Government Schemes for Startups and MSME in India Government of India and the Ministry of MSME have launched several unique government schemes and programs designed to empower startups and MSMEs in India. We have covered the top 5 government schemes for startups and MSME which can help them drive growth and more business.
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MSME & startups
When it comes to micro, small and medium enterprises MSME & startups, the Indian government is very clear they need to be nurtured, protected and encouraged for the betterment of India.
The Indian government wants the contribution of MSMEs to India GDP to reach 50% by 2024, from 29% today, and employ 15 crores of Indians, up from 11 crores today. That is why the Ministry of Micro, Small & Medium Enterprises has introduced several government schemes for startup & small businesses, which aim to provide them with more resources & a platforms to generate more growth. (Government Schemes)
Startup and MSMEs are the foundation on which the government’s Atma Nirbhar mission and Make In India vision will succeed: to create more job, increase exports, improve living standards for million of Indian and make India stronger through world level.
When it comes to startup, especially tech, India is among the fastest growing ecosystems. Last year, Venture Capitalist pumped a record $48 billions into Indian companies and ideas to expand their presence.
So right now, India is in a unique position where both the government & private investors want Indian entrepreneur & startups, MSMEs, to succeed and make their presence felt around the world. In this effort, the Government of India and the Ministry of Micro, Small and Medium Enterprises have launched several unique government schem & program designed to empower start-ups and MSMEs in India.
Pradhan Mantri Mudra Yojana
PM Modi launched Pradhan Mantri Mudra Yojana, in which Micro Units Development & Refinance Agency Bank or MUDRA Bank provides low rate loans to microfinance institutions and non bank financial institutions, who in turn provide low-interest loans to startups and MSME . Therefore, Pradhan Mantri Mudra Yojana is a one of a kind fund of fund designed and conceptualized to empower Indian entrepreneurs. Loans of up to Rs 10 lakh can be obtained under the MUDRA scheme.
It was launched in 2015 and within 2 year, more than Rs 1.8 crore was generated due to loan & business generated through MUDRA. As of 14th August 2020, more than 67 lakh loans worth Rs 48,000 crore have been sanctioned under the MUDRA schemes. (Government Schemes)
There are three categories of businesses, which can avail loan under the MUDRA loan for new businesse :-
- Category 1: Shishu, which is for new businesses. Loan of up to Rs 50,000 can be applied for.
- Category 2: Kishor, which is a middle aged business. Loan of up to Rs 5 lakh can be applied for.
- Category 3: Tarun, which is an existing and experienced business. Loan of up to Rs 10 lakh can be applied for.
Credit Guarantee Trust Fund for Micro & Small Enterprises
CGTSME is one of the largest startup loan scheme launched by the Ministry of MSME in India.
Under this Government scheme, an unsecured loan of up to Rs 1 crore is provided to eligible startups and MSME. The loan is distributed through a trust called the Credit Guarantee Fund Trust for Micro & Small Enterprises CGTMSE, which is promoted by the Ministry of MSMEs and the Small Industries Development Bank of India SIDBI.
Financial Support to MSMEs in ZED Certification Scheme
Focused on existing and new manufacturing units, the mission of ZED or Zero Defect and Zero Effect is to encourage manufacturers to create better product, with high quality & zero defect. The goal is to enable manufacturers to adopt world class manufacturing processes & use technology to ensure their products are best in class. (Government Schemes)
The government scheme will provide both financial support & technology and tools to guarantee zero defects in its products. Startup & MSME can register in the ZED program
Credit-linked capital grant for technology upgrad
The government is clearly aware that technology is the tool that can propel Indian startup & MSME to compete with global competitors.
This is the reason for the creation of the government schemes Credit Linked Capital Subsidy for Technology Upgrade CLCSS, in which the government provides financial assistance to MSMEs to upgrade their technology and implement state of the art technology platforms for their businesses. (Government Schemes)
Under CLCSS, the government provides a 15% investment subsidy of up to Rs 1 crore to upgrade technology for startups & MSME in India. More than 7,500 product & services are covered under this government schemes.
Startup India Initiative
The Prime Minister of India launched the Startups India Initiative in the year 2016 on January 16. The idea is to increase wealth and employability by giving wings to entrepreneurial spirit. The government grant tax benefit to startup under this scheme and around 50,000 startups have been recognized through this scheme in a period of just over five year, as of June 3, 2021.
The Department of Industrial Policy and Promotion maintain this initiative and treats it as a long-term project. In addition, the general age limit for startups has been increased from two years to seven year. Also, for biotech companies, the age limit is ten year from the date of incorporation. It is one of the best government sponsored startup schemes for entrepreneurs as it offers various concession.
Design Clinic for Design Expertise to MSME
Design and innovation are fundamentals to any industry, and every startups & MSME must have a design centric approach to solving problem in their niche. In order to encourage & inspire small businesses to experiment & test new designs for their products, the MSME Ministry has created a Design Clinic to induce design related knowledge for startup & MSMEs.
Under this Government scheme, Gob. will provide up to Rs 60,000 assistance to attend design seminars & up to Rs 3.75 lakh or 75% of the cost of a seminar, in which the entrepreneur and/or his team can learn and implement design theories & learn more about they. Through this program, entrepreneur can learn about the latest trends and practices related to design, interact and network with other designers, entrepreneurs, and learn in depth about design mindset & theories.
MSME, new businesses, startup and agencies can apply online for this design clinic and enter a new innovation portals.