Lesson 8. Government Schemes and Incentives for Promotion of Entrepreneurship
Throughout the world, micro and small enterprises (MSEs) are considered as an important constituent of the national economies, as they significantly contribute to expansion of employment. Considering the importance of micro and small enterprises, the Central and State Governments have been implementing several schemes for promotion of these enterprises such as;
8.2. PRIME MINISTER’S EMPLOYMENT GENERATION PROGRAMME (PMEGP)
Government of India has approved a new credit linked subsidy programme known as Prime Minister’s Employment Generation Programme (PMEGP). It has been done by merging the two schemes that were in process till 31.03.2008 specifically Prime Minister’s Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP) that were meant for creation of employment opportunities through establishment of small enterprises in rural and metropolitan areas. PMEGP will serve as a central sector scheme to which shall be administered aad monitored directly by the Ministry of Micro, Small and Medium Enterprises (MoMSME). The Scheme shall be implemented and governed by Khadi and Village Industries Commission (KVIC), which is a statutory organization under the administrative control of the Ministry of MSME as the single nodal agency at the National level. Whereas at the State level, the State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs) and District Industries Centres (DICs) as well as banks will implement the Scheme. The Government subsidy under the Scheme will be routed by KVIC through the recognized Banks to the entrepreneurs in their Bank accounts.
8.3. OBJECTIVES OF PRIME MINISTER’S EMPLOYMENT GENERATION PROGRAMME (PMEGP)
I.The chief objective of the scheme is to produce more and more employment opportunities in both, rural as well as urban areas of the country. For this purpose, setting up of new self-employment ventures/projects/micro enterprises shall also be done.
II. It also aims at bringing together a widely isolated traditional rural and urban youth seeking employment and providing them self-employment opportunities.
III.Through the scheme, the government wishes to provide a sustainable employment to a large segment of traditional rural and urban unemployed youth in the nation, and thereby to help them.
IV. It is also an attempt to increase the earning capability of rural and urban youth.
8.4. CONDITIONS OF ELIGIBILITY FOR BENEFICIARIES
- The age should be above 18 years.
- There will be no limit of income for setting up projects under PMEGP.
- The beneficiaries should have studied at least up to VIII standard for setting up of project costing more than Rs.10 lakh in the manufacturing sector and above Rs. 5 lakh in the business /service sector.
The assistance under the Scheme is provided only in case of new projects sanctioned particularly under the PMEGP.
- Self Help Groups alongwith those belonging to BPL are also eligible for assistance under PMEGP provided that they must not have availed benefits under any other Scheme
- The institutions should be registered under Societies Registration Act,1860.
- Production Co-operative Societies and Charitable Trusts are also eligible for the scheme
8.5. MARKET DEVELOPMENT ASSISTANCE SCHEME FOR MICRO/ SMALL MANUFACTURING ENTERPRISES/ SMALL & MICRO EXPORTERS
The scheme offers financial support by manufacturing Small & Micro Enterprises in International Trade Fairs/ Exhibitions under MSME India stall. It also offers funding for sector specific market studies done by Industry Associations/ Export Promotion Councils/ Federation of Indian Export Organization. SSI Associations that initiate anti-dumping cases are covered under the scheme.
8.6. OBJECTIVES OF MARKET DEVELOPMENT ASSISTANCE SCHEME FOR MICRO/ SMALL MANUFACTURING ENTERPRISES/ SMALL & MICRO EXPORTERS
(i) The scheme aims at encouraging Small & Micro exporters for tapping and developing markets in foreign country.
(ii) Through this scheme, government wants to motivate the representatives of small/ micro manufacturing Enterprises to participate under MSME India stall at International Trade Fairs/ Exhibitions for further exposure.
(iii) Further the scheme also aims at popularizing the implementation of Bar Coding on a large scale.
8.7. SCHEME FOR ASSISTANCE TO TRAINING INSTITUTIONS
The Scheme provides financial assistance to establish new institutions (EDIs) and to strengthen the infrastructure of the existing EDIs. The chief objectives of the scheme are development local entrepreneurship and thereby to develop new micro and small enterprises and to create self-employment in rural as well as urban areas, by providing training to new generation entrepreneurs in setting up of enterprises. The assistance shall be in the form of capital grant specifically for development of infrastructure.
8.8. RAJIV GANDHI UDYAMI MITRA YOJANA
The Union Micro, Small and Medium Enterprises Ministry launched the Rajiv Gandhi Udyami Mitra Yojana to provide assistance to entrepreneurs in the Northeastern region. Beneficiaries from the Northeastern region, and those belonging to the SC/ST/physically handicapped/women categories, will not have to contribute for the establishment of service enterprises of micro-manufacturing enterprises, under the scheme. The scheme aims to provide assistance to entrepreneurs through lead agencies or Udyami Mitra, who would provide guidance to the entrepreneurs in completing various formalities necessary for the establishment of the enterprise. This includes preparation of project report, arranging fund, use of technology, and marketing, setting up of plant with machinery along with getting approvals, clearances and NOCs as and when required. The Yojana was anticipated to provide end-to-end support for establishment of new micro and small enterprises.
