Diwali came early for the Micro, Small and Medium Enterprises (MSMEs) on Friday, when Prime Minister Narendra Modi announced 12 ‘gifts’ to the sector. These include easy and cheaper credit, relaxation in labour laws, easier compliance with environmental rules and changes in company laws.

All these are parts of a Support and Outreach Programme, which will continue for 100 days in 100 districts. The sector contributes over 28 per cent in Gross Domestic Product and over 48 per cent in exports. According to the 73rd round of the National Sample Survey, the MSME sector comprises 633.88 lakh units and has created 11.10 crore jobs.

A dedicated portal for sanctioning loans up to ₹1 crore in 59 minutes will be operationalised. All GST-registered MSMEs will qualify for a 2 per cent interest subvention on fresh or incremental loans. Exporters who receive loans in the pre-shipment and post-shipment period will qualify for a higher interest rebate — from 3 per cent to 5 per cent.

To provide relief from ‘inspector raj’, factory inspections will be sanctioned only through a computerised random allotment, and inspectors must upload reports on portal within 48 hours. Inspectors have to account for why they went to a factory, Modi said. MSMEs need file just one annual return for compliance with eight labour laws and 10 central rules, he said. An Ordinance has been promulgated to simplify levy of penalties for minor offences under the Companies Act.

The Prime Minister said the government has taken a number of steps to enable access to markets for entrepreneurs. Public sector companies, he said, have been asked to compulsorily procure 25 per cent (up from 20 per cent) of their purchases from MSMEs. OIf the 25 per cent, 3 per cent must be reserved for women entrepreneurs.

More than 1.5 lakh suppliers have registered with the GeM (Government e Market Place), of which 40,000 are MSMEs. Transactions worth more than ₹14,000 crore have been made on the platform. All public sector undertakings must now compulsorily be a part of GeM, Modi said.

Emphasising the importance of tool rooms as a vital part of product design, Modi announced that 20 hubs will be formed across the country, and 100 spokes in the form of tool rooms will be established.

Clusters of pharma MSMEs will be formed, given the sector’s importance, with the Centre bearing 70 per cent of the cost of establishing these clusters. Modi also announced a simplification of government procedures to enhance the Ease of Doing Business.

As part of establishing a unit, an entrepreneur needs two clearances, namely, environmental clearance and consent to establish, Modi noted. Going forward, a single consent would suffice under air pollution and water pollution laws.

Moreover, the return will be accepted through self-certification. The Union Cabinet has approved an Ordinance under which, for minor violations under the Companies Act, the entrepreneur will no longer have to approach the courts, but can correct them through simple procedures.

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