5 new govt schemes to uplift MSMEs and help them stay relevant

The government has launched five broad schemes to uplift the MSME sector, which MSME Minister Narayan Rane says is the strongest driver of economic development, innovation, and employment.

To make India self-reliant, the development of the MSME (micro, small and medium enterprises) sector—which forms the backbone of the Indian economy, contributing 30 percent to the country’s GDP—is crucial.

The government is rolling out various schemes and measures to give the sector a boost. 

Amid the COVID-19 outbreak, when MSMEs were on the verge of financial ruin, Finance Minister Nirmala Sitharaman announced a slew of initiatives in May 2020 under the Rs 20 lakh crore Aatmanirbhar Bharat stimulus package. Three policies that stood out were the Rs 3 lakh crore collateral-free loan scheme, the Rs 20,000 crore subordinate debt for MSMEs, and the Rs 50,000 crore equity infusion through the Funds of Funds (FoF).

Last month, Prime Minister Narendra Modi said that Indian MSMEs' efforts are driving India towards an ‘Aatmanirbhar Bharat’. 

“India’s exports are continuously rising, and Indian products are entering new markets, which is why the strengthening of MSMEs is crucial,” he added. 

MSMEs need handholding through government schemes and initiatives to stay relevant and competitive in the ever-evolving market. The government has recently added some more schemes and measures for MSMEs which SMBStory has detailed below.

Tool rooms and technical institutions

Tool toom and technical institutions are focused on the integrated development of the relevant industries that work with MSMEs. 

While tool rooms allow for the design and manufacturing of sophisticated small- and medium-sized tools, technical institutes provide technical services such as the design of tools, moulds, etc, materials testing, quality control, as well as technical consultancy related to the manufacture or application of tools.

A total of 18 MSME tool rooms and technical institutions established across India including Aurangabad, Ahmedabad, Bhubaneshwar, Guwahati, Hyderabad, Indore, Jamshedpur, Kolkata, Jalandhar and Ludhiana, serve in relevant sectors such as general engineering, foundry and forging, electronics, fragrance, glass, sports goods, footwear etc. The tool rooms have also developed special training programmes to meet international requirements. 


  • Improve access to tooling facilities for enhancement of MSMEs’ efficiency and providing industry-ready manpower by conducting training programmes.
  • Process and product development in relevant sectors.
  • Consultancy and job work in relevant sectors.

Eligibility criteria:

  • Industrial units focused on the MSME sector.
  • The training programme can be taken by school dropouts as well as MTech graduates.

MSME Champions scheme

MSME Champions scheme has been formulated through Standing Finance Committee (SFC) by merging all six components of the erstwhile Technology Upgradation Scheme (TUS) for a period of five years ie 2021-22 to 2025-26. The scheme is yet to be launched and the government said it will give a holistic approach to unify, synergise and converge various schemes and interventions. 

The end objective is to pick up clusters and enterprises, modernise their processes, reduce wastages, sharpen business competitiveness, and facilitate their national and global reach and excellence. There are three components under the new MSME Champions scheme:

1. MSME-Sustainable (ZED):

MSME Sustainable (ZED) Certification is an extensive drive to create awareness among MSMEs about Zero Defect Zero Effect (ZED) practices, and motivate and incentivise them for ZED certification. Through the journey of ZED Certification, MSMEs can reduce wastages substantially, increase productivity, enhance environmental consciousness, save energy, optimally use natural resources, expand their markets, etc

Key benefits:

Cost of Certification

  • Certification Level 1: Bronze: Rs 10,000
  • Certification Level 2: Silver: Rs 40,000
  • Certification Level 3: Gold: Rs 90,000

Subsidy on the cost of ZED certification:

  • Joining reward of Rs 10,000 (Bronze will become free if availed)
  • 80, 60, 50 percent for micro, small and medium enterprises, respectively

Additional subsidy:

  • 10 percent for women/SC/ST owned MSMEs or MSMEs in northeast India/Himalayas/left-wing extremism affected areas/osland territories/aspirational districts.
  • 5 percent for MSMEs that are also a part of the SFURTI or micro and small enterprises Cluster Development Programme (MSE-CDP).

Financial assistance in testing/quality/product certification:

  • Up to 75 percent of the total cost of testing/certification, with the maximum ceiling of subsidy being Rs 50,000.

Handholding support :

  • Up to Rs 2 lakh for consultancy for all ZED-certified MSMEs. 

Support in technology upgradation for zero-effect solutions:

  • Up to Rs 3 lakh for all ZED-certified MSMEs.
  • MSME KAWACH (Knowledge Acquisition through WASH for an Accelerated COVID-19 Handling) certification: After taking ZED Pledge, MSMEs can avail support for their preparedness to mitigate COVID-19 risks after obtaining certification based on WASH standard.
  • Graded incentives: MSMEs can avail graded incentives as prescribed for the three ZED certification levels. Wherever possible, the incentives provided by states will be linked through API integration with the ZED portal to ensure interoperability.

