Top 9 Government Schemes Available for MSMEs & Small Businesses Every Entrepreneur Should Know

Dipak Jadhav

  • Source: Read more | 10 Dec 2021

  • Growing businesses together

Top 9 Government Programs to Provide Financial Support to Start-ups in India

1. Startup India Initiative for small businesses 

Launched by Prime Minister Narendra Modi in 2016, the program falls within the scope of the Department of Industrial Policy and Publicity. It aims to support Indian entrepreneurs in creating 10 lakh mobile app startups.

Start-up India's flagship program is the MUDRA loan scheme (Pradhan Mantri Mudra Yojana). This program offers low-interest microfinance loans to emerging entrepreneurs from lower socioeconomic strata. financing of Rs. 20,000 crore has been allocated for this program.

PRADHAN MANTRI MUDRA YOJANA was initiated by the Government of India in the Fiscal Year 2016 budget by the Honorable Minister of Finance. 

MUDRA (Micro Unit Development and Refinancing Agency) is a Government drive to work with simple and quick advanced accessibility to Micro, Small and Medium Enterprises (MSMEs), for example, the non-corporate and non-farming area. Under this program, eligible applicants can easily be provided with loans without the need for any collateral or collateral. The range of loans provided under PRADHAN MANTRI MUDRA YOJANA is a minimum of Rs. 50,000 to a maximum of Rs. 10,000,000 for MSMEs.

The main criterion for eligibility under PMMY is that all small and micro enterprises (SMEs) must be from the Non-Institutional and Non-Farm sectors.

A few other criteria that must be met for eligibility are,

1. The Applicant/Enterprise must engage in income-generating activities, ie earn a minimum income.

2. The Applicant/Enterprise must operate in the manufacturing, trade or service sector (including allied agricultural activities from 1 April 2016).

3. The Applicant/Enterprise's loan amount must be a maximum of Rs. 10,000,000.

4. The minimum and maximum age requirements under PMMY are 18 and 65, respectively.

MUDRA credits can be used by any of the following organizations under PMMY

  1. business owners
  2. small business
  3. professionals
  4. Entrepreneurs
  5. Small Industrialists
  6. Producers
  7. Persons engaged in agricultural activities

2. ATAL Innovation Mission

Established by Niti Aayog, the government plan was created to foster an innovative culture and the development of entrepreneurial spirit throughout India. 

The plan aims to create collaboration between government, central and local innovation programs and to apply the entrepreneurial spirit from schools to companies by developing world-class Atal Incubators (AICs). This will help address business and social entrepreneurship initiatives in India.

3. E-Biz or Electronic Bizness Portal

Founded in 2013, it is the first online platform to allow inter-state (G2B) communication. The main purpose of the e-Biz portal was to create an entrepreneurial friendly atmosphere in the country. 

The platform was developed by Infosys and launched 29 services in 5 states in India. It is a single online communication forum for Indian business people and investors to handle transactions, permits and activities related to both.

4. Backing for International Patent Protection in Electronics and Information Technology (SIP-EIT)

The SIP-EIT program was initiated by the Ministry of Electronics and Information Technology to provide financial funding to MSMEs and Technology Initiatives to promote innovation, accept international patent rights, and optimize industry growth in the county. 

Businesses that want to go global need to apply for intellectual property rights, as innovations are at risk of being stolen or embezzled. 

Therefore, the government has implemented various safeguards through the SIP-EIT program.

5. Multiplier Grant Scheme (MGS)

MGS was launched under Electronics and Information Technology (DeitY) to promote integrated research and development (R&D) towards product and package development among industry and educational institutions. Under this program, the government provides financial assistance in the amount of 2 times the amount contributed by the industry, provided that the industry supports the R&D of products marketed at the enterprise level.

MGS encourages and accelerates the development of domestic products/services. Government incentives are available up to TL. 2 crore per project with a project duration limited to about 2 years. For industrial collaborations, the cost is limited to Rs. 4 crores with a maximum tenure of 3 years.

