“I might marvel why the MSME outreach programme, which supplies 2% curiosity subvention for incremental loans to the MSMEs, has additionally ended and by no means been prolonged thereafter. I consider this and the curiosity subvention for incremental loans are incentives for the sector to speculate extra, construct extra capacities, purchase new applied sciences, and many others,” Rajiv Chawla, Founder & Chairman, IamSMEofIndia, mentioned at ET Online’s Rising Bharat Summit.
The authorities introduced the two% curiosity subvention scheme in November 2018 and it existed until March 31, 2021. It was launched to supply curiosity aid to MSMEs on their excellent contemporary or incremental time period loans or working capital to the extent of Rs 1 crore.
“Maybe the federal government is brief of finances, possibly they suppose that the schemes have outlived the utility for no matter motive. I consider that the MSME sector is absolutely lacking these advantageous schemes,” Chawla mentioned, including that MSMEs require extra hand-holding now than earlier than.
Other than reconsidering these schemes, the federal government also needs to look past the Production Linked Incentive (PLI)-type schemes, mentioned Anil Bhardwaj, Secretary General, Federation of Indian Micro Small & Medium Enterprises (FISME). “For the MSME sector to develop, the PLI-type of schemes wouldn’t be of a lot assist as a result of they require very big outlay to be taken benefit of,” he mentioned.
How are the beforehand launched MSME schemes performing?
In Budget 2022, the federal government introduced measures such because the Emergency Credit Line Guarantee Scheme (ECLGS) for Covid-hit MSMEs. Another facility was launched on August 21, 2020, to restructure loans with out downgrading the present asset classification, to assist MSMEs to deal with the post-pandemic restoration. However, the scheme was discontinued on September 30, 2021. Commenting on how the beforehand launched MSME schemes have carried out and if they’d the meant outcomes, Madan Padaki, Co-Founder & CEO, Global Alliance for Mass Entrepreneurship (GAME), mentioned, “I feel some of the schemes, particularly the post-Covid ECLGS Scheme type of made positive that credit score was accessible for MSMEs hit by the pandemic on an emergency foundation. I feel we have now seen so much of offtakes of that scheme and we have now actually seen MSMEs getting benefited from these schemes. So, I feel some of this stuff have labored to an extent. But my key takeaway from all of these schemes is that even on the Centre and state stage, there aren’t any dearth of schemes on paper. What actually issues is how it’s reaching the bottom — what consciousness is being created and the way it’s being applied on the bottom,” he added.
Challenges for MSMEs
Commenting on the challenges going through small companies, FISME’s Bharadwaj mentioned whereas just a few segments within the MSME sector have recovered, others are nonetheless struggling. “Some exporters or suppliers, significantly these catering to Europe, have been hit. Consumer spending, as , is affected as a consequence of excessive inflation there, and industrial sectors have been impacted as a consequence of scarcity of power amid the continuing struggle between Russia and Ukraine.”
A big quantity of product classes that have been traditionally reserved for small-scale industries, and now termed as MSMEs, endure from know-how gaps. “So, a large tech improve is required,” he added.