medium Enterprises report, there are over 633.88 lakh
registered MSMEs in India. 79.63% owned by Males and 20.37 % females owned

Government Initiatives:

The Indian government has launched various initiatives to support SMEs, such as the Micro, Small,
and Medium Enterprises Development (MSMED) Act, and schemes like the Credit Guarantee Fund
Trust for Micro and Small Enterprises (CGTMSE) and the Prime Minister’s Employment Generation
Programme (PMEGP )

MSME Business Loans in 59 Minutes

With this scheme, an eligible MSME can avail a credit amount ranging from ₹1 lakh to ₹5 crores.
Available from both traditional institutional lenders and NBFCs, a business owner can get this MSME
loan at a yearly interest rate of 8.50%.

National Small Industries Corporation (NSIC) Scheme

Single MSME units can avail credit up to Rs. 5 crore, at interest rates charged between 9.5% and 12%.

Pradhan Mantri Mudra Yojana

Pradhan Mantri Mudra Yojana scheme provides loans of up to Rs. 10 lakh to micro, small, and
medium enterprises (MSMEs) for their business operations. It has three categories based on the
amount of loan required – Shishu, Kishor, and Tarun.
Stand-up India

The Stand-up India scheme is aimed at promoting entrepreneurship among women and
economically weaker sections of society. Under this scheme, loans ranging from Rs. 10 lakh to Rs. 1
crore are provided to help start-ups and businesses run by SC/ST or women entrepreneurs.

Credit guarantee fund trust for micro and small enterprises (CGTMSE)

CGTMSE scheme provides collateral-free loans up to Rs. 2 crores to new or existing MSMEs. Under
this scheme, banks and other financial institutions provide loans to MSMEs, and the government
provides a credit guarantee of up to 75% of the loan amount. Collateral free loans up to a limit of
Rs.200 lakh – For individual MSEs

National small industries corporation (NSIC) subsidy schemes

NSIC Scheme offers various credit-related subsidies such as financial assistance for marketing,
technology upgrades, raw material procurement, and one-time settlement of outstanding dues for
MSMEs.

Credit Link Capital Subsidy Scheme (CLCSS)

The Credit Linked Capital Subsidy Scheme (CLCSS) by The Ministry of Micro, Small and Medium
Enterprises (MSME) aims to boost the technological capabilities Of Micro and Small Enterprises
(MSEs) in India. It offers up to 15% upfront capital subsidy on institutional finance, helping MSEs
upgrade their machinery and adopt advanced technologies. This initiative not only enhances product
quality and reduces production costs but also promotes Competitiveness and sustainability among
small Businesses. MSEs with a valid UAM number can Benefit from this scheme, ensuring inclusive
growth Across various sectors of the economy. NSIC Scheme offers various credit-related subsidies
such as financial assistance for marketing, technology upgrades, raw material procurement, and one-
time settlement of outstanding dues for MSMEs. The revised scheme aims at facilitating Technology
upgradation by providing 15% up-Front capital subsidy to MSEs, Upto 1 core and 15% subsidy

Credit Link Capital Subsidy Scheme (CLCSS)

The Credit Linked Capital Subsidy Scheme (CLCSS) by The Ministry of Micro, Small and Medium
Enterprises (MSME) aims to boost the technological capabilities Of Micro and Small Enterprises
(MSEs) in India. It offers up to 15% upfront capital subsidy on institutional finance, helping MSEs
upgrade their machinery and adopt advanced technologies. This initiative not only enhances product
quality and reduces production costs but also promotes Competitiveness and sustainability among
small Businesses. MSEs with a valid UAM number can benefit from this scheme, ensuring inclusive
growth Across various sectors of the economy.

None financial assistance

For the development of MSMEs The Goverment of India not only focus on access to credit but
access to market, technology upgradation, ease of doing business and sense of security. Following
are som3 major steps taken by GOI

MSME SAMBANDH ( procurement from central ministries / departments / CPSEs )

National Institute for Micro, Small and Medium Enterprises ( ni-msme )

Development of msme Technology centers at 14 locations on public private partnerships ppp

National small industries Corporation ( facilitating the growth of small enterprise since 1955)

Single point registration Schemes

Technical services centers

E marking / digital services facilitation for MSMEs

Stablishment of Small Industry Development Bank of India to specially facilitate the MSMEs

The National Single Window System (NSWS.GOV.IN)

 Get all approvels required to start your business in india

 Identifying and applying for approvels according to your business requirements
 Know your aprovel KYA module includes guidance for 32 central departments and 32 states
 The portal hosts applications for approvals from 32 central departments and 28 state
Governments

International Cooperation (IC)

95% of airfare and space rent for entrepreneurs.

Assistance to Training Institutions (ATI)

Maximum assistance for creation or strengthening Of infrastructure will be Rs.150 lakh on matching
Basis, not exceeding 50% of project cost. However, for the North-Eastern Region(including Sikkim),
Andaman & Nicobar and Lakshadweep, maximum assistance on matching Basis would be Rs.270 lakh
or 90% of project cost, Whichever is less.

ISO 9000/ISO 14001 Certification Reimbursement

75% of expenditure Subject to a maximum of Rs.75,000 in each case.

Entrepreneurial and Managerial Development of SMEs Through Incubators

Funding support for setting up of ‘Business Incubators (BI)’: The cost may vary from Rs.4 to 8 lakh for
each incubatee/idea, subject to overall Ceiling of Rs.62.5 lakh for each BI.
RBI Role in MSMEs Development

All private and public sector banks in India have targets prescribed by the Reserve Bank of India (RBI)
for lending to the MSE sector. Under these guidelines, domestic scheduled commercial banks (except
small finance banks and regional rural banks) and foreign banks with more than 20 branches will
allocate 7.5% of their Adjusted Net Bank Credit (ANBC) or credit equivalent amount of off-balance
sheet exposure, to the microenterprises sector.

As per the RBI regulations, banks have been mandated to offer MSME loans of up to Rs.10 lakh
without accepting collateral. Sometimes, depending on the financial position and track record of the
MSME units, banks can increase this limit to Rs.25 lakh

The RBI has directed all public sector banks to open at least one specialised branch in each district for
lending to the MSME sector. At present, there are 2,032 such branches.
REFERANCES

Kaur, G. (2021). A study on role of RBI in driving growth of MSME’s in India. International Journal of
Advanced Research in Commerce, Management & Social Science (IJARCMSS), 4(4), 155-158.
Retrieved from https://www.inspirajournals.com/uploads/Issues/70930489.pdf

Press Information Bureau. (2024, July 22). Contribution of MSMEs to GDP and manufacturing GVA.
PIB. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1985020

Ministry of Micro, Small and Medium Enterprises. (2023). Annual report 2022-23.
https://msme.gov.in/sites/default/files/MSMEANNUALREPORT2022-23ENGLISH.pdf