Press Information Bureau
Government of India
Ministry of Micro,Small & Medium Enterprises
21-December-2011 18:22 IST
Proposal to Develop 25 Clusters as Industry Innovation Clusters


Introduction of an Electronic Tracking System under PMEGP    


More than 6.91 Lakh Proposals Covered under Credit Guarantee Scheme


Udyami Helpline - a useful Tool for Entrepreneurs


5.71 Lakh Additional Employment Opportunities   to be Generated

 in 2011-12 under PMEGP




 The role of Micro, Small and Medium Enterprises in the economic development of the country is well established. For their promotion and development, The Ministry of Micro, Small and Medium Enterprises (MSME) has been  implementing various programmes and schemes.


Procurement Policy

Government has approved a public procurement policy for Micro and Small Enterprises which mandates that Central Ministries/ Departments/ PSUs have to procure minimum 20% of their total annual purchases from MSEs. Out of this 20%, as share of  4%  has to be earmarked for the MSEs owned by SC/ ST entrepreneurs. Central Ministries/ Departments/ PSUs will prepare their annual plan for setting of goal of 20% procurement and will mention  in their Annual Reports. The policy will help to promote MSEs by improving their market access and competitiveness through increased participation by MSEs in Government purchases and encouraging linkages between MSEs and large enterprises.


MSE- Cluster Development Programme

The Ministry of MSME has adopted the cluster approach for holistic development of micro and small enterprise in a cost effective manner. Soft interventions (Technical assistance, capacity building, exposure visits, market development, trust building, etc. for the cluster units), hard interventions (creation of tangible “assets” like Testing Facility, Design Centre, Effluent Treatment Plant, Training Centre, R&D Centre, Raw Material bank/Sale Depot, Product Display Centre, Information Centre, any other need based facility) and Infrastructure Development (Development of land, provision of water supply, drainage, power distribution, non-conventional sources of Energy for common captive use, construction of roads, etc.) are undertaken in the existing clusters / new industrial areas / estates or existing industrial areas / estates.


It is proposed to develop 25 clusters initially as Industry Innovation Clusters. The innovation will necessarily include commercial successful exploitation of new technologies, ideas or methods through the introduction of new products or new processes or through the improvement of existing ones.  The institutional linkages of clusters with technical and academic institutions, incubation centres, patent offices, R&D centres etc., needs to be emphasized to make use of new ideas, knowledge for the benefit of the cluster.  Of course the role of pro-active Special Purpose Vehicle (SPV), Associations is paramount.  Efforts have been made to identify pro-active associations and SPVs.


National Manufacturing Competitiveness Programme

            The National Manufacturing Competitiveness Programme (NMCP) for the MSMEs, aims at enhancing the competitiveness of enterprise in this sector. There are 10 components of the NMCP, which have been approved and are available for MSMEs. These are:-


(i)                 Lean Manufacturing Competitiveness Scheme (LMCS) for MSMEs

(ii)               Design Clinics Scheme for design expertise to MSMEs manufacturing sector

(iii)             Marketing Assistance and Technology Upgradation Scheme for MSMEs

(iv)             Enabling manufacturing sector to be competitive through Quality Management Standards (QMS) and Quality Technology Tools (QTS).

(v)               Technology of Quality Upgradation Support for MSMEs

(vi)             Promotion of Information and Communication Technology (ICT) in MSME sector.

(vii)           Setting up Mini Tool Room & Training Centres under PPP Mode

(viii)         Marketing Assistance/Support to MSEs (Bar Code)

(ix)             Building Awareness on Intellectual Rights for MSMEs

(x)               Scheme for Providing Support for “Entrepreneurial and Managerial Developments of SMEs through Incubators”.


Prime Minister’s Employment Generation Programme(PMEGP)

A national level credit linked subsidy scheme, namely, ‘Prime Minister’s Employment Generation Programme (PMEGP)’was introduced in August 2008 by merging erstwhile PMRY and REGP schemes of this Ministry with a total plan outlay of Rs.4485 crore towards margin money subsidy for generating an estimated 37.38 lakh additional employment opportunities during the four terminal years of XI plan (2008-09 to 2011-12). An amount of Rs.250 crore has also been kept towards backward – forward linkages. Under this programme, financial assistance is provided for setting up of micro enterprises each costing upto Rs.10 lakh in service sector and Rs.25 lakh in manufacturing sector.  The assistance is provided in the form of subsidy upto 25 per cent (35 per cent for Special category including weaker sections) of the project cost in rural areas while it is 15 per cent (25 per cent for Special category including weaker sections) for urban areas.


