On 2nd November 2018, Hon'ble Prime Minister Shri Narendra Modiji announced a set of incentives to MSMEs, which is the 2nd largest employment generator in the country after agricultural sector. Some of the key benefits offered to the MSMEs include loan sanction up to Rs.1.00 crore within 59 minutes, availment of 2% interest subvention or rebate on incremental loan up to Rs.1.00 crore for firms registered under GST, interest subvention on pre and post shipment credit for exports from 3% to 5% etc.
To ease cash flow for the MSMEs, all companies having turnover of more than Rs.500 crores would now come under Trade Receivables e-Discounting System (TReDS). Public Sector companies will have to source at least a quarter of their requirement from MSMEs against 20% earlier, out of which 3% should be from units run by women entrepreneurs.
Another positive initiative announced by the Prime Minister is inspection of establishments through random technology based allotment, which itself will be a big relief to small units compared to earlier system of Inspection Raj. Further, the report of the visiting inspectors will have to be published within 48 hours. Besides filing of single common form for eight labour laws instead of two and single approval for environmental clearance, the package includes plans for creation of special clusters for MSMEs in the pharma sector, for which the Govt. will bear 70% of the cost.
No doubt the incentives announced are of far reaching reforms. Compared to an environment of stringent environmental clearance problems coupled with non-availability of adequate bank finance, MSMEs can now look forward to a congenial atmosphere to carry out their business in a more pragmatic and healthy environment with less interference from the regulatory authorities.
Nationalized Banks having a heavy load of bad debts are finding it extremely difficult to lend more funds to the units, particularly under MSMEs. In this context, sanction of loan up to Rs.1.00 crore within the smallest time of 59 minutes appears to be really a succour to this deprived sector. We are happy that a few constructive suggestions offered by DMAI in a meeting prior to the announcement have been taken into consideration by the authorities favourably.