Lok Sabha Question No. 1730 (UNSTARRED), answered on 2021-02-11
Subject: Strengthening of MSMEs
Ministry: MICRO,SMALL AND MEDIUM ENTERPRISES
Asked by: Khagen Murmu

## GOVERNMENT OF INDIA MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO.  1730 TO BE ANSWERED ON 11.02.2021

## STRENGTHENING OF MSMEs

## 1730.  SHRI KHAGEN MURMU:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

(a) whether the Micro Small and Medium  Enterprises (MSMEs)  sector would prove instrumental in the Indian economy achieving the USD 5 trillion mark but not before shortfalls in its  current  structure  are  addressed  and  if  so,  the  steps  taken  /being  taken  by  the  Government  to address those;

(b) whether the Government has devised any mechanism to build resilience and strengthen the longevity muscle of the MSMEs, which would help break barriers and capture global markets;

- (c) if so, the details thereof; and
- (d) if not, the reasons therefor?

## ANSWER

## MINISTER OF MICRO, SMALL AND MEDIUM ENTERPRISES (SHRI NITIN GADKARI)

(a): The Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades. MSMEs is complementary to large industries as ancillary units and this sector contributes significantly in the inclusive industrial development  of  the  country  contributing  to  approximately  30  per  cent  to  the  Gross  Domestic Product  (GDP).  Its  share  in  total  manufacturing  and  export  is  33  per  cent  and  49  per  cents respectively. COVID-19 pandemic has temporarily affected various sectors including Micro, Small and  Medium  Enterprises.  As  per  the  advance  estimates  received  from  Central  Statistics  office, Ministry  of  Statistics  and  Programme  Implementation,  all  India  Gross  Value  Added  growth  of manufacturing sector  (including  MSMEs) at  constant  prices  for  FY  2020-21  and  FY  2019-20  is estimated at -9.4 percent. The share of MSME GVA in All India GVA during 2018-19 and 2019-20 was 34.77% and 34.76 % respectively.

(b) to (d): To build resilience and strengthen the longevity muscle of the MSMEs, Government implement  following  schemes  and  portals  such  as  Samadhan,  Sampark,  Sambandh,  GeM  and TReDS  portals,  apart  from  several  other  initiatives  for  the  growth  and  development  of  MSME sector.

-  Credit Guarantee Trust for MSE: Credit guarantee for MSE loans upto Rs. 2 crore, without collateral and third party guarantee.
-  59  minute  loan  portal:  portal  to  enable  easy  access  to  credit  for  MSMEs.  In-principle approval of loans upto Rs. 1 crore through the portal linked with GST portal.
-  Credit Linked Capital Subsidy Scheme (CLCSS): 15% capital subsidy (limited to maximum Rs.15.00  lakhs)  for  Technology  Upgradation  of  Micro  and  Small  Enterprises  (MSEs)  via purchase of Plant & Machinery.
-  Prime Minister's Employment Generation Programme: credit linked Subsidy Scheme to setup a plant and generate employment opportunities
-  Public  Procurement  Order,  2015,  Under the  Policy  every  Central  Government  Ministries, Departments and Public Sector Undertakings shall procure minimum of 25 per cent of their total annual value of goods or services from Micro and Small Enterprises.
-  GeM portal: All government procurement made mandatory to be procured from this portal.

## Other initiatives:

-  To  facilitate  and  promote  investment,  Government  has  set  up  Empowered  Group  of Secretaries (EGoS) and Project Development Cells (PDCs) in the Ministries/Departments. EGoS will look into hindrances being faced by investors, and also take up cross cutting policy issues.
-  Startup India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities.
-  Atmanirbhar  Bharat:  The  economic  stimulate  package  under  Atmanirbhar  Bharat  for MSMEs.
-  New  definition  of  MSMEs:  Investment  and  turnover  both  has  been  used  to  classify enterprises  among  micro,  small  and  medium.  Distinction  between  manufacturing  and services MSMEs removed. It will help in attracting more investment in MSMEs.
-  UDYAM Registration: The Government has notified composite criteria of classification of MSMEs based on investment in plant & machinery or equipment and turnover of MSMEs as  structural  change  to  facilitate  existing  entrepreneurs  and  new  entrepreneurs.  The investment  limits  in  Plant  and  Machinery/  Equipment  is  also  enhanced.  The  erstwhile process  of  filing  of  Udyog  Aadhaar  Memorandum,  has  been  replaced  by  Udyam registration on a portal developed by this Ministry. The new criteria is expected to induce MSMEs to invest more, thus leading to strong possible trends in capital formation both gross and net. The calculation of investment in plant and machinery or equipment is linked to  the  Income  Tax  Return  (ITR)  of  the  previous  year,  filed  under  the  Income  Tax  Act, 1961. This would lead to further Ease of Doing Business.
-  Financial support to the stressed MSMEs with infusion of Rs.20,000 crore equity support through Subordinate Debt: This measure is likely to benefit more than 2 lakh MSMEs .
-  Fund of  Funds  created  to  infuse  equity  worth  Rs.50,000  crore  in  the  MSME  Sector:  A Rs.10,000 crore Corpus Fund to be set up. This measure would provide equity funding to growth potential and viable MSMEs.
-  Ensuring timely payment to the MSMEs: Government of India and CPSEs have to clear all receivables  of  MSMEs  in  the  next  45  days.  This  will  ease  the  liquidity  problem  of MSMEs.
-  Procurement  by  domestic  companies:  Global  tender  to  be  disallowed  in  Government procurement  tenders  upto  Rs  200  crores.  It  will  provide  more  market  opportunities  to domestic entities.

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