MSME Ministry Scheme

MSME Ministry Scheme



The role of micro, small and medium enterprises(MSMEs) are well established in the economic and social development of the country. This sector contributes 8 per cent of the country’s GDP, 45 per cent of the manufacturing output and 40 per cent of its export. The MSMEs provide employment to about 60 million persons through 26 million enterprises.

In accordance with micro small and medium enterprises development (MSMED) Act 2006 the MSME are classified into:- 

1.Manufacturing/Production of goods

2.Providing/Rendering of services

  • The Manufacturing Enterprises have been defined in terms of investment in plant and machinery(excluding land and building) and further classified into:-
  1. Micro Enterprises-investment up to Rs25 lakh
  2. Small Enterprises-investment above Rs25 lakh and upto Rs5 crore
  3. Medium Enterprises-investment above Rs5 crore and up to Rs10 crore
  • The Service Enterprises have been defined in terms of their investment in equipment(excluding land and building) and further classified into:- 
  1. Micro Enterprises-investment up to Rs10 lakh
  2. Small Enterprises-investment above Rs10 lakh and up to Rs2crore
  3. Medium Enterprises-investment above Rs2 crore and up to Rs5 crore



1. Promulgation of MSMED Act, 2006.

A significant achievement of the Government is the enactment of the ‘Micro, Small & Medium Enterprises Development Act, 2006’, which aims to facilitate the promotion and development and enhance the competitiveness of MSMEs. The act has come into force from 2nd October, 2006 and it fulfils a long-cherished demand of this sector. Apart from giving legal strength to the definitions ofmicro, small and medium enterprises, this Act also contains penal provisions relating to the delayed payment to these enterprises.

2.Prime Minister’s Employment Generation Programme

Under this programme, financial assistance is provided for setting up of micro enterprises each costing up to Rs.10 lakhs in service sector and Rs.25 lakh in manufacturing sector. The assistance is provided in the form of subsidy up to 25 percent (35% for special category including weaker section) of the project cost in rural areas while it is 15 percent (25% for special category including weaker sections) for urban areas. 

3.Promotional Package

These, inter alia, include credit and fiscal support, cluster based development, infrastructure, technology and marketing support. Capacity building of MSME Associations and support to women entrepreneurs are the other important features of this package.

4.Task Force on MSMEs

A Task Force under the chairmanship of the Principal Secretary to Prime Minister was constituted to address the issues of MSME sector. The Task Force submitted its Report in record time and has made recommendations in the areas of credit, marketing, labour, rehabilitation and exit policy, infrastructure, technology, skill development, taxation and development of MSMEs in the North-East and Jammu & Kashmir. A Council of MSMEs under the chairmanship of Hon’ble Prime Minister has been constituted to lay down the broad policy guidelines and review the development of the MSME sector. For ensuring timely/speedy implementation of the recommendations of the Task Force and follow-up on the decisions of the Prime Minster’s Council on MSMEs, a Steering Group under the chairmanship of Principal Secretary to the Prime Minister has also been constituted.

5. 4th All India Census of MSMEs

The quick results of 4th All India Census of MSMEs (2006-07), which was launched in May, 2008, were released during 2009-10. The results reveal that there are 2.61 crore MSMEs in 2006-07, providing employment to about 6 crore persons. Of the total MSMEs, 28% are in the manufacturing segment and 72% in the services segment.

6.Credit Guarantee Scheme

The Government has set up a Credit Guarantee Fund to provide relief to those micro and small entrepreneurs who are unable to pledge collateral security in order to obtain loans for the development of their enterprises. (a) enhancement in the loan limit to Rs.100 lakh, (b) enhancement of guarantee cover from 75% to 85% for loans upto Rs.5 lakh; (c) enhancement of guarantee cover from 75% to 80% MSEs owned/operated by women and for loans in the North East Region (NER), (d) reduction in one-time guarantee fee from 1.5% to 1% and annual service charges from 0.75% to 0.50% for loans up to Rs.5 lakh and (e) reduction in one-time guarantee fee for NER from 1.5% to 0.75%, etc. The Government is making concerted efforts to further enhance the awareness of the scheme throughout the country for enhancing the coverage of the Scheme.

