Diwali comes early for MSMEs as PM Modi announces loans of up to Rs 1 crore in 59 minutes

Prime Minister Narendra Modi unveiled several initiatives to enhance credit access and boost employment for the MSMEs at the launch of the MSME Support and Outreach Programme in New Delhi on Friday. The programme is set to run for 100 days and cover 100 districts in the country, according to media reports.

Likening the initiatives to ‘Diwali gifts,’ Modi also launched a portal where small enterprises can avail loans of up to Rs 1 crore in just 59 minutes.

Modi placed emphasis on India’s recent 23-place jump on the World Bank’s ‘Ease of Doing Business’ ranking. In the past four years, India has moved up from 142 ranking to 77.

“With reform of processes helping small and medium enterprises, breaking into the top 50 is not far away,” he added.

According to him, the decisions taken by the government for MSMEs show that breaking silos, taking collective initiatives and decisions, and fulfilling collective responsibilities would create comprehensive impact.

The Prime Minister noted that after agriculture, MSMEs were the biggest job providers.

“If agriculture is the backbone of India's economy, then MSMEs are taking the economy to newer heights,” Modi added.

The government has also decided to increase interest subvention on pre and post shipment credit. It was increased from three percent to five percent.

Announcing the 59-minute Rs 1 crore loan, Modi added that GST-registered MSMEs would get two percent rebate in interest on new or incremental loans.

It was also decided that companies whose turnover exceeds Rs 500 crore will have to be registered on the Trade Receivables e-Discounting System (TReDS platform) in order to smoothen the cashflow for the MSMEs.

The event also focused on tech upgradation for MSMEs. "For this, 20 hubs will be built. I announce a package of Rs 6,000 crore for this,” Modi said.

He also said that government companies will have to buy at least three percent of their purchases from women entrepreneurs.

The Prime Minister also mentioned that the process for obtaining environmental clearances has been simplified, stating the government wants to support self-certification.

The government also made changes to the Companies Act, relieving MSMEs from legal complications. "There were provisions in the Companies Act such as the laws involving minor faults or unintentionally violators, which were considered criminal. This led MSMEs to go to jail many times,” Modi explained. “A lot of time and money was spent on legal proceedings, causing trouble to small and medium industries. We have brought in an ordinance to ease MSMEs from these troubles.”

In addition, Modi said: "To do away with unnecessary scrutiny, the government has decided to regulate inspector visits, with a computerised random allotment system. Now, he can't just go to any place. He will have to enter the report on the portal in 48 hours.”

Speaking about the pharma sector, Modi added:“The MSME sector’s ease of doing business to pharma companies and reaching customers directly, has led us to decide to build a cluster.”

The event was attended by Finance Minister Arun Jaitley and MSME Minister of State Giriraj Singh.