Eligibility criteria:

All MSMEs registered with the UDYAM registration portal (of the Ministry of MSME) will be eligible to participate in MSME Sustainable (ZED) Certification and avail related benefits/incentives.

2. MSME-Competitive (Lean):

MSME Competitive (LEAN) scheme [MCLS] aims to enhance the competitiveness of MSME sectors through the implementation of lean tools and techniques.

Key benefits:

  • Cost of implementation: Basic: free; Intermediate: Rs 1,20,000; Advance: Rs 2,40,000
  • Financial Assistance to a group of MSME Units for adoption of Lean tools/techniques.
  • Subsidy on cost of Implementation: 90% of Total Cost of Implementation

Eligibility criteria:

All MSMEs registered with the UDYAM registration portal will be eligible.

3. MSME-Innovative (Incubation, IPR and Design):

MSME Innovative Champions combines innovation in incubation and design intervention, as well as protecting IPR, through a single-mode approach to create awareness among MSMEs about India’s innovation and motivate them to become MSME Champions.

Key benefits:


  • Financial Assistance to Host Institute (HI) for developing and nurturing the ideas - shall be provided up to a maximum of Rs 15 lakh per idea.
  • Financial assistance for plant and machinery to HI up to Rs 1 crore


  • For the design projects approved for any MSME, 75 percent (micro) and 60 percent (small and medium) of the total project cost will be contributed by GoI up to a maximum of Rs 40 lakh, and the remaining project cost will be borne by MSMEs and deposited to the Implementing Agency (IA).


  • A grant of up to Rs 1 crore would be provided to an IPFC in milestone-based (three or more) instalments.
  • Reimbursement for registration of patent, trademark, geographical indications (GI), design.

Eligibility Criteria:

  • Incubation: MSMEs, individuals, students who want to develop their innovative ideas can apply through registered HIs.
  • Design: The beneficiary unit(s) must typically be a registered micro, small or medium enterprise as per the definition in MSMED Act and should have a valid UAM or Udyam registration.
  • IPR: For manufacturing MSMEs with UAM/UDYAM registration

Digital MSME

The ‘Digital MSME’ scheme for the promotion of Information and Communication Technology (ICT) in the MSME sector is designed to cater to the diverse digital needs of the sector and to make the maximum number of MSMEs digitally empowered. 

Under this scheme, a large number of MSMEs are expected to be benefited in terms of standardisation of their business processes, improvement in delivery time, reduction in inventory carrying cost, improvement in productivity and quality of production, controlling cost and time, improved customer satisfaction etc

Key benefits:

  • Empower and enable MSMEs to harness IT as a medium of communication to revamp access to the markets to update their managerial and technical knowledge through online content–both static and dynamic.
  • To give them software interventions, evolving their internal efficiencies by way of intense ICT intake and automating procedures for cost reduction, imparting digital literacy and capacity enhancement for information access, processing, collaboration, and dissemination.
  • To offer to the MSMEs a safe and sound bouquet of customised digital solutions that have been designed keeping in mind the diverse requirements of the ecosystem, saving them from the travails of indiscreet and indiscriminate adoption of technology.

Eligibility criteria:

All MSMEs registered with the UDYAM registration portal (of the MoMSME) will be eligible to participate in the scheme. 

Credit Guarantee Scheme for Subordinate Debt (CGSSD)

Under the CGSSD scheme, subordinate debt is aimed at sustaining and reviving the MSMEs—which have either become NPA or are on the brink of becoming NPA. Promoter(s) may infuse this amount in MSME units as equity and thereby, enhancing liquidity and maintaining debt-equity ratio. In a situation where an outright loan is difficult, sub-debt with a guarantee will provide the requisite financing to the MSME units.

Key benefit: 

Promoter(s) of the MSMEs are given credit equal to 15 percent of their stake (equity plus debt) or Rs 75 lakh, whichever is lower.

Eligibility criteria:

This scheme seeks to extend support to the promoter(s) of the operational MSMEs which are stressed and have become NPA as of April 30, 2020.

Self Reliant India (SRI) Fund 

Through the scheme, the MSME ministry aims to ensure the availability of growth capital to the MSMEs through equity/quasi-equity/equity-like structured instruments. 

This scheme is yet to be launched and is aimed at encouraging MSMEs in moving towards listing on the stock exchanges, and growing beyond the MSME bracket. The AIF will be anchored by NSIC Venture Capital Fund Limited (NVCFL), a wholly-owned subsidiary of The National Small Industries Corporation (NSIC), a Mini-Ratna corporation.

Key benefit: 

Disbursement to MSMEs across the country.

More details about the aforementioned schemes and application processes can be accessed in the link here.

Edited by Kanishk Singh


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