The government established CGTMSE to provide unsecured business loans to MSME and startups.

The scheme allows business units to take out unsecured loans at a low-interest rate of up to a maximum of Rs. 100 lakh under a partnership with SIDBI (Small Industry Development Bank of India) to encourage new businesses and restart existing businesses. Loans are mainly given to manufacturing companies as working capital or term loans.

6. Software Technology Park (STP)

The STP scheme was established as a 100% export-oriented program to promote and export computer software and professional services through communication networks or physical media. The schema focuses only on computer software. 

The concepts of 100% Export Oriented Units (EOU) and Export Processing Zones (EPZ) to create Science Parks/Technology Parks are covered in this diagram.

7. Loan for Roof Solar Projects

The plan is committed to the development of 40,000 MWp Grid-Interactive Rooftop Solar PV Plants over the next five years to increase reliance on non-traditional energy sources. 

These rooftop solar power plants with capacities from 1 kW to 500 kW are expected to be installed across India in various sectors such as residential, commercial and the like. Under the scheme, a 15% subsidy is provided to organizations or individual businesses for such facilities.

8. NewGen Innovation and Entrepreneurship Development Center (NewGen IEDC) 

The NewGen IEDC program was started by the National Science and Technology Entrepreneurship Development Board. The program aims to instil a spirit of creativity and entrepreneurship among young people in India through a variety of methods such as mentoring, coaching and assistance. There are also provisions to support and encourage entrepreneurship.

Startup India is a government campaign that aims to promote bank financing for start-ups to boost entrepreneurship and promote startups that will contribute to the Indian economy. It was first announced by Prime Minister Narendra Modi on 15 August 2015.

The campaign focuses on eliminating bureaucracy and bottlenecks and restricting the role of States in policy and getting rid of "license raj" and barriers such as land permits, foreign investment offers, environmental permits.

A startup defined by Startup India is an enterprise headquartered in India, established less than seven years ago, with an annual turnover of less than Rs 25 crore. 

Start-Up India will also take into account companies that are engaged in innovation, development or improvement of products and processes, or companies that are scalable and have high employment potential.

9. Dairy Processing and Infrastructure Development Fund (DIDF)

DIDF is a fund created under NABARD in 2017, where the eligibility criteria of the dairy associations, multi-state dairy cooperatives, state milk federations, milk-producing enterprises and NDDB subsidiaries project can receive loans. 

The loan component consists of 80%, with the borrower paying the remaining 20%. Interest is accrued at an annual rate of 6.5%. and the loan usage period is determined by the amount of money borrowed. Loan repayment is guaranteed by the respective state government, and in case of default by the borrower, the state government steps in to contribute to the defaulted portion.

Final Summary

These key government initiatives aim to increase the number of individuals involved in entrepreneurship in India and help drive the growth of the Indian start-up ecosystem. 

If you are planning to start a startup, keep in mind that the government of India provides several schemes to assist and assist your organization in its growth. Being aware of the various plans will help you choose the right ones at the right time and fulfil your entrepreneurial dreams.

Frequently Asked Questions 

1. What is a start-up?

A Start-up refers to an established India that has been in existence for less than ten years, developing innovative products/services and generating revenue of less than Rs. 100 million annually.

2. Why is the government promoting Startups in India?

India is on the brink of economic development where innovation and creativity will lead to change. To encourage and encourage such development, the Government of India is developing various schemes to accelerate the development of initiatives.

3. Can startups get tax breaks?

Yes, start-ups get tax breaks, i.e. exempt from paying income tax, provided they are certified by the Inter-ministerial Board (IMB).

4. Can startups apply for government tenders?

Newly established companies can apply for government tenders as they are exempt from the “previous experience/turnover” eligibility requirements that other companies must comply with while benefiting from government tenders.

5. Will startups get a lower rate to choose government plans?

Yes, most of the government schemes mentioned above have low-interest rates which will be beneficial for startups to run their business smoothly.

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