Govt proposes subsidy regime for MSMEs in draft policy

The government today proposed a subsidy regime for MSMEs with turnover of up to Rs 5 crore as also a pro-growth regulatgory framework, as it floated a draft policy for micro, small and medium enterprises.

The MSME sector, at present, is governed by the industrial policy and does not have a policy of its own.

The draft policy, on which comments has invited comments from stakeholders in 45 days, proposes providing subsidy for small entities having turnover of less than Rs 5 crore, among other things.

The three components of the policy framework include an enabling framework; a supporting framework; and a subsidy framework for very small businesses.

"The Subsidy Regime Framework may be required for very small players of say less than Rs 5 crore of turnover," the draft paper said.

"The first objective of this Policy thus must be not only to encourage establishment and growth, but also, emphasise on growth. For this purpose, at the outset, we need to define our MSMEs in such a fashion that the definition does not become a hindrance to growth (which at present it is)".

An existing business having a turnover of Rs 5 crore, which in the international context would still be considered a "Micro Business?, does not have an enabling framework to grow to Rs 50 crore, or, a Rs 50 crore turnover company does not have an enabling framework to grow to Rs 500 crore, the draft paper said.

"This has been a large vacuum in the Policy space which seriously needs to be addressed," the draft paper said.

The draft of the policy focuses on establishing a Start-up Regime Framework for encouraging entrepreneurship by providing a suitable ecosystem and putting in place a regulatory regime framework which does not discourage growth.

It also entails frameworks for innovation; new product development; export promotion and marketing; environmental compliance; manufacturing & services excellence; financial regime; and exit policy for MSMEs; among others.

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