The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) was launched by the Government of India to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme. The Ministry of Micro, Small and Medium Enterprises, Government of India and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises

Reservation of items for exclusive manufacture in SSI sector statutorily provided for in the Industries (Development and Regulation) Act, 1951, has been one of the important policy measures for promoting this sector.

The Reservation Policy has two objectives

Ensure increased production of consumer goods in the small scale sector

Expand employment opportunities through setting up of small scale industries

It has made very easy for enterprises that are having MSME Certificate to obtain Licenses, approvals and registrations on any field for their business from the respective authorities as they can produce the Certificate of MSME Registration while making application.

The scheme of refund of octroi provided under the Package Scheme of Incentives, 1993 will be included in the new Scheme up to 31-3-2006 on the same pattern. Where account-based cess or other levy is charged instead of or in lieu of octroi, such change will also be eligible for refund as in the case of octroi.

Under the International Cooperation Scheme, financial assistance is provided on reimbursement basis to the State/Central Government organizations, industries/enterprises Associations and registered societies/trusts and organizations associated with MSME for deputation of MSME business delegation to other countries for exploring new areas of MSMEs, participation by Indian MSMEs in international exhibitions, trade fairs, buyer seller meet and for holding international conference and seminars which are in the interest of MSME sectors.

At present, IT units in public IT Parks are exempted from stamp Duty and Registration fees upto 31st March 2006. Now all new industrial units having MSME Registration and expansions will be exempted from payment of Stamp Duty and Registration fees.

This scheme provides a subsidy for Employment Generation. The national-level nodal agency is Khadi and Village Industries Commission (KVIC) and it implements the scheme at national level. At the State level it is implemented through State KVIC Directorates, State Khadi and Village Industries Boards, District Industries Centres and banks. The Government subsidy under the Scheme is routed by KVIC through the partner banks for distribution to the entrepreneurs directly in their Bank accounts.

Details of the Scheme

Technology-driven MSMEs may not be able to use their resources to full potential due to lack of the latest technology. Under this scheme, MSMEs are provided upgraded technology to replace their old and obsolete ones. The Scheme aims to provide 15% capital subsidy for technology upgradations. There is also a ceiling in 15% capital subsidy which is 15 Lakh for induction of well established and improved technology. It is given for in approved sub-sectors/products.

Businesses or enterprises after obtaining MSME registration certificate can avail a benefit of 1% on the Overdraft loan and as per Union budget 2019 MSMEs registered under GST can get 2% interest subvention. It is available for incremental loans of Rs 1 crores under the MSME Credit Scheme

The incubation scheme has been launched in May 2019 to provides opportunity to the innovators in developing their new innovative ideas for the creation of new innovative products. Nature of assistance are as follows:

• Under this scheme financial assistance up to 15 lakh is provided for developing and nurturing of an idea.

• Financial assistance up to 1.00 Cr. is provided for procurement and installation of Plant and Machines in BI. This will strengthen the technology-related R&D activities of BI.

• Financial assistance of up to 1.00 Cr. provided as grants in aid for the seed capital support to HIs/BIs for promoting them to converting their ideas into start-ups.

• Scheme Details

• Apply for the Scheme

There has been given relaxations to MSMEs from all expenses incurred for obtaining ISO 9000, ISO 14001, and HACCP certifications. It will promote the standards and certifications in order to enhance their performance across sectors.

100% tax exemption for Innovative startups

No Income Tax required to be paid in 3 year out of 7 Years – ie. Startups are eligible for getting 100% tax exemption on profit for a period of three years in a block of seven years provided that annual turnover does not exceed Rs 25 crores in any financial year. It is Allowed by way of Deduction under Income Tax Act. In this deduction, Companies upto 10 Years in existence are still considered startup. Income Tax Law also Allows credit for minimum alternate tax (MAT) to be carried forward for up to 15 years instead of 10 years.

Under this scheme, The Central Government follows a Price and Purchase Preference policy Wherein around 358 items are listed for exclusive purchases by Central Government from the MSME units only. They are numerous support like marketing assistance even for those products, which are manufactured by MSMEs and do not fall under the purview of Reservation Policy.

• Details of the Scheme

More than 50% subsidy is given to the Enterprise that has the certificate of registration granted by MSME. Fees for patent registration for MSMEs has been reduced to Rs 1,600 or Rs 1,750 from Rs 4,000 or Rs 4,400 respectively. For expedited examination, it is reduced to Rs 8,000 from Rs 25,000 earlier. Similarly, for renewal of patents, the fees has been reduced. For design applications filing, fees for MSMEs and startups has been reduced to Rs 1,000 from Rs 2,000.

At times, the buyers of services or products from the MSME’s or Small Scale Industries tend to delay the payment. MSME ministry provided a helping hand to such enterprises by giving them the right to collect interest on the late payments from buyers. The settlement will be done through conciliation and arbitration and it will be resolved in minimum time.

Payment term are provided under this rules are-

1. On or before the agreed date of payment or

2. In case there is no mention of the date of payment, Within 15 days from the day they had accepted the goods and services from MSME or SCI registered business.

The Micro, Small and Medium Enterprises Development Act, 2006, has made strict provisions for charging of interest so that problem of delayed payment can be mitigated. In these provisions, if any buyer fails to make payment to MSMEs as per agreed terms or a maximum of 45 days, Buyer need to pay monthly compounded interest which is three times of the rate notified by the Reserve Bank of India.

From time to time government has announced many tenders where only MSME Industries can apply. Recently, as a part of Covid-19 relief package, the Finance minister has announced that there are issues of unfair competition from foreign companies in government procurement tenders due to the size and strength differ and govt will not allow global tenders in such schemes up to Rs 200 crore.

At times, the buyers of services or products from the MSME’s or Small Scale Industries tend to delay the payment. MSME ministry provided a helping hand to such enterprises by giving them the right to collect interest on the late payments from buyers. The settlement will be done through conciliation and arbitration and it will be resolved in minimum time.

Payment term are provided under this rules are-

1. On or before the agreed date of payment or

2. In case there is no mention of the date of payment, Within 15 days from the day they had accepted the goods and services from MSME or SCI registered business.

The Micro, Small and Medium Enterprises Development Act, 2006, has made strict provisions for charging of interest so that problem of delayed payment can be mitigated. In these provisions, if any buyer fails to make payment to MSMEs as per agreed terms or a maximum of 45 days, Buyer need to pay monthly compounded interest which is three times of the rate notified by the Reserve Bank of India.

Govt has provided relief to registered MSMEs in electricity bills. For taking this benefits unit must have MSME registration and they have to make an application to the department of the electricity along with the MSME registration certificate.