Govt. launches new avatar of Zero Defect Zero Effect Scheme for MSMEs

ZED aims to improve competitiveness through compliance with intl. norms

MSME Minister Narayan Rane recently launched the revamped Zero Defect Zero Effect (ZED) Scheme for MSMEs, multiple media reports say. First unveiled by Prime Minister Narendra Modi in 2016 as part of the then NDA government’s flagship Make In India programme, the ZED Scheme was conceptualised as a means to improve competitiveness, quality compliance and greening of the manufacturing processes of MSMEs through harmonisation with global standards.  

 The ZED Certification also intends to drive MSMEs to become ‘MSME Champions’ by proactively adapting their manufacturing lifecycles to become more environmentally conscious and energy efficient.  

 MSMEs can seek consultation to reduce wastage, use natural resources judiciously, employ energy conservation solutions, improve productivity and expand their market potential with increased compliance to norms aimed to promote ‘zero defect’ output, a report in News 9 says. MSMEs have to undergo three stages of certification to achieve any of the ascending five categories of ratings - bronze, silver, gold, diamond and platinum.  

 Indeed, one of the major roadblocks that prevent MSMEs from gaining greater global market access is the lack of awareness about international quality control standards and regulations. Particularly, industries dealing with wearable and edible products, such as textiles, toys and finished food products have stringent norms for quality control, that focus on both human and environmental safety.  

As per the new avatar of the ZED scheme that can be availed by any MSME registered on the Udyam portal, the following changes have been instituted and are valid until March 31, 2026:  

1. Parameters - The number of parameters MSMEs must comply with to gain the certification is now 20, as compared to 50 before. 

2. Subsidies - Micro Enterprises will be awarded 80%, Small Enterprises 60% and Medium Enterprises 50%. An additional 10% subsidy will be accorded to MSMEs run by women, SC/STs and those in select geographical locations. SMEs that are part of the SFURTI cluster development programme will receive an added subsidy of 5%. 

3. Upgradation - MSMEs can upgrade to a higher level of certification at any time within the validity of their certificate. The charges toward upgradation and the subsidy applicable will remain unchanged. 

4. Financial benefits - An INR 10,000 ‘joining reward’ will be given for MSMEs taking up the ZED pledge, to be valid for a stipulated period of time. MSMEs will also be eligible for upto INR 5 Lakh toward consultancy services to guide them to achieve ZED status. They will also be provided with exemptions from bank processing fees and benefit from low interest rates.  

While manufacturing MSMEs will be the focus of the ZED scheme in Phase 1, MSMEs in the services sector will be targeted in Phase 2, a report in The Economic Times says. The government also intends to align the ZED Certification with global norms, so as to promote international acceptance, the report says. MSMEs that are not registered under Udyam may also be included under the scheme in this phase, the report says.  

As of March 24, 2022, nearly 24,000 MSMEs have signed up so far for the ZED scheme, as per data shared by the Minister of State for MSME Bhanu Pratap Singh to the Lok Sabha, The Financial Express reports. Site assessment has been completed for 503 MSMEs and while no MSME has yet been awarded the platinum certification, 4 MSMEs have secured the diamond certificate, gold to 62, 132 to silver and 131 to bronze, the report said.