Corporate Review

Government schemes for MSMEs in India

Government schemes for MSMEs in India

Under the Chairmanship of Prime Minister Narendra Modi, the Ministry of Micro, Small and Medium Enterprises (MSME) launches various programmes/ MSME schemes for the development and promotion of MSMEs across the country.

Moreover, the Government of India has been really proactive to ensure that all the benefit of these MSME schemes reaches to the MSMEs in time. To provide immediate relief to the MSME sector, various announcements (in addition to the various MSME schemes) have been made under the Atmanirbahar Bharat Package. Highlighting the key elements:

  • INR 3 lakh crore collateral-free automatic loans for MSMEs to buy raw material, meet operational liabilities and restart businesses
  • Revision of MSME definition to extend maximum benefits to the sector
  • Disallowing global tenders in procurements upto INR 200 cr to create attractive opportunities for domestic players
  • Clearing of MSME dues by the Government and Public Sector Units (PSUs) within 45 days

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Classification of enterprises under the criteria:  Investment in Plant & Machinery/equipment and Annual Turnover


Government Schemes

1. Prime Minister Employment Generation Programme (PMEGP)

The scheme aims at providing financial assistance to self-employment ventures, in order to generate employment opportunities for unemployed youth and traditional artisans.

Key Features

  • Bank-financed subsidy scheme for setting up microenterprises in the non-farm sector.
  • Margin money subsidy on bank loans of 15% to 35% for manufacturing projects of up to INR 25 lakhs, and INR 10 lakhs for service projects.
  • For special category beneficiaries such as SC/ST/Ex-Servicemen/NER/Women/PH/Minorities, the money subsidy margin is 25% in urban areas and 35% in rural areas. The limit for the maximum project cost is INR 10 lakhs in the service sector and INR 25 lakhs in the manufacturing sector.

Scheme Applicable for

  • Individuals above the age of 18 can apply for this scheme.

Detailed Overview

  • Other beneficiaries can be Institutions registered under Societies, Self Help Groups, Charitable Trusts and Production Co-operative Societies.
  • The own contribution for beneficiary belonging to the general category is 10% of the project cost and 5% of the project cost in cases of reserved category.
  • Upon the approval of the loan, banks sanction and release the amount of 90% – 95% of the total project cost, allowing the beneficiaries to set up units for operations.
  • Support events like EDP training, awareness camps, etc are held to provide Backward & Forward Linkages, in order to attain sustainability of the projects under the scheme.
  • Government of India has facilitated online processing of applications and allocation of Margin Money directly by the financing branches.
  • The e-portal’s online one-page application form is fixed requirement for institutional as well as individuals. The PMEGP MIS portal and the application form are mobile friendly, allowing e-mail/SMS notifications to the applicant at each stage of the application process.
  • PMEGP e-portal also displays model projects of various KVI activities.
  • PMEGP e-portal is also linked to with the Model Village Industries projects by the NSIC.
  • For the increase and ease in registrations of the MSMEs, the Government of India has recommended PMEGP to adopt the Udyog Aadhar Memorandum (UAM) for online registrations.

How to Apply

By responding to the advertisements to be given by the State / Divisional Directors of KVIC locally through print & electronic media inviting applications along with project proposals from prospective beneficiaries / SHGs etc.


2. Credit Guarantee Scheme for Micro & Small Enterprises (CGTMSE)

The scheme aims at motivating first generation entrepreneurs towards self-employment by providing credit guarantee funding for third-party guarantee-free / collateral free loans.

Key Benefits

  • Guarantee on credits for loans up to INR 2 crores, without third-party guarantee and collateral.
  • Guarantee on coverages range from 75% (others) to 85% (Micro Enterprise up to INR 5 lakh).
  • 50% of the coverage is for retail activity.

Scheme Applicable For

Current Entrepreneurs and Aspirant Entrepreneurs

Detailed Overview

  • Third party/ collateral guarantee free credit facilitation by eligible institutions with maximum credit capped at INR 200 lakhs qualify for guarantee under the scheme. Lately, guarantee coverage has been made eligible to selected Small Finance banks and NBFCs.
  • Guarantee cover extends to 50%/ 75% / 80% & 85% of the sanctioned amount of the credit facility. Extent of guarantee cover is of 85% for micro-enterprises for credit up to Rs. 5 lakhs. Extent of guarantee cover if of 50% for credit ranging from INR 10 lakh to INR 100 Lakh per micro and small enterprise borrower retail trade activity.
  • Extent of guarantee cover is 80% for both MSME owned/operated by women and loans/credits in the North East Region for credits up to INR 50 lakhs. In cases of default, the trust settles 75% of the amount extended by the lending institutions for credits up to INR 200 lakhs.

How to Apply

Through Member Lending Institutions (Banks and NBFCs).

3. Procurement and Marketing Support (PMS) Scheme

The scheme aims at developing the marketability of services and products in the MSME sector. Promoting access initiatives and awareness about various marketing relevant topics. Creating awareness regarding e-marketing, GeM portal, GST and other related topics etc.

Key Benefits

  • Involvement of Individual MSEs in domestic Exhibition/ Trade Fair
  • Developing capacity of MSMEs in Development of Marketing Haats/ Modern Packaging Technique
  • Organizing events like Domestic Trade Fair& Exhibition/ Awareness programs/ National & International Workshops & Seminars/ Vendor Development Programs


Existing Entrepreneurs

Detailed Overview

  • Participation of MSEs in domestic exhibitions and trade fairs across the country: Maximum Budgetary support upto INR 1.5 Lakh max. for A class & Metro cities. INR 1.0 Lakh max. for Class B cities / Hilly States/ J&K/ NER/ and for other cities INR 0.80 Lakh max.
  • Organizing participation in domestic trade fairs and exhibition by the Ministry/ Office of DC (MSME):
  • Maximum Budgetary support for advt. & publicity and space rent for the event is as follows,
    • Regional: (State/District): Rs.30.00 Lakh max.
    • National: INR 40.00 Lakh max.
    • International: As decided by Empowered Committee subject to approval of Dept. Of Expenditure.
  • Developing capacity of MSMEs in modern packaging technique: Maximum Budgetary support of INR 1.5 lakh max. for green packaging consultancy for MSME unit and INR 1.0 lakh max. for ordinary packaging consultancy.
  • Development of Marketing Haats. Maximum Budgetary support of INR 50 lakh max for Development of new MSME Haats, upper limit of GIA will not surpass.
  • For Renovation/up-gradation of existing Marketing Haats, upper limit of GIA will not exceed INR 20 Lakh max.
  • Vendor Development Programmes: Maximum Budgetary Support of INR 1 Lakh max for State Level Vendor Development Programme (SLVDP), INR 10 lakh max for A class city National Level Vendor Development Programme (NLVDP) (One day) and INR 7.0 lakh max. for other cities. (2-3 days)
  • International/ Seminars/ National Workshops: Maximum Budgetary Support of INR 5.0 lakh or actual whichever is less for National Seminar/Workshop and INR 7.5 Lakh maximum or actual whichever is less for International Seminar/Workshop.
  • Awareness Programs: Maximum Budgetary support of INR 70,000 per program (One day).

How to Apply

By responding to the advertisements to be given by the State / Divisional Directors of KVIC locally through print & electronic media inviting applications along with project proposals from prospective beneficiaries / SHGs etc.


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