MSME Minister Narayan Rane has introduced a scheme worth Rs 20 lakh under CGTMSE for micro units exempted from GST.

MSME Minister Narayan Rane unveiled a specialized initiative targeting informal micro enterprises (IMEs), exempting them from the Goods and Services Tax (GST) framework. This program enables IMEs to secure collateral-free loans of up to Rs 20 lakh through the government’s Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

Scheme Objective

Titled the ‘Special Provision for Informal Micro Enterprises under Credit Guarantee Scheme,’ the objective is to offer credit support to micro or nano enterprises, aiming to mitigate the perceived credit risk associated with lending to IMEs, as outlined by the MSME Ministry.

Guarantee Coverage and Loan Provisions

As per a circular issued by CGTMSE to all its member lending institutions (MLIs) on February 14, the scheme provides up to 85% guarantee coverage for unsecured loans of up to Rs 20 lakh to IMEs registered on the Udyam portal. This move is anticipated to incentivize MLIs to extend more loans, thereby augmenting credit availability to IMEs in the MSE sector.

CGTMSE Achievements

Established in 2000, CGTMSE has achieved notable milestones, surpassing Rs 1.50 lakh crore in guaranteed amounts in the current fiscal year, a substantial increase of 50% compared to the previous fiscal year’s figure of Rs 1.04 lakh crore, according to the MSME Ministry.

Budgetary Backing and Financial Inclusivity

During her budget speech for 2023, Finance Minister Nirmala Sitharaman announced a Rs 9,000 crore fund infusion into the CGTMSE corpus. This injection aims to facilitate an additional collateral-free credit of Rs 2 lakh crore to MSMEs and reduce credit costs by 1%.

Udyam Portal and Formalization Efforts

As per recent data, nearly 1.41 crore IMEs are registered on the Udyam portal out of the total 3.74 crore registered MSMEs. The government’s MSME formalization endeavor includes initiatives such as the Udyam Assist Platform (UAP), launched in January last year, to aid IMEs in registering with the Udyam portal and accessing priority sector lending (PSL) benefits.

Seamless Integration with Digital Infrastructure

The UAP, initially proposed in a report by the standing committee on finance led by Jayant Sinha, aims to seamlessly integrate IMEs into the burgeoning digital ecosystem. This includes integration with platforms like Government e-Marketplace (GeM), Trade Receivables Discounting System (TReDS), and other digital marketplaces, facilitating their participation in the digital economy.