Ever had a great business idea, with a proper execution plan, but you were still stuck with the funding to kickstart your business? Let’s get to know what our government has to offer you.
The backbone of our country’s economy is the micro and small-scale industries. About 30% of the total GDP of the country is from MSMEs. The government of India has taken significant steps for the development and upliftment of MSMEs. They have introduced several schemes for the establishment of new entrepreneurial institutes and to support existing companies to develop and expand their business. Here we would be uncovering these approaches and how to obtain these support schemes.
Generally, for starting a new business, the first thing that you need to have is a viable project and a proper plan of execution. Every scheme demands a promoter investment of about 15-30%, which gives you a collateral-free business setup. Now let’s look at each of the schemes in detail.
The PMEGP (Prime Ministers Employment Generation Program) program implemented by KVIC (Khadi and Village Industries Commission), aims at promoting new self-employment institute or non-farming micro-industry, which provides or creates employment opportunities. Any individual above 18 years and education qualification of 8th grade can apply for this scheme. There is a minimum project cost of 10 Lakh in the manufacturing sector and 5 lakhs in the service sector. The scheme provides a subsidy of 15% (Urban projects)/ 25% (Rural projects) in general category and of 25% (Urban projects)/ 35% (Rural projects) in special category ( SC/ ST/ OBC/ Women/ NER…). Maximum project cost that would be considered for subsidy is 25 Lakh for the Manufacturing sector and 15 Lakh for the service sector. Only new enterprises will be considered for the scheme and need to be applied online via https://www.kviconline.gov.in/pmegpeportal/pmegphome/
CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) provides a collateral-free loan of up to 2 Cr to existing and new enterprises. This credit facility covers both term loan and working capital. This is something that everyone needs to take a note on as submission of collateral is not required up to a total amount of 2 Cr. SIDBI provides schemes like SMILE, STAR,.. based on CGTMSE. The guarantee coverage ranges from 85% to 75% of the total project cost. More details can be found from https://www.cgtmse.in/About_us.aspx
CLCSS (Credit Linked Capital Subsidy for Technology Upgradation) scheme provides upfront capital subsidy of 15% on institutional Credit up to Rs. 1 Cr (i.e. subsidy cap of Rs. 15.00 lakh). Upgradation technology needs to be new, refurbished and used machines will not be considered for subsidy.
There are many schemes like CEFPPC, which provides a subsidy of 35% of the total project cost for creating or expanding food processing unit with a minimum project cost of 3 Cr. The scheme demands a mandatory promoter investment of 20% of the total project cost
If you are already running a business, there are specific portals that you need to register in right away. The government of India has categorised enterprises into categories based on the turnover and plant investment called MSMEs, which are given special considerations in their schemes. To become an MSME, you need to register yourself in the Ministry of MSME and obtain UDYAM registration certificate. This right away gives a 2% interest subvention on your outstanding balance finances upon submission of the registration certificate at the lending institute. Apply for UDYAM REGISTRATION FORM - For New Enterprise who are not Registered yet as MSME. Also, register at msme databank and NSIC, which is a single portal for government public procurement and tenders. To support the marketing of the product, 25% of annual procurement of any central government institute needs to be from MSMEs.
These are just the perk over the cookies, more detailed information regarding every plan can be found at https://taxguru.in/wp-content/uploads/2020/12/Micro-Small-and-Medium-Enterprises-MSMEs.pdf Explore all the schemes that apply to your industry, conduct in-depth research on the assistance that you can avail and contact government lending institutes like SIDBI and MSME development institute near you with your project proposal. Serious consideration is given to MSMEs, and every institute is helpful for the development of the same.
I wish you all the best with your venture!! Kudos!!
About the Author
Thomman Shaji
Research Student
IISER Mohali
Senior Partner :Broons Global
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