The Micro, Small, and Medium Enterprises (MSMEs) sector is a vital part of the Indian economy contributing to the country’s GDP and employment generation. The government not surprisingly offers several financial aids and MSME subsidy schemes to boost the sector. The Indian government subsidies list 2023 has a several schemes focused on boosting the growth of the MSME sector.
Government subsidy schemes for MSMEs seek to address major problems faced by the MSME sector and help them scale up their operations significantly. There are special schemes for subsidies across states (e.g., MSME subsidy scheme for Karnataka, Tamil Nadu, West Bengal etc.) and/or business challenges (e.g., MSME subsidy on machinery, MSME loan subsidy, MSME schemes for new entrepreneurs, etc.).
MSMEs applying for these schemes get advantages including interest subsidies, loan subsidies, subsidies for upgrading technology and equipment etc. Here are a few advantages of applying to government schemes for MSMEs:
- Reduced rate of interest for loans from select financial institutions
- Easy access to collateral-free loans
- Tax exemptions
- Access to international market
- Subsidy on patent registration
- Subsidised skill development programmes
- Assistance for new entrepreneurs
Apart from general schemes and central government subsidy schemes for small scale industries, there are specific schemes for MSMEs who are women and MSMEs owners who belong to the SC/ST classes. These schemes are meant to uplift the Indian business industry and give an edge to MSMEs in its fight in the national and international market.
Alternatively, you can also apply for a business loan up to ₹30 lakhs through Tata nexarc for your business. These are collateral-free loans and requires minimal documentation. You can use the loan for working capital needs, to buy machinery, rent/lease property, or any other. The process is online and you can get a loan offer in as less as 5 minutes.
MSME subsidy schemes in 2022-2023
There are several central government subsidy schemes for small scale industries that helps boost MSME growth. You can view the Indian government subsidies list 2023 on the website of MSME ministry. Here are a few MSME subsidy schemes 2023 that are popular among small businesses and how to apply for these MSME subsidies.
1. Interest equalisation scheme
Interest equalisation scheme was introduced by the government to give a boost to the exporting community of India. Exporters, especially MSME exporters, benefited from the scheme as it gave interest subsidies to exporters.
This MSME interest subsidy scheme offers an interest subsidy on pre and post shipment export credit like packing credit. MSMEs can get a rebate up to 5% while other businesses are liable for a 3% subsidy.
The interest equalisation scheme covers mostly labor-intensive and employment generating sectors. Here is the list if eligible industries for this interest subsidy scheme for MSMEs:
- Cosmetics and toiletries, leather goods and footwear companies
- Readymade garments industry
- Fabrics of all types, toys, sports goods, paper, and stationary making firms
- Processed agriculture/food items sectors
- Handicrafts, handmade carpet and handloom products sector
- Coir and coir products, yarn and other jute products industry
- Ceramics and allied products industry including glass and glassware units
- Medical and scientific instruments, optical frame, lens and sunglass makers
- Auto components, bicycle and parts, articles of iron or steel manufacturers
- Articles of base metals, industrial machinery, electrical and engineering enterprises
All MSMEs exporters registered on Udyam portal can apply.
How to apply?
Apply online through the Directorate General of Foreign Trade (DGFT) new online module.
2. CLCSS – Credit Linked Capital Subsidy Scheme for Technology Upgrades
CLCSS is an MSME capital subsidy scheme that seeks to help MSMEs that wish to upgrade their technology. This scheme can be considered as a government subsidy for machinery loan.
The credit linked subsidy scheme for MSMEs provides 15% upfront capital subsidy up to ₹15 Lakhs for MSME units. This is subject to the maximum investment in approved machinery being ₹1 crore to MSE units on institutional loans specifically taken for induction of state-of-the-art or near state-of-the-art technology.
This loan should be taken to upgrade the present technology level to a higher one involving improved productivity, improved product quality and/or improved work environment. This is an MSME subsidy on machinery which means that there is a list of equipment that the subsidy applies to. All the other machinery will not be eligible to be financed under the scheme.
All MSMEs upgrading plant and machinery included in the approved list of equipment can apply.
How to apply?
MSMEs can apply through banks from which they are taking the loan to fund the technology upgrade.
3. Financial support to MSMEs in ZED certification scheme
Zero defect Zero Effect (ZED) certification was introduced to motivate businesses, especially MSMEs, to manufacture goods with ‘Zero Defects’ so that the exported goods are never returned citing bad quality. Goods that are ZED certified should also be ‘Zero Effect’ meaning that the goods shouldn’t have a negative effect on the environment. A ZED rating is provided to an MSME upon the completion of the certification which will be valid for 4 years.
This scheme aims to create awareness about ZED certified manufacturing process in the way of subsidies for MSMEs getting the certification. If MSMEs opt for ZED certification micro enterprises will get a 50% subsidy on the certification costs while small and medium enterprises will get 60% and 80% respectively. The same amount of subsidy is given if the MSME chooses to go through a re-assessment/re-rating by credit rating agencies & other agencies.
All registered MSMEs can apply.
How to apply
MSMEs will have to register on the ZED website and take an online self-assessment to apply.
4. Subsidy for upgrading existing PMEGP/REGP/ MUDRA units
This is a central government subsidy scheme for small scale industries. As the name of the scheme mentions, this MSME subsidy scheme is for units that have availed the benefits of PMEGP/REGP/ MUDRA schemes. This is an MSME loan subsidy scheme for expansion and upgrading well performing units. It helps businesses bring in new technology/automation to modernise the existing unit.
Maximum subsidy under this MSME subsidy scheme is 15% of the project cost (20% for MSMEs in northeast region and hill states). The rest of the project cost is provided by a bank as a term loan.
All existing units financed under PMEGP/REGP/MUDRA scheme whose margin money claim has been adjusted and the first loan has been repaid within the loan tenure can apply.
How to apply
Apply by filling in the application form on PMEGP e-Portal.
5. National SC-ST Hub scheme
Government of India introduced the National SC-ST hub scheme to contribute to the Central Public Procurement Policy for Micro and Small Enterprises Order 2012 which seeks to 4% Public Procurement target from SC-ST entrepreneurs. This program is an MSME scheme for new SC/ST entrepreneurs to help them in capacity building and technology upgrades.
A central government subsidy scheme for MSMEs, the National SC-ST Hub scheme 25% subsidy on purchase of plant and machinery/equipment or ₹25 lakh whichever is less. The entrepreneurs will receive marketing and mentoring support through participation in exhibitions and vendor development programmes. They will be reimbursed for fees charged for bank loan processing, testing services, membership of Export Promotion Council, membership in government promoted eCommerce portals, Single Point Registration Scheme of NSI, etc.
New and existing MSMEs set up by people under the SC/ST category can apply.
How to apply?
Visit scsthub.in to apply.
Things to keep in mind while applying for government schemes
Above mentioned are some prominent MSME subsidy schemes that gives you financial assistance for technology upgrades, certifications, loan repayments, etc. While applying to these government schemes there are few things to keep in mind:
- Check the eligibility criteria
- Go through the key benefits of the scheme
- Know the closing date to apply for a scheme
- Ensure you have all the documents required
Applying to central government subsidy schemes for MSME holds multiple advantages and is specifically beneficial to MSMEs as it helps build reputation. Being selected for one MSME subsidy scheme would improve your chances of being selected for more such schemes.