For the Prime Minister’s Employment Generation Programme (PMEGP), the principle of first-come-first served (or FIFO: first-in-first-out) would be followed in Coir Board/KVIC/KVIBs/DICs and in Banks. 


Ministry is also introducing an electronic tracking system for on-line tracking of all cases under PMEGP scheme beginning with filing of application to selection, sanction, disbursal, setting up of the units and its physical verification. Applicant should be able to view the status of their cases on-line. 


Skill Development

Skill Development has been taken up as a high priority area by Ministry of MSME through various measures like enhancing the training capabilities of the Tool Rooms, MSME Development Institutes and other organizations under the Ministry of MSME. The agencies under the Ministry of MSME conducted programmes for skill development for nearly 4.29 lakh trainees during 2010-11 and the targets set for 2011-12 is 4.78 lakh persons. The Ministry of MSME provides all such trainings for SCs/STs free of cost. Special programmes are organized through MSME-DIs for weaker sections of the society viz., SC/STs, women and physically handicapped free of cost besides providing a monthly stipend of Rs. 125/- per week per candidate during the entire period of training.


Credit Guarantee Scheme

The Government is implementing the Credit Guarantee Fund Scheme for Micro and Small Enterprises with the objective of facilitating flow of credit to the MSEs, particularly to micro enterprises by providing guarantee cover for loans upto Rs.100 lakh without collateral / third party guarantees. For making the scheme more attractive to both lenders as well as borrowers, several modifications have been undertaken which, inter alia, include: (a) enhancement in the loan limit to Rs.100 lakh; (b) enhancement of guarantee cover from 75% to 85% for loans upto Rs. 5 lakh; (c) enhancement of guarantee cover from 75% to 80% for MSEs owned/operated by women and for loans in North Eastern  Region (NER); (d) reduction in one-time guarantee fee from 1.5% to 1% and annual service charges from 0.75% to 0.5% for loans upto Rs. 5 lakh and (e) reduction in one-time guarantee fee for NER 1.5% to 0.75% etc.


As on 30th November, 2011, more than 6.91 lakhs proposals (for loans of over Rs.31,642 crore) have been covered under the scheme.


Credit Linked Capital Subsidy Scheme for Micro and Small Enterprises

Under the CLCSS for technology up-gradation of Micro, Small and Medium Enterprises. The scheme was launched in October-2000 and revised from 29.9.2005. The revised  scheme aims at facilitating technology up-gradation of Micro and Small Enterprises (MSEs) by providing 15% capital subsidy (limited to maximum Rs. 15 lakhs) for purchase of Plant & Machinery. Maximum limit of eligible loan for calculation of subsidy under the scheme is Rs. 100/- lakhs. Presently, 48 well established and improved technologies/sub sectors have been approved under the Scheme.


The CLCSS is implemented through 11 nodal banks/agencies including SIDBI, NABARD and Tamil Nadu Industrial Investment Corporation Limited, Chennai (TIIC) and NSIC Ltd. Since inception of the scheme, 15613 units have availed subsidy of Rs. 813/- crore till 30.11.2011.


ISO 9000/ISO 14001/HACCP Reimbursement Scheme

The Government introduced an incentive scheme for its technological up-gradation/quality improvement and environment management. The scheme envisages one time reimbursement of charges for acquiring ISO 9000/14001/HACCP (or its equivalent) certification to the extent of 755 of the cost subject to a maximum of Rs.75000/- in total. The Scheme is administered by Office of Development Commissioner, Ministry of MSME. The Scheme has been decentralized w.e.f. 1.4.2007 and Directors, MSME Development Institutes have been empowered to receive and make reimbursement to the MSMEs folling in their jurisdiction. The Government has extended the Scheme upto 11th Five Year Plan.


            Total 21500 no. of units amounting to Rs.105.24 crore have been reimbursed since inception (1994) till date (31st March, 2011). During 2011-12, about 970 units amounting to Rs. 4.85 crore have been reimbursed upto November, 2011.


