1. INCENTIVES AND SCHEMES ASSOCIATED WITH MSMEs

2. Aims and objectives "Imparting greater vitality and growth impetus to the Micro, Small and Medium Enterprises (MSME) in terms of output, employment and exports and instilling a competitive culture based on heightened technology awareness."

3. MSME classification based on investment limit in plant and machinery: Manufacturing Enterprises Micro Rs. 2.5 million (US$ 56000) Micro Rs. 2.5 million (US$ 56000) Small Rs. 50 million (US$ 1.1 million) Small Rs. 50 million (US$ 1.1 million) Medium Rs. 100 million (US$ 2.2 million) Medium Rs. 100 million (US$ 2.2 million) Services Enterprises Micro Rs. 1 million (US$ 22000) Micro Rs. 1 million (US$ 22000) Small Rs. 20 million (US$ 0.4 million) Small Rs. 20 million (US$ 0.4 million) Medium Rs. 50 million (US$ 1.1 million) Medium Rs. 50 million (US$ 1.1 million)

4. Micro, Small and Medium Enterprises Development Act, 2006 1.Industry replaced by enterprise, which include service enterprises also. 2.Ambit of sector enlarged to cover medium enterprises. 3.Constitution of MSME Board 4.Simplification of registration procedure 5.Policy of preferential procurement from MSMEs 6.Progressive credit support 7.Penalty for delayed payments 8.Provision for exit policy

5. MSMED Act 2006 promulgated in order to : 1.remove impediments due to multiple laws 2.introduce statutory consultative and recommendatory bodies on MSME policies 3.improve registration procedures of MSMEs 4.statutory basis for purchase preference and credit policies 5.Improve realization of payments of MSMEs

6. Specific policy measures initiated for boosting the growth of tiny, small and cottage industries a)Reservation of items for exclusive manufacturing in small sector b)Preferential credit support measures c)Preferential government procurement policies d)Fiscal concessions e)Infrastructural development like development of industrial estates, testing labs, common facility centers f)Entrepreneurship development

7. Major Schemes For MSME’s Support (A)Credit support 1.Public sector banks advised to double the flow of credit to MSMEs within 5 years (20% annual growth) 2.A minimum of 40% of bank credit earmarked for priority sector lending which includes loans to MSEs 3.Specialised SME Bank branches in industrial clusters for smooth flow of credit to MSMEs 4.One Time Settlement (OTS) scheme for settling NPAs of MSMEs 5.Interest band prescribed

8. (B) Performance and Credit Rating Scheme 1.Helps MSMEs in accessing credits from banks & financial institutions, orders from foreign buyers 2.Helps in assessing their strengths and weaknesses. 3.Rating by one of the empanelled national or international Rating agencies. 4.Government subsidises 75% of the cost of Rating fee 5.Concessional credits from Banks/FIs to such rated units

9. ( C )Credit Guarantee Fund for Small Enterprises Credit Guarantee Fund Trust for Micro & Small Enterprises (CGFTSI) gives guarantee to its Member Lending Institutions for their collatoral free loans to MSEs upto INR 2.5 million (USD 64000). Initial guarantee fee at specified rate (1.5% ) of the credit facility sanctioned shall be paid upfront and thereafter annual fee. Provides comfort to the Banks and Financial Institutions.

10. (D)Technological Support 1.Credit Linked Capital Subsidy Scheme for Technology Upgradation Scheme meant to improve quality of products by technology upgradation. Investment upto INR 10 million (US$.250,000) eligible for support with subsidy upto 15% on investment. 2.Technology Business Incubators for incubating new enterprises 3.Testing.Technology Business Incubators for incubating new enterprises 4.Testing Centres for Quality Certification 5.Tool Rooms and Training Centres for skill upgradation 6.Incentive scheme for obtaining ISO Certification by MSEs (E)Marketing Assistance and Export Promotion 1.Support for participation in trade fairs and exhibitions – national as well as international 2.Training programmes on packaging for exports 3.Purchase preference in Government procurement 4.Market Development Assistance Scheme for publicity, market studies and adoption of modern market practices

11. (F)Cluster Development Programme Grant upto 80% of Project cost with ceiling of Rs.100 million to implementing agency for technology upgradation & productivity improvement and energy conservation & pollution control Rs 1 million assistance for capacity building activities without fixed assets

12. Entrepreneurship Development Programmes Rural Employment Generation Programme (REGP) Prime Minister’s Rojgar Yojna (PMRY) EDP Institutes Incubators (G)International Cooperation Programme

13. Institutional Support Structure At federal level – Ministry of MSME – Small industry development organization (SIDO) – National small industry corporation (NSIC) – Khadi and village industries commission (KVIC) – Coir board – Entrepreneurship development institutions (EDIs)

14. State level – Directorate of industries – District industries center – State finance corporation (SFC) – State industrial development corporation (SIDC) – Technical consultancy organizations – Entrepreneurship development institutions (EDIs)

15. Others. – Industry organizations – NGO’s – Banks and financial institutions