8.9. OBJECTIVE OF RAJIV GANDHI UDYAMI MITRA YOJANA (RGUMY)
The objective of the scheme is to provide support and assistance to the new generation entrepreneurs, who have already completed EDP/SDP/ESDP or vocational training from ITIs, through the selected lead agencies. Under This scheme, financial assistance is provided to the selected lead agencies i.e. Udyami Mitras for rendering assistance and support to the new generation entrepreneurs.
8.10. CREDIT LINK CAPITAL SUBSIDY SCHEME FOR TECHNOLOGY UPGRADATION
The Scheme aims at facilitating technology upgradation by providing capital subsidy to SSI units, including tiny, khadi, village and coir industrial units, on institutional credit availed of by them for modernization of their production equipment. The Scheme before its revision provided 12 per cent capital subsidy to SSI units, including tiny units, on institutional finance availed of by them for induction of well established and improved technology in selected sub-sectors/products approved under the Scheme. The eligible amount of subsidy calculated under the earlier scheme was based on the actual loan amount not beyond Rs.40 lakh.
A large percentage of SSI units continue with outdated technology and plant & machinery because of insufficient investment and lack of awareness. With increasing competition of the economy, the survival and growth of the SSI units are critically dependent on their modernization and technological upgradation. Upgradation of both the process of manufacture and corresponding plant and machinery is necessary for the small enterprises
It is in this background that the ceiling for loans under the Scheme was raised from Rs. 40 lakh to Rs. 1 crore and rate of subsidy from 12 per cent to 15 per cent.
8.11. NATIONAL AWARD SCHEME
The Micro, Small & Medium Enterprises (MSMEs) in India have seen an immense development in the last few decades. The MSMEs have made us notice remarkable growth in terms of quality production, export-import, modernization, product development very much beyond expectations. Entrepreneurial efforts have made it possible to produce a large number of items, which previously were imported. In some cases new variants so produced are having additional attributes and are quite user friendly as well. This all has been possible due to the farsightedness of entrepreneurs of MSMEs
8.12. SCHEME TO SUPPORT FIVE SELECTED UNIVERSITIES / COLLEGES TO RUN 1200 ENTREPRENEURSHIP CLUBS.
The scheme is to support five universities to run Entrepreneurship Clubs and each university should be from Northern, Western, Eastern, Southern and North East region. Each university is supposed to run 240 clubs per year and each club should have a membership of 50 entrepreneurs. In a period of 5 years, 3 lakh entrepreneurs are to be benefited in all.
8.13. OBJECTIVES OF THE SCHEME
The scheme is to encourage entrepreneurs. Moreover, this scheme will perform a very important role in bringing the entrepreneurs, universities and MSME-Development Institutes (MSME-DI) together. Because of this scheme it will be possible for entrepreneurs to come together and solve their common problems.
8.14. SCHEMES FOR WOMEN ENTREPRENEURS:
A. Mahila Udyami Yojana (MUY): IDBI has set up special fund under this scheme with corpus fund of Rs.5Crore to provide seed capital assistance to the women entrepreneurs intending to initiate projects in SSI sector. This scheme is implemented by SIDBI. 51% of equity should be managed by women.
B. Stree Sakthi Package (SBI): Under this scheme, EDPS are exclusively designed and conducted for women entrepreneurs. Moreover, an amount of Rs.25000/- is provided without collateral security.
C. Priya darshini yojana: It is implemented by Bank of India. Financial assistance is provided to women entrepreneurs
• Max. loan provided in the scheme is upto 2 lakhs for term loan and 1 lakh for working capital.
• Assets acquired with finance are hypothecated as security.
• Repayment period is 3-5 years.
• Margin money is 20% depending on type of activity.
Besides these programmes other schemes such as PMRY, SEPUP (Self Employment Programme for urban Poor.),SGSY, IRDP and Rashtriya Mahila Kosh help women entrepreneurs in providing financial assistance.
In conclusion Government incentives available are of two types of subsidies.
• Investment subsidy to establish more enterprises. It includes various subsidies such as capital investment subsidy, transport subsidy, power generator subsidy, and social subsidy to women entrepreneurs.
• Other subsidies include Export / import subsidy, tax subsidy, excise subsidy/ duty exemption, and capital subsidy for technology upgradation
Source: 1. http://mycii.in/KmResourceApplication/E000000166.6249.Microsoft%20Word%20-%20Govt%20Incentives%20for%20SME%20Export%20Promotion.pdf
Website of Ministry of Micro, Small and Medium Enterprises (Government of India)
all above sites were visited on 09/11/2012