New Delhi: The Diwali gift hamper from the government for micro, small and medium enterprises (MSMEs) is a 12-point package that, among other things, will give business owners access to credit upto Rs 10 million through a web portal in 59 minutes. The portal, which was launched as a pilot project in September, has already seen in-principle approval to 72,680 loan proposals worth Rs 236 billion.
The package comes two years after the government's decision to demonetise old currency notes of Rs 500 and Rs 1,000 that had dealt a body blow to the MSME sector because it relied on cash for the majority of its transactions.
The package aims to give such enterprises access to credit and increase their cash flows, along with a liberal business environment. It also includes relaxation in labour laws and environmental rules along with changes in company laws, may come as a relief to small and medium enterprises, which are facing liquidity crunch owing to issues related to non-banking finance companies (NBFCs) and weak banks.
The Prime Minister announced a 2 per cent interest subvention for all goods and services tax (GST)-registered MSMEs on fresh or incremental loans up to Rs 10 million. A Rs 60-billion package was also announced for creating 20 hubs and 100 tool rooms for technology upgrade.
The reform measures also include an increase in interest rebate from 3 per cent to 5 per cent for exporters who receive loans in the pre-shipment and post-shipment period.
Citing official figures, MSME Minister Giriraj Singh said 65 million firms employed 120 million workers in the sector and generated the highest number of jobs after agriculture.
"In this age of globalisation, these reform measures will go a long way in strengthening the MSME sector. I will myself do a focused monitoring of the government's reach-out to small businesses across 100 districts in the next 100 days," Modi said while announcing the package.
In a bid to increase market access, central public sector enterprises (CPSEs) have been asked to procure 25 percent of their purchases, up from 20 per cent, from MSMEs.
Of the 25 percent, 3 percent purchase will now be reserved for MSME firms belonging to women entrepreneurs.
All public sector undertakings will also compulsorily be part of government e-Marketplace (GeM), which will give market access to smaller companies as out of 150,000 suppliers on the portal, 40,000 are MSMEs.