7.National Manufacturing Competitiveness Programme

The Government has launched an all India campaign under the National Manufacturing Competitiveness Programme (NMCP) for the MSMEs, which has ten specific components aimed at improving MSME processes, designs, technology and market access. These components seek to introduce the best elements of industrial competitiveness in the MSME sector, which has often been unable to afford such practices and techniques. The ten components of the scheme are as under:

  • Building awareness on Intellectual Property Rights for MSMEs; 
  • Scheme for Providing Support for Entrepreneurial and Managerial Development of SMEs through incubators.
  • Enabling Manufacturing Sector to be Competitive through Quality Management Standards (QMS) and Quality Technology Tools (QTT);
  • Mini Tool Rooms under PPP mode;
  • Marketing Assistance/support to MSEs (Bar Code);
  • Lean Manufacturing Competitiveness Programme for MSMEs;
  • Promotion of Information & Communication Tools (ICT) in Indian MSME sector;
  • Design Clinics Scheme for MSMEs;
  • Marketing Assistance and Technology Up gradation Scheme for MSMEs; and
  • Technology and Quality Up gradation Support to MSMEs.

All the ten components have been operationalised and the guidelines of the scheme have been notified. The details of the scheme guidelines are available on the web site

8. MSE-Cluster Development Programme (MSE-CDP)

The guidelines of the MSE-Cluster Development Programme have been comprehensively modified in February, 2010 to provide higher support to the MSEs. The scope of the scheme includes:

  1. Preparation of Diagnostic Study Report with Government of India (GOI) grant of maximum Rs.2.50 lakh (Rs.1 lakh for field offices of the Ministry of MSME);
  2. Soft interventions like training, exposure, technology up gradation, brand equity, business development, etc. with GOI grant of 75% of the sanctioned amount of the maximum project cost of Rs.25 lakh per cluster. For NE and Hill States, cluster with more than 50% micro/village, women owned and SC/ST units, the GOI grant will be 90%.
  3. Preparation of Diagnostic Study Report with Government of India (GOI) grant of maximum Rs.2.50 lakh (Rs.1 lakh for field offices of the Ministry of MSME);
  4. Soft interventions like training, exposure, technology up gradation, brand equity, business development, etc. with GOI grant of 75% of the sanctioned amount of the maximum project cost of Rs.25 lakh per cluster. For NE and Hill States, cluster with more than 50% micro/village, women owned and SC/ST units, the GOI grantwill be 90%.
  5. Detailed Project Report (DPR) with GOI grant of maximum Rs.5 lakh for preparation of a technical feasible and financially viable project report.
  6. Hard Interventions in the form of tangible assets like Common Facility Centre having machinery and equipment for critical processes, research and development, testing, etc. for all the units of the cluster with GOI grant up to 90% of the cost of project of maximum Rs.15 crore.

  7. Infrastructure Development with GOI grant of up to 80% of the cost of project of Rs.10 crore, excluding cost of land; and

  8. Exhibition Centres by Associations of Women Entrepreneurs of women owned micro and small enterprises with GOI assistance @ 40% of the project cost. Over 460 clusters have been undertaken for various cluster development interventions (ie. diagnostic study, soft interventions and   hard interventions) and 126 proposals (including 28 for up gradation of existing industrial estates) have been taken up for infrastructure development under the scheme.

  9. Credit Linked Capital Subsidy Scheme

    To make the Credit Linked Capital Subsidy Scheme (CLCSS) more attractive, the following   amendments were made with effect from 29 September, 2005:
    the ceiling on loans has been raised from Rs.40 lakh to Rs.1 crore.
    the rate of subsidy has been raised from 12 percent to 15 percent
    the admissible capital subsidy has now been based on the purchase price of plant and machinery, instead of the term loan disbursed to the beneficiary unit.

  10. Entrepreneurship and Skill Development

    In line with the overall target set by the Prime Minister’s National Council on Skill Development, the Ministry has taken up skill development as a high priority area. Under the Entrepreneurship/Skill Development Programmes  conducted by various organizations of the Ministry of MSME.