National Award

The President of India, Smt. Pratibha Devi Singh Patil presented National Awards to the Micro, Small and Medium Enterprises in New Delhi on 2nd September, 2011. The awards were in three categories: (a) Outstanding Entrepreneurs of Micro, Small and Medium Enterprises (Entrepreneurship, R&D & Quality Products), (b) Khadi and Village Industries and (c) Coir Industries; Special awards to women and SC/ST Entrepreneurs and Banks for excellence in Micro and Small Enterprises Lending. A total of 213 entrepreneurs including 14 banks received awards in various categories. 32 entrepreneurs received awards from the President of India, while Shri Virbhadra Singh, Minister of Micro, Small and Medium Enterprises presented awards to the rest of the awardees.


Marketing Assistance Scheme

The main objectives of Marketing Assistance Scheme are to enhance the marketing competitiveness of the micro, small and medium enterprises (MSMEs), to provide them a platform for interaction with the individual / institutional buyers, to update them with prevalent market scenario and to provide them a forum for redressing their problems. The National Small Industries Corporation Ltd., (NSIC) a public sector undertaking under the administrative control of this Ministry acts as a facilitator to promote marketing efforts and enhance the competency of the  MSMEs for capturing the new market opportunities by way of organizing / participating in various domestic & international exhibitions/trade fairs, buyers-seller meets, intensive campaigns/seminars and other marketing promotion activities.


BE for 2011-12 is Rs. 10.00 crore and it is targeted to support participation in 10 international and 100 domestic exhibitions/trade fairs.


Performance and Credit Rating Scheme

The National Small Industries Corporation Ltd. (NSIC), a public sector undertaking under the Ministry of MSME has been implementing “Performance & Credit Rating Scheme” for micro and small enterprises (MSEs) on behalf of the Government. The scheme is being operated through 07 accredited rating agencies i.e. CRISIL, SMERA, ONICRA, CARE, FITCH, ICRA and M/s Brickworks. The scheme is aimed to create awareness amongst micro, small & medium enterprises about the strengths and weakness of their existing operations and to provide them an opportunity to enhance their organizational strengths and credit worthiness. The rating under the scheme serves as a trusted third party opinion on the capabilities and creditworthiness of the micro, small & medium enterprises. An independent rating by an accredited rating agency has a good acceptance from the Banks/Financial Institutions, Customers/Buyers and Vendors. Under this Scheme, rating fee to be paid by the micro, small & medium enterprises is subsidized for the first year only and that is subject to maximum of 75% of the fee or Rs. 40000/-, whichever is less.


BE for 2011-12 is Rs. 75 crore and it is targeted to support rating of 18000 MSEs during the year.


International Cooperation Scheme

International Cooperation (IC) Scheme, being implemented by M/o MSME, is an ongoing Scheme of the Ninth Plan (under implementation since 1996), which is continuing in the Eleventh Plan (2007-2012) with an outlay of Rs. 10.00 crore.  Technology infusion and/or upgradation of Indian micro, small and medium enterprises (MSMEs), their modernisation and promotion of their exports are the important objectives of the Scheme.  Under the scheme, financial assistance is provided to industry associations/agencies for participation in international trade fairs as well as for organising international conferences in India and aboard for the promotion of MSMEs.


The Scheme encompasses the following activities:

     (i)            Deputation of MSME business delegations to other countries for exploring new areas of technology infusion/upgradation, facilitating joint ventures, improving market of MSMEs products, foreign collaborations, etc.

   (ii)            Participation by Indian MSMEs in international exhibitions, trade fairs and buyer-seller meets in foreign countries as well as in India, in which there is international participation.

 (iii)            Holding international conferences and seminars on topics and themes of interest to the MSMEs.


BE for 2011-12 is Rs. 10.00 crore and it is expected that 500 entrepreneurs would be facilitated to participate in 50 international events.


