The COVID-19 pandemic and subsequent nationwide lockdown to prevent the virus from spreading has hit the county hard. Small and medium industries have been the most affected by the corona virus epidemic. To revive the sector, the central government has announced various measures starting from last year. These included financial support mechanism, broadening the definition of MSMEs, introduction of information technology based Champions Platform and promotion of self-employment among others. Take a look at the steps taken by the government to help the stressed sector
financial support system
1. Credit Guarantee Scheme: Government of India made a provision of Rs 20,000 crore as subordinate debt to provide equity support to stressed MSMEs. This scheme was launched on June 24, 2020.
2. Fund of Funds for MSME Scheme: The government on August 5 last year issued guidelines with regard to the Atmanirbhar Bharat (SRI) fund, with a corpus of Rs 10,000 crore for MSMEs to avail equity infusion of Rs 50,000 crore.
Reclassification of MSMEs
Through a notification dated June 26, 2020, the Ministry of MSME reclassified enterprises on the basis of investment in plant and machinery/equipment and turnover. As per the new classification, which came into effect from July 1 last year, a micro enterprise is one where the investment does not exceed Rs 1 crore and the turnover does not exceed Rs 5 crore. In a small enterprise, the investment does not exceed Rs 10 crore and the turnover does not exceed Rs 50 crore. A medium enterprise is classified as a business where the investment does not exceed Rs 50 crore and the turnover is Rs 250 crore.
Apart from this, the Ministry also changed the earlier process of filing Udyog Aadhaar Memorandum (UAM) for existing and potential entrepreneurs by ‘Udyam’ registration on the respective portal (https://udyamregistration.gov.in).
IT Based Solutions
In order to provide technical solutions to MSMEs, Prime Minister Narendra Modi launched the CHAMPIONS portal on June 1, 2020. The portal also provides guidance to MSMEs to grab new business opportunities.
The government has also created a network of control rooms in the hub and spoke model where the Ministry of MSME is the hub, while the spokes are located in the states. There are 68 State Level Control Rooms, which are providing all possible assistance to MSMEs in terms of finance, market access, technology up-gradation, skill development etc. According to the government, access to information technology enabled services at affordable cost will bring the MSME sector on an equal footing with the big players.
Long Term Strategy for the Sustainability of MSMEs
1. Smart Industrial Village Policy: With an aim to achieve an inclusive and equitable growth model, besides promoting decentralized economic architecture, the government has launched the “Smart Industrial Village” policy, a release by the Ministry of MSME titled “COVID-19 Relief for MSME Sector” According to.
The migrant labor crisis was never at the center of policymaking as it is during the pandemic. One cannot forget the migrant workers walking for miles from big cities to reach their native places amid the lockdown, many dying on the way. The policy would result in migration of migrant workers to avoid concentration of population.
2. Promoting Swadeshi Ideology: As incentives for import substitution, there will be a price advantage on indigenous products and their development. There will also be an additional benefit on price to Indian suppliers as compared to the cost of imports for a particular product.
3. Encouraging Innovations: For this, the government will set up a large number of business incubators in educational institutions.
4. Financial Aid: The government will give priority to lending from banks to MSMEs by including small enterprises in the prescribed priority sector and increasing the sub-target limit from 7.5 percent to 10 percent. It is providing collateral-free MUDRA micro loans to encourage self-employment. There is also a limit on exemption on working capital by banks. In addition, the government will formulate a safe trade policy for sectors dependent on Chinese imports such as chemicals, pharmaceuticals and electronics.
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