  11. Rajiv Gandhi Udyami Mitra Yojana

    The scheme aims to promote and support establishment of new micro and small enterprises through handholding of potential first generation entrepreneurs, who have already successfully completed Entrepreneurship Development Programme (EDP)/Skill Development Programme (SDP)/Entrepreneurship-cum-skill Development Programme (ESDP) of at least two weeks’ duration, or have undergone vocational training from ITIs. One of the main objectives of handholding is to guide and facilitate the potential entrepreneurs in dealing with various procedural and legal hurdles and completion of various formalities which are required for setting up and running of enterprise successfully and to save them from harassment at the hands of various regulatory agencies for want of required compliances. It will not only increase the proportion of potential entrepreneurs trained under various EDPs/SDPs/ESDPs/Vocational Training (VT) in setting up their enterprises, more importantly, it will also enhance survival/success rate of newly set up enterprises.
      As a component of this scheme, the Ministry has recently launched a MSME Call Centre (known as ‘Udyami Helpline’) with a toll-free number 1800-180-6763. The Udyami Helpline, inter alia, provides basic information on how to set up an enterprise, various schemes being implemented for the promotion of MSMEs, accessing loans from banks and further contacts for obtaining detailed information.

  12. Performance and Credit Rating Scheme

    To sensitize the MSE sector on the need for credit rating and encourage the MSEs to maintain good financial track record enabling them to earn higher rating for their credit requirements, the Government in April, 2005 launched the ‘Performance and Credit Rating Scheme’. The implementation of the scheme is through National Small Industries Corporation (NSIC). Reputed Rating Agencies have been empanelled by NSIC from which the MSEs can select the one to be engaged by it for obtainingthe rating. The Ministry of MSME subsidises the cost of rating by sharing 75% of the fee charged by the Rating Agency, subject to a ceiling of Rs.40,000.


    In order to enhance the marketing competitiveness of MSEs in domestic as well as international market, Office of Development Commissioner (MSME), Ministry of MSME, provides the financial assistance for reimbursement of 75% of one-time registration fee (Under SSI-MDA Scheme) w.e.f. 1st January,2002 and 75% of annual recurring fee for first three years (Under NMCP Scheme) w.e.f. 1st June,2007 paid by MSEs to GS1 India for using of Bar Coding. The work of reimbursement has been decentralized and transferred to field offices i.e. MSME-DIs w.e.f. 1st April,2009 with a view to ensure speedy & timely and extensive implementation of the scheme.

    Bar codes are the series of black lines and white spaces printed on product packages or attached as tags which you would have noticed on consumer products. Information on a product or a consignment like its item code or serial number, expiry date, consignor/ consignee etc., can be represented through such bar codes. When these bar codes are scanned using a scanner, it enables instantaneous data capture with 100% accuracy and at great speeds. 

    Bar Coding can have a significant impact on the success of any enterprise/ company and organisation. Timely and accurate capture of product information and its communication electronically across the Supply Chain ahead of physical product flow is critical to lowering inventory costs, in accurate sales forecasting & dynamic production scheduling and in product track and trace.

    Bar Coding not only facilitates the exchange of information between buyers and sellers, but also provides the potential for better visibility and sharing of information across an entire Supply Chain. Other benefits are-

    Automated data capture with 100% accuracy,

    Real time stock management of raw materials and finished goods


    Fast and error free data recording on product/ consignment movement

    Easy integration with existing software, if any

    In compliance with growing requirements of leading national markets


    In line with requirements of international retailers &

    Also gives international look and feel.

    GS1 India, an autonomous body under Ministry of Commerce & Industry, Government of India is a solution provider for registration for use of Bar Coding. To become a subscriber of GS1 India, all one has to do is fill up the subscription enquiry or registration form and make the necessary payments as registration fee. Details about registration with GS1 India for use of Bar Coding are available on their website

    For further details members please contact od DC(MSME),Nirman Bhavan, New Delhi.

