Google, SIDBI launch INR 110 Crore fund to assist micro enterprises offset COVID-19 impact

Fund prioritises micro enterprises led by women, medical equipment manufacturers

US-headquartered internet giant Google through its Indian subsidiary ​​Google India Pvt. Ltd. has partnered with the Small Industries Development Bank of India (SIDBI) to set up an INR 110 Crore (USD 15 Million) fund to help the pandemic embattled micro-enterprises find their feet again.   

The ‘crisis response’ to COVID-19 will provide financial assistance in the form of loans between INR 25 Lakhs - 1 Crore disbursed through SIDBI at competitive interest rates to eligible micro enterprises having a turnover of up to INR Five Crores, multiple media reports said. With women entrepreneurs and MSMEs producing medical equipment considered as priority sectors for lending under the programme, significant rate concessions will be provided for them, the reports said.   

In a statement, Google India said that the programme aims ‘to fulfil the credit needs of Indian micro enterprises’ and will ‘help them make investments in their business operations, such as purchasing new machinery and equipment production and infrastructure’ apart from meeting other capital requirements.   

The announcement comes a year after Google revealed plans to invest USD 10 Billion in India and is part of a series of efforts the tech major has undertaken in association with various government departments to support the strengthening of digital infrastructure in the country.   

For instance, considering that the number of users in India using voice assistance is twice the global average, Google is implementing the first-of-its-kind pilot project to manage vaccine booking on the COWIN app, where its voice-assistant will be harnessed to guide users in eight languages to follow the steps to secure an appointment. The company, in association with NASSCOM and Tata, Strive and SafeEducate to provide one lakh scholarships for a free enrolment to a Google Career Certificate on various subjects like IT support, automation, project management and data analytics say this news report.   

Commenting that the collaboration with Google India was one of many of the SIDBI’s ongoing initiatives to help micro enterprises fight the disproportionate impact that the pandemic has wrought on the sector, Chairman and Managing Director of SIDBI, Sivasubramanian Ramann said that partnership was the launch of the bank’s first foray into paperless lending from on-boarding through disbursal stages.   

The other initiatives implemented by SIDBI as part of is COVID-19 emergency response strategy includes programmes like War Against Second Wave of Covid COVID-19 (SHWAS) to support micro manufacturers of COVID-related critical medical equipment, Assistance to MSMEs for Recovery and Organic Growth (AROG), SIDBI Assistance to Facilitate Emergency Response Against Coronavirus (SAFE) and SAFE Plus.    

Similar to another international multi-partner collaboration dedicated to MSMEs, the Google-SIDBI association’s focus on women entrepreneurs has come at an opportune time. Women-led MSMEs, already suffering from credit-related challenges, have significantly been worse off during the pandemic, the International Finance Corporation (IFC) had revealed in an eye-opening study last month.   

Comprising 20% of total MSMEs in India, there are 15 million women-led micro and small businesses in India. Shockingly, 90% of them ‘rely on informal sources of financing’ causing a huge credit gap of USD 158 Billion. Though Non-Performing Assets (NPAs) are 40% less for businesses led by women entrepreneurs, 66% of them do not even have a bank account, the study said. As the majority of these women rely on family for funding, the pandemic further worsened the credit scenario for women-owned and women-led enterprises due to the contraction in household income.   

Given the fact that microfinance institutions cannot scale up, and banks cannot scale down, women entrepreneurs are often left underserved in terms of financial assistance, the IFC report says. Perhaps this is where industry-government partnerships, like the Google-SIDBI one, can bridge the gap.