Assistance to Training Institutions

Under the scheme assistance is provided to existing and new training Institutions for establishment of Entrepreneurship Development Institute (EDI) and strengthening of their training infrastructure on a matching basis. Ministry  provides assistance  on a matching basis, not exceeding 50 percent of the project cost or  Rs. 150 lakh whichever is less (90 percent or Rs. 270 lakh of the project cost whichever is less, for State level EDIs in Union Territories of Andaman & Nicobar and Lakshadweep Islands) excluding cost of land and working capital. The balance 50 percent of the matching contribution (10 percent for State level EDIs in Union Territories of Andaman & Nicobar and Lakshadweep Islands) should come from the concerned Institute, State/UT Government, public funded institution(s), NGOs/Trusts/ Banks/Companies/ Societies/ Voluntary organizations etc.


The assistance would be for creation of infrastructure. The land will have to be provided by the state Government or any other institution or by the applicant. Financial assistance would be for construction of building, purchase of training aids/equipments, office equipments, computers and for providing other support services e.g. libraries/data bases etc. The costs of land, construction of staff quarters etc. would not qualify for calculation of matching grant from the Central Government. All the proposals under this scheme are required to be recommended by and routed through the concerned State/UT Government.


A new component of training has been added under this scheme, i.e.  assistance would be provided under the scheme to following Training Institutions, for conducting Entrepreneurship Development Programmes (EDPs) and Entrepreneurship cum Skill Development Programmes (ESDPs) and Training of Trainers (ToTs) programmes in the areas of Entrepreneurship and/or Skill Development:


(a)       National level EDIs (including branches),

(b)      Training Institutions established by Partner Institutions (PIs) of national level EDIs,

(c)      Training/Incubation centers of NSIC,

(d)       Training cum Incubation Centers (TICs) set up by Franchisees of NSIC

(e)       Other Training institutions with proven professional competency, capacity and experience, approved under the scheme.


Entrepreneurship Skill Development (ESDP) training would normally be of 100 to 300 hours (1 to 3 months). Entrepreneurship Development (EDP) training would be of 72 hours (2 weeks) and Trainer’s Training for 300 hours.


BE for 2011-12 is Rs. 70.82 crore and it is targeted to provide financial assistance to 4 existing/new EDIs and to train 45000 persons. The scheme is likely to take off with the addition of new component, i.e., provision of financial assistance for imparting training through national EDIs/NSIC and their partner institutions.


Rajiv Gandhi Udyami Mitra Yojana

The objectives of Rajiv Gandhi Udyami Mitra Yojana (RGUMY) is to  provide handholding support and assistance to the potential first generation entrepreneurs, who have already successfully completed or undergoing Entrepreneurship Development Training Programme (EDP) / Skill Development Training Programme (SDP)/ Entrepreneurship cum Skill Development Training Programme (ESDP) /Vocation Training Programmes (VT), through the selected lead agencies i.e. 'Udyami Mitras' , in the establishment and management of the new enterprise, in dealing with various procedural and legal hurdles and in completion of various formalities required for setting up and running of the enterprise.


A ‘Udyami Helpline’ (a Call Centre for MSMEs) with toll-free number 1800-180-6763 is in operation to provide information, support, guidance and assistance to first generation entrepreneurs as well as other existing entrepreneurs to guide them regarding various promotional schemes of the Government, procedural formalities required for setting up and running of the enterprise and help them in accessing Bank credit etc. The Udyami Helpline has become a useful tool for entrepreneurs and general public to gather information about various schemes of the Ministry. The target for 2011-12 is to assist 5000 beneficiaries under the Scheme. 


ARI Sector

The  Ministry of MSME in Agro and Rural Industries (ARI) sector has been involved in a focused manner, for the development of agro and rural industries. The following main schemes are being implemented by KVIC and Coir Board:


Prime Minister’s Employment Generation Programme (PMEGP)

            Prime Minister’s Employment Generation Programme (PMEGP) is a significant initiative with an attractive level of subsidy and was launched in August 2008. This programme has been formulated by merging erstwhile PMRY and REGP schemes of the Ministry with a total plan outlay of Rs. 4735 crore including Rs. 250 crore for backward and forward linkages. It is estimated to generate around 38 lakh additional employment opportunities in the terminal four year (2008-09 to 2011-12) of XI Plan. Under this programme, financial assistance is provided for setting up of microenterprises costing upto Rs. 10 lakh in service sector and Rs. 25 lakh in manufacturing sector. The assistance is provided in the form of margin money subsidy upto 25 percent (35 percent for special category) of the project cost in rural areas while it is 15 percent (25 percent for special category) for urban areas.


