What’s the News:
While MSMEs are known for their resilience, in 2020 the sector took a hit due to the COVID-19 pandemic. Reviving the MSME sector and growing it to help it compete in a global market is a big deal for policy makers. This will push forward India’s goal of “self-reliance” while making sure that the country’s economy does not take any hits. As such, new MSME schemes and funds are coming out every month.
Let’s look at a few of the recent ones.
- The Production Linked Incentive (PLI):
- The PLI scheme is a government incentive for the MSMEs in manufacturing sectors, including Electronic and Technology, Food Products, Pharmacy, Automobiles, Steel Products and White Goods.
- By encouraging companies to establish manufacturing facilities, this scheme hopes to also create more jobs
- The scheme is open to companies registered in India who are engaged in manufacturing
- Through this scheme, domestic manufacturers can get incentives of 4-6% on incremental scales of their products
- RBI’s Account Aggregator program:
- RBI has launched an “account aggregator” program to help MSMEs get faster access to loans by sharing their financial data digitally
- An “account aggregator” helps a business securely and digitally access their financial information, and share this information from one financial institution to another
- This means that MSMEs with multiple financial records in several banks can now submit an organised digital record to the RBI
- Using simple, mobile-based and safe digital data sharing, MSMEs can share information (including digital invoices and tax returns) from banks like ICICI, Axis, HDFC etc
- They can use RBI-approved aggregator platforms like PhonePe, Finvu, OneMoney, and CAMS Finserv for doing this.
- This will replace long physical processes of submitting bank statements, notarisation, stamped documents etc with a much easier digital technique
- Read about it here
- The ‘Ubharte Sitaare’ Fund:
- Announced by Financial Minister Nirmala Sitharaman, this new fund has been set up Exim Bank and SIDBI
- This fund will identify Indian enterprises which are currently underperforming but has the potential to become ‘future champions’, especially through exports
- With an allocation of Rs. 250 crore, the fund is a mix of support through financial, technical and advisory assistance
With all eyes on the revival of the MSME sector, MSME schemes and funds will keep coming. Experts agree that e-commerce, faster loans, and digitalization are the way forward for this sector. With the RBI now favoring digital financial records, and the ‘Ubharte Sitaare’ fund looking to identify businesses with global potential, this is a good chance for Indian MSMEs to turn challenges into opportunities.
MarketCentral can help MSMEs take the first step towards positive change by enabling them to go online.