Schemes of Government for MSME Sectors part 1

Every person wants to start their own business but due to not having enough money, they are unable to make a decision. In the previous articles, we learned what are the ways of earning money, how can we make the hidden talent inside us as our profession.

Today, in this article, we will discuss the subject of how we can start our business with the help of the government. Yes, I am saying with the help of Government, so MSME is a path that the Government of India has extended to support the people financially. Let's see what is MSME, how it works, and what are the schemes that the government of India bestows. One by one we will discuss each of the schemes In-depth.

What is MSME?

MSME can be defined as the Ministry of micro, small and medium enterprises. The Micro, Small, and Medium Enterprises (MSMEs) sector have emerged as a highly vibrant and dynamic sector in the Indian economy in the last five decades. The MSME area contributes to 45% of India’s Total Industrial Employment, 50% of India’s Total Exports, and 95% of all industrial gadgets of the country, and more than 6000 varieties of merchandise are manufactured in these industries (As consistent with msme.Gov.In). When those industries grow, the economic system of the country grows as an entire and flourishes.MSME industries are the backbone of the economy. 

There are several advantages of this sector: 

  • You can acquire government tenders by getting registered in the MSME portal.
  • Enrolled MSMEs get tax sponsorships and assessment and capital endowments.
  • Due to the MSME registration, the financial institution loans emerge as less expensive as the percentage rate could be very low at around ~ 1 to 1.5%. Much decrease than bank rate on ordinary loans.
  • It additionally allowed credit score for minimum alternate tax (MAT) to be carried ahead for up to fifteen years in preference to 10 years.
  • Many authorities tenders are only open to the MSME Industries.
  • They get smooth get entry to credit.
  • Business registered beneath MSME is given a higher predilection for government license and certification.

Documents required for the registration in MSME

  • Business Address Proof
  • Copies of Sale Bill and Purchase Bill
  • Partnership Deed/ MoA and AoA
  • Copy of Licenses and Bills of Machinery Purchased

Schemes of MSME

1). Prime Minister Employment Generation Programme and Other Credit Support Schemes

2). Development of Khadi, Village and Coir Industries

3). Technology Upgradation and Quality Certification

4). Marketing Promotion Schemes

5). Entrepreneurship and skill Development Programme

6). Infrastructure Development Programme

7). Scheme of Surveys, Studies and Policy Research

8). National SC-ST-HUB

9). Scheme of Information, Education, and Communication

Today we will talk in-depth about the first scheme and will know what facilities are provided in this scheme and how can we take advantage of it, so let's start today.

1). Prime Minister Employment Generation Programme and Other Credit Support Schemes

There are three main schemes under this scheme, they are as follows and we will try to understand them all completely.

1.1   Prime Minister Employment Generation Programme(PMEGP)
1.2. Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE)
1.3. Interest Subsidy Eligibility Certificate (ISEC)

Prime Minister Employment Generation Programme(PMEGP)

The scheme is implemented by the Khadi and Village Industries Commission (KVIC) which functions as the national nodal agency. The scheme is implemented at the state level through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industry Centers (DICs), and banks. In such cases, KVIC routes government subsidies to eventual disbursement through designated banks.

The maximum eligible project/unit cost in the manufacturing sector is 25 lakhs and 10 lakhs in the business/service sector.
Beneficiary categories Grant rate under PMEGP (project cost)
Area (project / unit location) General category 15% (Urban), 25% (Rural), Special 25% (Urban), 35% (Rural)
(Including SC / ST / OBC / Minorities / Women, physically handicapped ex-servicemen, etc) 
The banks usually provide the remainder of the overall project cost in the form of the term loan and the working capital. 

Who are eligible to apply..??

1). Any person, above the age of 18.
2). In the manufacturing sector at least VIII level pass for projects above Rs.10 lakh and above Rs. 5 lakh in the business/service sector. 
3). Under PMEGP only new proposals will be considered for approval. 
4). Self-help groups (including those belonging to the BPL given they have not benefited from any other scheme), Institutions registered under the Societies Registration Act, 1860; Co-operative 5). Societies of Production and Charitable Trusts are also eligible.
6). Existing Units (under PMRY, REGP, or any other scheme of Government of India or Government of State) and Units which have already taken advantage of Government Subsidy under any other scheme of Government of India or Government of State shall NOT qualify.

How can you apply for this Scheme?

KVIC's (Khadi and Village Industries Commission) State / Divisional Directors, in consultation with KVIB (Khadi and Village Industries Board) and the Director of Industries of the respective states (for District Industry Centers DICs), will provide local ads through print & electronic media inviting applications along with project proposals from prospective beneficiaries desirous of enterprise/service unit start-up under PMEGP.

Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE)

The Ministry of Micro, Small and Medium Enterprises, and Small Industries Development Bank of India (SIDBI) jointly established a trust entitled Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Micro and Small Enterprises Credit Guarantee Scheme. The CGTMSE corpus is contributed by the Indian Government and SIDBI. The Trust Fund guarantees 75 percent of the loan balance to the creditor.

Collateral free loan up to a limit of 100 lakh is available for individual MSE on payment by the MSE to the bank of the guarantee fee.

Who are eligible to apply?

Within the scheme all current and new undertakings are eligible.

How can you apply for this Scheme?

Candidates who meet the eligibility criteria can approach banks / financial institutions and select eligible Regional Rural Banks under the scheme. / schemes / sccrguarn.htm

Interest Subsidy Eligibility Certificate (ISEC)

The Interest Subsidy Eligibility Certificate (ISEC) Scheme is an important process pursued by khadi institutions to finance the khadi programme. It was implemented to raise funds from financial institutions to fill the void between real fund requirements and budgetary funding availability.

Under the ISEC Scheme, credit is made available for working capital at a concessional interest rate of 4 percent per annum, as required by the institutions. The Central Government is paying the lending banks the difference between the actual lending rate and 4 percent through KVIC.

Who are eligible for this scheme?

The Khadi institutions have valid Khadi certificates and have approved the Khadi system. Institutions registered with the KVIC / State Khadi and Village Industries Boards (KVIBs) can use funding under the ISEC Scheme, the Scheme only supports the Khadi and the polyvastra sector.

How can you apply for this scheme?

The Khadi institutions will apply along with the ISEC certificate issued by KVIC to the working capital finance bank. Based on the working capital that has been sanctioned, the financing bank will raise the claim for reimbursement to the nodal branch for the interest rate above and above 4 percent.

So friends, if you want to start your own business in the favor of Aatmnirbhar Bharat then you can take the help of the government. My suggestion for you is, people who are successful today have not done anything special but they did normal things in a special way, so guys think out of the box. It is said that youth have lot of energy and enthusiasm so by taking the experience from the elders and putting your efforts in an innovative way definitely make you successful entrepreneur.

Do you like this post my dear friends, kindly put your comments, and stay connected in next post we will discuss some other schemes..!!  


  1. This gave me so much knowledge.
    Thank you soooo much .
    U r doing a great job πŸ‘

  2. This is very informative and interesting read. Keep up.

  3. Very informative ..keep it up. πŸ‘

  4. Good work and Writing interpretation

  5. A good information you shared. Keep going :)

    Our youth have many options to do even in this pandemic. Please explore the link:

  6. Very good and informative article for everyone who wants to take the benefits of gov. Policy

  7. Thanks for sharing such a great MSME schemes offered by government. People really need to know about this sector. As government has given some benefits during COVID-19

  8. Thanks for sharing this information do follow


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