  14. National Small Industries Corporation

    To provide an opportunity for first generation entrepreneurs to acquire skills for enterprise building and to incubate them to become successful small business owners, NSIC has set up 47 Training-cum-Incubator Centres (TICs) under PPP mode. NSIC has also launched a B2B Web portal to provide marketing facilities to national and international MSMEs for business to business relationship. The MSME Info Call Centre of NSIC has been made functional to provide information about the schemes and activities being implemented for the benefit of MSMEs. Further, NSIC has established a Marketing Intelligence Cell in May, 2010, which shall provide data base and information support to the MSMEs on marketing of their products/services.

  15. National Board for MSMEs

    The Government has set up for the first time a statutory National Board for Micro, Small and Medium Enterprises so as to bring together the representatives of different sub sectors of MSMEs along with policy makers, Bankers, trade unions and others – in order to move towards cohesive development of the sector. The deliberations and directions of the National Board will go a long way to guide and develop enterprises in this sector – to become more competitive and self reliant.


Steps To Register a Limited Liability Partnership (LLP)

Do you want to start an Indian LLP?

To register a Indian LLP, you need to first apply for a Designated Partner Identification Number (DPIN), which can be done by filing E-Form for acquiring the DIN or DPIN. You would then need to acquire your Digital Signature Certificate and register the same on the portal. Thereafter, you need to get the LLP name approved by the Ministry. Once the LLP name is approved, you can register the LLP by filing the incorporation form.

Step 1: Application for DIN or DPIN

All designated partners of the proposed LLP shall obtain “Designated Partner Identification Number (DPIN)”. You need to file E-Form DIN-1 in order to obtain DIN or DPIN. In case you already have a DIN (Director Identification Number), the same can be used as a DPIN.

Step 2: Acquire/ Register DSC

The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the LLP(s) are required to be filed with the use of Digital Signatures by the person authorised to sign the documents.                                  

Acquire DSC -A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian IT-Act 2000.

Register DSC – Role check can be performed only after the signatories have registered their Digital signature certificates (DSC) with LLP application. To know about it click Register a DSC

Step 3: New User Registration

To file an E-Form or to avail any paid service on LLP portal; you are first required to register yourself as a user in the relevant user category, such as registered and business user. To register now click New User Registration .

Step 4: Incorporate a LLP

Apply for the name of the LLP to be registered by filing Form 1 ( Application for reservation or change of name) for the same. After that depending upon the proposed LLP, file required incorporation Form 2 ( Incorporation document and Subscriber’s statement)

Once the form has been approved by the concerned official of the Ministry, you will receive an email regarding the same and the status of the form will get changed to Approved. To know more about E-Filing process click "All About E-Filing"

Step 5: File LLP Agreement

After incorporation of LLP, an initial LLP agreement is to be filed within 30 days of incorporation of LLP. The user has to file the information in Form 3 ( Information with regard to Limited Liability Partnership Agreement and changes, if any, made therein).

Do you want to convert existing partnership firm into LLP?

Any existing partnership firm that is willing to get converted into LLP will need to apply through Form 17 (Application and statement for the conversion of a firm into LLP. Form 17 needs to be filed along with Form 2 (Incorporation document and Subscriber’s statement).

Do you want to convert an existing private company/ unlisted public company into LLP?

Any private company/ unlisted public company that is willing to get converted into LLP need to apply through Form 18 (Application and Statement for conversion of a private company/ unlisted public company into limited liability partnership (LLP)). Form 17 needs to be filed along with Form 2 (Incorporation document and Subscriber’s statement).

Encouraging MSMEs for acquiring company structure by adopting corporate Governance or Limited Liability Partnership(LLP) framework under the marketing assistance and technology up gradation scheme under NMCP.

The cost of Assistance will be in the form of reimbursement up to 50 % of the total expenditure subject to Rs45000/- per MSME unit. The admissible cost may cover ,as applicable, the expenses towards the associated consultancy charges, expenditure on legal or statutory fees.

Ministry of Micro Small and Medium Enterprises, Government of India,
shaheed captain Gaur marg,Okhla,New Delhi-110 020