India is where entrepreneurship and small businesses have been at the forefront of its economic growth. Small and medium enterprises (SMEs) have contributed immensely to India’s GDP, employment, and economic development. However, these businesses often need help accessing capital for growth and expansion. To overcome this hurdle, the central and state governments have launched various schemes to provide financial assistance to small businesses. These schemes aim to provide easy access to credit and help entrepreneurs start, expand, and sustain their businesses.
Central Government Schemes
Pradhan Mantri Mudra Yojana (PMMY)
The Pradhan Mantri Mudra Yojana (PMMY) is a flagship scheme of the Government of India to provide loans up to Rs.10 lacs to non-corporate, non-farm small/micro enterprises. The scheme aims to give financial assistance to small businesses, including startups, and is categorized into three categories: Shishu, Kishore, and Tarun. Shishu covers loans up to Rs.50,000/-, Kishore covers loans from Rs.50,001/- to Rs.5 lacs, and Tarun covers loans from Rs.5 lacs to Rs.10 lacs.
Stand-Up India Scheme
The Government of India launched the Stand-Up India Scheme to promote entrepreneurship among women and SC/ST communities. Under this scheme, loans up to Rs.1 crore are provided to at least one woman borrower and one borrower from the SC/ST community for setting up a greenfield enterprise in the manufacturing, services, or trading sector.
Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE)
The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) is a scheme that provides collateral-free credit facilities to micro and small enterprises. This scheme offers credit facilities up to Rs.2 crores without collateral security or third-party guarantee. The scheme is implemented through various financial institutions such as banks and NBFCs.
National Small Industries Corporation Subsidy
The National Small Industries Corporation Subsidy is a scheme implemented by the Government of India to encourage the growth of small businesses in the country. Under this scheme, small businesses can avail subsidies on various activities such as procuring plant and machinery, marketing assistance, and technology upgradation. The scheme provides up to a 15% subsidy on purchasing plants and machinery.
State Government Schemes
Tamil Nadu New Entrepreneur and Enterprise Development Scheme (NEEDS)
The Government of Tamil Nadu launches the Tamil Nadu New Entrepreneur and Enterprise Development Scheme (NEEDS) to assist new entrepreneurs financially. The scheme’s goal is to encourage entrepreneurship and create an atmosphere suitable for the growth of small enterprises. This scheme offers loans up to Rs.1 crore for new enterprises.
Punjab State MSME Revival and Rehabilitation Scheme
The Punjab State MSME Revival and Rehabilitation Programme was created by the Punjab Government to revitalize and rehabilitate MSMEs in the state. This initiative provides financial help to sick or closed MSMEs for their resuscitation and restoration. The scheme offers a subsidy of up to 25% of the project cost, subject to a maximum of Rs.25 lacs.
Maharashtra State Rural Livelihoods Mission (MSRLM)
The Maharashtra State Rural Livelihoods Mission (MSRLM) is a scheme launched by the Government of Maharashtra to provide financial assistance to rural entrepreneurs. The scheme aims to promote entrepreneurship in rural areas and provide sustainable livelihoods to people in rural areas. Under this scheme, loans up to Rs.10 lacs are provided to rural entrepreneurs for starting or expanding their businesses.
Odisha State Financial Corporation (OSFC) Scheme
The Government of Odisha launches the Odisha State Financial Corporation (OSFC) Scheme to provide financial assistance to small and medium enterprises in the state. This scheme offers loans for purchasing plant and machinery, working capital, and other business requirements. The scheme provides loans up to Rs.5 crore for manufacturing enterprises and Rs.1 crore for service enterprises.
Rajasthan State Finance Corporation (RSFC) Scheme
The Rajasthan State Finance Corporation (RSFC) Scheme is a scheme launched by the Government of Rajasthan to give financial assistance to small and medium enterprises in the state. This scheme offers loans for purchasing plant and machinery, working capital, and other business requirements. The scheme provides loans up to Rs.50 lacs for micro and small enterprises and up to Rs.1 crore for medium enterprises.
Benefits of Government Schemes
- Easy access to credit: Government schemes provide easy access to credit for small businesses, which may otherwise find it challenging to obtain loans from banks and financial institutions.
- Low-interest rates: Loans provided under government schemes often come with cheaper interest rates than other loans offered by banks and financial institutions.
- Collateral-free loans: Some government schemes provide collateral-free loans, which means that small businesses do not need to provide any security or guarantee for the loan.
- Subsidies and incentives: Many government schemes offer subsidies and incentives to small businesses for activities such as purchasing machinery and technology upgradation.
In addition to the above-mentioned schemes, the Indian government has launched several other initiatives to support small businesses and entrepreneurs, including:
- Stand-Up India: This scheme launched by the Government of India in 2016 provides loans between Rs.10 lacs and Rs.1 crore to women entrepreneurs and entrepreneurs from SC/ST communities for setting up greenfield enterprises in greenfield manufacturing, services, or trading sectors.
- Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE): The Government of India launched this credit guarantee scheme to provide collateral-free credit up to Rs.2 crores to micro and small enterprises.
- Micro Units Development and Refinance Agency (MUDRA) Scheme: The Government of India created this plan to give micro and small businesses loans of up to Rs.10 lacs.
- National Small Industries Corporation (NSIC) Scheme: The Government of India established this scheme to provide marketing and financial assistance to small enterprises in India.
- Prime Minister’s Employment Generation Programme (PMEGP): The Government of India launched this credit-linked subsidy scheme to provide financial assistance to new and existing micro and small enterprises in the manufacturing and service sectors.
Apart from the central and state government schemes, several other initiatives and programs are run by non-governmental organizations (NGOs), private companies, and banks to support small businesses and entrepreneurs in India. Some of these programs are:
- Startup India: This initiative was launched by the Government of India to promote entrepreneurship and create a supportive ecosystem for startups in India. The program offers various benefits, including funding, incubation, and mentorship.
- SIDBI Startup Mitra: The Small Industries Development Bank of India (SIDBI) developed this program to support and help Indian entrepreneurs. The program offers various services, including financial aid, incubation, mentorship, and networking opportunities.
- Women Entrepreneurship Platform (WEP): This initiative was launched by NITI Aayog, the policy thinks tank of the Government of India, to promote and support women entrepreneurship in India. The platform offers various services, including mentorship, funding, and networking opportunities.
- Swavalamban Express: This program was launched by HDFC Bank to provide financial assistance and support to micro and small enterprises in rural areas of India. The program offers various services, including loans, training, and marketing support.
- Udyam Sakhi: The Ministry of Micro, Small, and Medium Enterprises (MSME) launched this program to support and assist women entrepreneurs in India. The program offers various services, including training, funding, and networking opportunities.
All these programs and initiatives aim to support and assist small businesses and entrepreneurs in India, enabling them to overcome various challenges and grow their businesses.
The Indian government has launched several schemes to assist small businesses and entrepreneurs financially. These schemes aim to promote entrepreneurship, provide sustainable livelihoods, and contribute to the country’s overall economic development. Small businesses can use these schemes to access credit, obtain low-interest loans, and receive subsidies and incentives. As a result, these schemes have helped many small businesses grow and thrive in the country.
Dr. Utkarsh Amaravat is a banker with vast experience in retail credit. He holds a B.E. Mechanical and MBA Marketing degree from Gujarat Technological University and a Ph.D. in management (Credit Risk Management) from Sardar Patel University. He has mainly experience in sales and processing of credit proposals. Sales/Marketing, Relationship Management, Credit, and Risk Management, including research work are vital domains for him.