         Under PMEGP, an amount of Rs. 1037.00 crore has been provided in BEs 2011-12. Against this, an amount of Rs. 690.07 crore has been released to KVIC till November 2011. During 2011-12 (upto November 2011) 1,42,244 applications have been received by various implementing agencies under PMEGP, of which 57,408 candidates have already been selected by District Level Task Force concerned for assistance under PMEGP. Financial assistance for 40,837 projects has been sanctioned by banks. Loans were disbursed in 26,368 cases by bank for providing employment opportunities to around 2.45 lakh persons. An estimated 5.71 lakh additional employment opportunities are targeted to be generated in 2011-12.


Workshed Scheme for Khadi Artisans

         Workshed Scheme for Khadi Artisans was introduced in July 2008 for providing assistance for construction of Worksheds for Khadi artisans for better work environment. Funds to the tune of Rs.15.00 crore have been released to KVIC in 2010-11. Against the target of providing assistance to 8000 worksheds, assistance to 7082 artisans were provided upto March, 2010. It is estimated that assistance will be provided to 4,444 worksheds in 2011-12. An amount Rs. 9.41 crore has been released till November 2011.


Scheme for Enhancing Productivity & Competitiveness of Khadi Industry and Artisans

            Scheme for Enhancing Productivity & Competitiveness of Khadi Industry and Artisans was approved in July 2008 to assist 200 Khadi institutions to make Khadi Industry competitive with more market driven and profitable production by replacement of obsolete, old machinery and equipment. During 2010-11, 16 projects have been sanctioned by KVIC utilizing an amount of Rs. 3.78 crore. An amount of Rs. 21 crore has been provided in BE 2011-12.


Strengthening Infrastructure of existing Weak Khadi Institutions and Assistance for Marketing Infrastructure

            ‘Strengthening Infrastructure of existing Weak Khadi Institutions and Assistance for Marketing Infrastructure’ has been introduced recently which envisages renovation of selected 30 khadi sales outlets and providing assistance for strengthening of infrastructure of existing 100 weak selected Khadi institutions. An amount of Rs. 7.50 crore has been provided in BE 2011-12.



Products Development, Design Intervention and Packages (PRODIP)

            Products Development, Design Intervention and Packages (PRODIP) was launched in November, 2002 with the aim to diversify and develop products under Khadi & Village Industries and also to improve the packaging of various KVI products. During 2010-11, 178 projects (109 Khadi and 66 VI) have been assisted under this scheme and a target of 210 projects has been fixed for 2011-12.


Market Development Assistance (MDA) Scheme to promote sales of Khadi and Khadi Products

         A flexible, growth stimulating and artisans centric scheme named Market Development Assistance (MDA) to promote production and sales of Khadi and polyvastra has been introduced from 2010-11. The scheme provides for assistance @20% of the value of production to be shared among artisans, producing institutions and selling institutions in the ratio of 25:30:45.


Khadi Reform Programme

            The Department of Economic Affairs, Ministry of Finance has tied up financial aid from Asian Development Bank (ADB) amounting of to US$150 million over a period of three years for implementing a comprehensive Khadi Reform Programme worked out in consultation with ADB and KVIC. Under this Reform package, it is proposed to revitalize the Khadi sector with enhanced sustainability of Khadi, increased incomes and employment to artisans, increased artisans welfare and to enable KVIC to stand on its own with gradually decreasing dependence on Government Grants, Initially, the programme will be implemented in 300 khadi institutions keeping the needs of regional balance, geographical spread and inclusion of backward areas. The first tranche fund of Rs. 96 crore has already been released to KVIC for its implementation.


Mahatma Gandhi Institute for Rural Industrialization

            ‘Mahatma Gandhi Institute for Rural Industrialization’ a national level institute has been established by revamping Jamnalal Bajaj Central Research Institute at Wardha, Maharashtra in association with IIT, Delhi to strengthen the R&D activities in Khadi and Village Industry sectors. Funds to the tune of Rs. 6.35 crore were released during 2010-11.


Scheme of fund for Regeneration of Traditional Industries (SFURTI)


            The Scheme titled “Scheme of Fund for Regeneration of Traditional Industries (SFURTI)” was introduced in October, 2005 with a view to developing around 100 clusters in Khadi, Village and Coir Industry sector with a total cost of Rs. 97.25 crore to make these industries more productive and competitive and to increase the employment opportunities in rural areas of the country.


