5 new government programs to uplift MSMEs and help them stay relevant

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

The government is rolling out various programs and measures to boost the sector.

Amid the COVID-19 outbreak, when MSMEs were on the brink of financial ruin, Nirmala Sitharaman, Minister of Finance announced a series of initiatives in May 2020 under the Rs 20 lakh crore Aatmanirbhar Bharat stimulus package. Three policies that stood out were the unsecured loan scheme of Rs 3 lakh crore, subordinated debt of Rs 20,000 crore for MSMEs and capital injection of Rs 50,000 crore through the Fund of Funds (FoF ).

Last month, Prime Minister Narendra Modi said the efforts of Indian MSMEs are leading India towards an “Aatmanirbhar Bharat”.

“India’s exports are constantly increasing and Indian products are entering new markets, hence strengthening MSMEs is crucial,” he added.

MSMEs need to be supported by government programs and initiatives to remain relevant and competitive in an ever-changing marketplace. The government has recently added other programs and measures for MSMEs which SMBStory detailed below.

Tool rooms and technical institutions

Technical tools and institutions focus on the integrated development of relevant industries that work with MSMEs.

While tool rooms enable the design and manufacture of sophisticated small and medium-sized tools, technical institutes provide technical services such as design of tools, molds, etc., material testing, quality control, as well as technical advice related to manufacturing. or the 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 l general engineering, foundry and forging, electronics, perfumery, glass, sporting goods, footwear, etc. The tool rooms have also developed specific training programs to meet international requirements.

Benefit from:

  • Improve access to tooling facilities to improve MSME efficiency and provide industry-ready workforce by organizing training programs.
  • Development of processes and products in the sectors concerned.
  • Advice and work in the sectors concerned.

Eligibility criteria:

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

MSME Champions Program

The MSME Champions program was formulated through the Standing Finance Committee (SFC) by merging the six components of the former Technology Upgrading Program (TUS) for a period of five years i.e. 2021-22 to 2025-26. The program has not yet been launched and the government has stated that it will adopt a holistic approach to unify, synergize and converge various programs and interventions.

The end goal is to capture clusters and businesses, modernize their processes, reduce waste, improve business competitiveness, and facilitate their national and global reach and excellence. The new MSME Champions program has three components:

1. MSME-Sustainable (ZED):

The Sustainable MSME Certification (ZED) is a broad initiative to raise awareness of Zero Defects Zero Effect (ZED) practices among MSMEs, and to motivate and incentivize them towards ZED certification. Through the ZED certification journey, MSMEs can significantly reduce waste, increase productivity, improve environmental awareness, save energy, make optimal use of natural resources, expand their markets, and more.

Key Benefits:

Certification cost

  • 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:

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

Additional grant:

  • 10% for female-owned MSMEs/SC/ST or MSMEs in North East India/Himalayas/left-wing extremism affected areas/Osland Territories/Aspiring Districts.
  • 5% for MSMEs who are also part of SFURTI or the Micro and Small Enterprise Cluster Development Program (MSE-CDP).

Financial support for product testing/quality/certification:

  • Up to 75% of the total cost of the tests/certifications, the maximum grant cap being Rs 50,000.

Getting started support:

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

Support in technological upgrading 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 making the ZED Pledge, MSMEs can receive support in their preparedness to mitigate COVID-19 risks after achieving certification based on the WASH standard.
  • Graduated incentives: MSMEs can benefit from graduated incentives as prescribed for the three levels of ZED certification. Where possible, incentives provided by States will be linked through API integration with the ZED Portal to ensure interoperability.

Eligibility criteria:

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

2. MSME-Competitive (Lean):

Competitive Program for MSMEs (LEAN) [MCLS] aims to improve the competitiveness of MSME sectors through the implementation of lean tools and techniques.

Key Benefits:

  • Implementation cost: Basic: free; Intermediate: Rs 1,20,000; Advance: Rs 2,40,000
  • Financial assistance to a group of MSME units for the adoption of Lean tools/techniques.
  • Implementation cost grant: 90% of total implementation cost

Eligibility criteria:

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

3. MSME-innovative (Incubation, DPI and Design):

MSME Innovative Champions combines innovation in incubation and design intervention, as well as IPR protection, through a single-modal approach to sensitize MSMEs on India’s innovation and motivate them to become MSME Champions .

Key Benefits:


  • Financial support to the host institute (HI) to develop and nurture the ideas – will be provided up to a maximum of Rs 15 lakh per idea.
  • Financial aid for factories and machinery at HI up to Rs 1 crore


  • For design projects approved for any MSME, 75% (micro) and 60% (small and medium) of the total project cost will be borne by the GoI up to a maximum of Rs 40 lakh, and the remaining cost of the project will be supported by MPME and submitted to the Executing Agency (IA).


  • A grant of up to Rs 1 crore would be given to an IPFC in installments based on milestones (three or more).
  • Reimbursement for the registration of a patent, trademark, geographical indications (GI), model.

Eligibility criteria:

  • Incubation: MSMEs, individuals, students who wish to develop their innovative ideas can apply through registered HIs.
  • Design: The beneficiary unit(s) must generally be a micro, small or medium-sized enterprise registered according to the definition of the MSMED law and must have a valid UAM or Udyam registration.
  • IPR: for manufacturing MSMEs with UAM/UDYAM registration

Digital MSME

The “Digital MSME” program for the promotion of information and communication technologies (ICT) in the MSME sector is designed to meet the various digital needs of the sector and to make the maximum number of MSMEs digitally empowered.

Under this program, a large number of MSMEs are expected to benefit from the standardization of their business processes, improved delivery times, reduced inventory carrying cost, improved productivity and quality of production, control of costs and deadlines, improvement of customer satisfaction, etc.

Key Benefits:

  • Empower and enable MSMEs to harness IT as a means of communication to revamp access to markets to update their managerial and technical knowledge through online content, both static and dynamic.
  • To give them software interventions, evolving their internal efficiency through intense ICT input and automating cost reduction procedures, transmitting digital culture and building capacity for access, processing, collaboration and dissemination of information.
  • To provide MSMEs with a safe and healthy bouquet of customized digital solutions that have been designed keeping in mind the diverse requirements of the ecosystem, rescuing them from the difficulties of prying and indiscriminate adoption of technology.

Eligibility criteria:

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

Credit Guarantee System for Subordinated Debts (CGSSD)

Under the CGSSD program, subordinated debt aims to support and revive MSMEs, which have become or are about to become NPAs. The promoter(s) can inject this amount into MSME units as equity and thereby improve liquidity and maintain the debt ratio. In a situation where outright lending is difficult, sub-debt with collateral will provide the necessary financing for MSME units.

Key benefit:

MSME promoters receive credit equal to 15% of their stake (equity plus debt) or Rs 75 lakh, whichever is lower.

Eligibility criteria:

This scheme aims to extend support to the promoter(s) of operational MSMEs that are in difficulty and have become NPA by 30 April 2020.

Self-Governing India Fund (SRI)

Through this program, the Ministry of MSMEs aims to ensure the availability of growth capital for MSMEs through structured equity/quasi-equity/equity-like instruments.

This program has not yet been launched and aims to encourage MSMEs to move towards listing on the stock exchange and to develop beyond the category of MSMEs. 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 company.

Key benefit:

Disbursement to MSMEs across the country.

More details on the aforementioned programs and application processes can be viewed in the link here.

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