Narendra Modi announces 12 sops for MSMEs, says sector second-largest employer after agriculture

Prime Minister Narendra Modi on Friday announced a slew of sops for the micro, small and medium enterprises (MSME) sector, ranging from granting loans at the shortest possible time, curtailing Inspector Raj to making it mandatory for public sector units to buy a certain percentage of goods from women entrepreneurs.

“India has become an economic powerhouse due to the MSME sector,” said Modi while speaking at the ‘Support and Outreach Initiative for the MSME sector’ event at Vigyan Bhavan in Delhi. The program was attended by finance minister Arun Jaitley and Minister of State for MSME Giriraj Singh.

PM Modi said his government has finalised 12 policies to give a boost to the MSME sector. Modi termed the 12 new measures “historic” that will make Deepawali brighter for the sector and its millions of entrepreneurs and employees.

Stating that reform process would help the MSME sector, Modi said, “We are significantly pushing for initiatives for MSMEs. MSME is the second largest employer after agriculture sector.  India is an economic powerhouse due to the MSMEs. We must take collective initiative & responsibility for the MSME sector.”

He said GST-registered micro, small and medium enterprises (MSMEs) will be sanctioned a loan of Rs 1 crore in just 59 minutes through a new portal.  Modi added that the portal had a dry run earlier. ‘‘In the time taken for you to reach your office, you can now get a loan. We had run a pilot and I had set a target of 72,000 MSMEs under this and 72,680 have come on board,” said Modi.

Also, GST-registered MSMEs will get 2 percent subvention or rebate on incremental new loans of up to Rs 1 crore, he said, adding interest subvention on pre- and post-shipment credit for exports by MSMEs has been increased from 3 percent to 5 percent. He said that loan option for GST registered firms will now be available through the GST portal itself.

To rid the sector of Inspector Raj, Modi announced that inspections of factories in the sector will be sanctioned only through a computerised random allotment and inspectors will have to upload reports on portal within 48 hours. “No inspector can now go anywhere. He will be asked why he went to a factory,” he said.

MSMEs would not have to apply for separate consent for air and water clearance. Easing compliance with environmental rules, MSMEs will need single air and water clearance and just one consent to establish a factory.

The sector will have to file just one annual return on eight labour laws and 10 central rules, he said, adding that an ordinance has been promulgated to simplify levy of penalties for minor offences under the Companies Act.

Public sector companies, which were mandated to source 20 percent of their annual procurement from MSMEs, will now source at least a quarter of their requirement (25 percent) from the sector, he said, adding 3 percent of sourcing by PSUs would have to be done from MSMEs run by women. Also, all central public sector enterprises will have to take membership of the Government e-Marketplace (GeM) to facilitate online procurement of common use goods and services by various government departments and organisations.

Modi announced Rs 6,000 crore for creation of 20 hubs and 100 tool rooms for technology upgradation. Clusters for MSMEs in the pharma sector will be created to boost production in the sector, he said.

All companies with a turnover of more than Rs 500 crore would have to now come on Trade Receivables e-Discounting System (TReDS) platform so that there is no cash flow problem for MSMEs.

The prime minister also referred to India jumping 23 places on World Bank’s latest ‘Ease of Doing Business’ ranking. He said in four years his government has achieved what many did not believe and achieved what no other nation in the world has done - leaping from 142 rank in 2014 to 77th rank. Breaking into top 50 rank is not far away, he said.

Talking about the government’s achievement, Arun Jaitley said, “We have been able to show foreign investors that a country is an ideal place for investments and there’s no place for red-tapism.  The government is making various plans to ease the banking sector for the common man. In various fields, we have to move ahead and agriculture is a field where most of the funds have been utilised. Around 32 crore Jan Dhan accounts have been opened, villages have been electrified; we are moving ahead. Since 2014, in the percentage increase in rural sanitation has risen to 92% from 39%. Various countries have taken it up as a case study,” Jaitley added.

With inputs from agencies