            The Scheme envisages need-based assistance for replacement of production equipment, setting up of Common Facility Centre (CFC), product development, quality improvement, improved marketing training and capacity building, etc.  Under this scheme, 105 clusters (29 Khadi, 50 Village Industries and 26 Coir) have been taken up with the approval of Steering Committee for their development under this programme. 17 National Level Committee for their designated as Technical Agencies to provide technical support in these clusters. Upto 2010-11, Rs. 82.09 crore (62.94 crore to KVIC and Rs. 19.15 crore to Coir Board) has been released for implementing this scheme. With the implementation of the SFURTI, average increase of 40% to 60% in wages of the artisans have been achieved in the functional KVI clusters.


Coir Board

The Coir Board is a statutory body established by the Coir Industry Act, 1953 for promoting the overall development of the coir industry and upliftment of the living conditions of the workers engaged in this traditional industry.  The Coir Board consists of a full-time Chairman and 39 part-time members, as provided in section 4 of the Coir Industry Act, 1953.  All sections interested in the welfare of the coir industry are represented on the Coir Board.  The functions of the Coir Board for the development of coir industries include undertaking scientific, technological and economic research and development activities; collection of statistics relating to exports and internal consumption of  coir and coir products; development of new products and designs; publicity for promotion of exports and internal sales; marketing of coir and coir products in India and abroad; preventing unfair competition among producers and exporters; assisting in the establishment of units for the manufacture of products; promoting co-operative organizations among producers of husks, coir fibre, coir yarn and manufacturers of coir products, facilitating remunerative returns to producers and manufacturers, etc.  


            Coir Board has promoted two research institutes namely, Central Coir Research Institute (CCRI), Kalavoor, Alleppey and Central Institute of Coir Technology (CICT), Bangalore for undertaking research activities in different aspects of coir industry.  Coir is highly labour intensive industry employing more than 6.5 lakh workers in coconut producing States.  Nearly 80 per cent of the coir workers in the fibre extraction and spinning sector are women.  Two strengths of coir industry are that it is export oriented and it generates wealth out of waste (coconut husk).  


            The main schemes being implemented by Coir Board for development of coir industries are:

Export market Promotion – In association with trade and industry Coir Board is participating in major international fairs/exhibitions on a country/product specific basis, product promotion programmes, catalogue shows, extending external market development assistance to exporters etc.  During 2010-11 coir and coir products worth Rs. 807.07 crore have been exported.


Domestic Market Promotion- This scheme is for enhanced sale of coir products through Board’s showrooms and sales outlets, and also popularizing coir and coir products.  Further, to promote the sale of coir and coir products manufactured by the Co-operatives and Public Sector Enterprises, a Market Development Assistance (MDA) Scheme was launched in 2000-2001 under which financial assistance @ 10% (50% each by Coir Board and State Government) to the sales outlets in the cooperative and public sector on the basis of the annual sales turn over of the coir products is provided.


            Development of Production Infrastructure Scheme is for extending financial assistance upto 25 percent of the cost of equipment and infrastructural facilities subject to ceiling of Rs.6.00 lakh for setting up coir units and Rs.2.00 lakh for modernization of existing coir units.  Under this scheme 22 units have been assisted during 2010-11.


Mahila Coir Yojana – This scheme envisages distribution of motorized ratts for spinning coir yarn to women artisans after being trained.  The beneficiary under the scheme gets a subsidy of 75 per cent of the cost of the motorized ratt subject to maximum of Rs.7500/- and 75 per cent of the cost or  Rs. 3200/- whichever is less, for motorized traditional ratts.  During 2010-11 322 motorised ratts have been distributed and 5871 persons have been trained under Mahila Coir Yojana.


The Scheme for Rejuvenation, Modernisation and Technological Upgradation of Coir Industry was introduced in March 2008 to assist spinners and tiny household sector.  Under this scheme, assistance is provided for replacement of outdated ratts/looms and for constructing worksheds so as to increase production and earnings of workers.  Under this scheme, amount of Rs.13.91 crore was utilized for assisting 1200 units during 2010-11. The year 2011-12 has a target for assisting 1123 units, with a BE of Rs. 17.26 crore.