Government announces subsidy regime for MSMEs in draft policy

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msme-IITFSaturday, December 6, 2014: The government has announced a subsidy regime by forming a draft policy for micro, small and medium enterprises with turnover of up to Rs 50 million as a pro-growth regulatory framework. At present, the MSME sector doesn’t have any its own policy and thus it is governed by the industrial policy.

The draft policy formulated by the government has proposed providing subsidy for small MSME entities having turnover of less than Rs 50 million. The government has for now invited comments from stakeholders in 45 days upon the newly framed draft policy.

The three components of the policy framework involve an enabling framework; a supporting framework; and a subsidy framework for very small businesses. The draft paper noted, “The Subsidy Regime Framework may be required for very small players of say less than Rs 50 million of turnover.”

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It further notified, “The first objective of this Policy thus must be not only to encourage establishment and growth, but also, emphasise on growth. For this purpose, at the outset, we need to define our MSMEs in such a fashion that the definition does not become a hindrance to growth (which at present it is)”.

The draft paper said that an existing business with turnover of Rs 50 million, which in International context would be regarded as ‘micro’ set up, are not entitled to have an enabling framework to reach 500 million, neither does the 500 million turnover company have an enabling framework to allow it to grow to Rs 5000 million. It further highlighted, “This has been a large vacuum in the Policy space which seriously needs to be addressed.”

The draft of the policy primarily focuses on establishing a Start-up Regime Framework for encouraging start-up units to provide suitable ecosystem and also putting in place a regulatory regime framework for smooth functioning and growth of businesses.

The draft also highlights the frameworks for innovation; new product development; export promotion and marketing; environmental compliance; manufacturing & services excellence; financial regime; and exit policy for MSMEs.

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