MSME Loan scheme for business by the Government of India?
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What do you mean by MSMEs:-

There are various Government subsidies that are provided  to MSMEs  for the economic development of the country.

MSME stands for Micro, Small and Medium Enterprises. This was introduced by the Government of India in agreement with MSMED (Micro, Small and Medium Enterprise Development) Act 2006.

MSME is widely recognized for its important contributions to economic growth, creation of employment opportunities for the nation and provision of public goods and services.

Classification of MSME Sector in India:-

Our Finance Minister Nirmala Sitharman classified the MSME sector on 13th May 2020 as:-

(i)Micro Sector:-Investment up to Rs. 1Crore & turnover up to Rs. 5 crore.

(ii)Small Sector:-Investment up to Rs.Rs 1 Crore to Rs. 10 Crore and Turnover is Rs. Rs.50 Crore.

(iii) Medium Sector:-Investment from Rs. 10 Crore to Rs. 20 Crore and Investment will be Rs.50 crore to Rs. 100 Crore.

The government of India provides different schemes and subsidies for the development of MSMEs in India.

Top 10 most important subsidies provided by Govt. of India are as follows –


MSME Loan scheme for business by the Government of India?


Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Honorable Prime Minister of India on April8, 2015 for providing loans of up to Rs. 10 Lakh to the non-corporate, non–farm, small and micro enterprises in India. these loans are classified as a MUDRA loan under PMMY. This is a very important subsidy provided by the Government to MSMEs.

These loans are given by Commercial Banks, RRBs, Small Finance Banks MFIs, and NBFCs.In the Financial Year, 2021-22 loans were sanctioned to subscriber no5,37,95,526 of Rs.339110.35 Crores.


Mudra Loan apply by any one who, run a small business in India. The minimum age for the applicant must be 18 years and the maximum age is set to 65 years.

There are 3 types of Mudra Loan:-

(1)Tarun Loan:-Mudra loan offer Rs. 500,000 to Rs. 10, 00,000 . 

(2)Kishore Loan:-Mudra Loan offer Rs. 50,000 to Rs. 5,00,000.

(3)Shishu Loan:- Mudra loan offers smaller loans up to Rs. 50,000.

Which Sectors are covered under PMMY?

1. Land Transport Sector:-Auto-rikshaws, E-rickshaws, Passenger Car& Taxi, small goods transport& another three-wheeler.

2. Service Sector:-Hair & Beauty saloon, beauty parlor, Tailoring store dry cleaning services, Gymmanusim, Athletic training, medical shop, Garage, motorcycle repairing, photocopy shop courier agency.

3. Food Products Sector:-Manufacturing papads, pickles, jams, jellies and other agricultural products, sweet shops, small service food centers, Everyday catering services canteens, micro cold storage, ice making factories, Bakeries & Backed products.

4. Textile Sector:-Handloom and power loom industry, embroidery work, chikan work, dyeing and printing, knitting etc. Mechanical or computerized 

stitching for garments and non-garments, production of automobiles and furnishing accessories.


2.The Credit Guarantee Fund Scheme for Micro & Small Enterprises (CGMSE):-

The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) was launched by the Government of India to make available collateral-free credit to the micro and small enterprises sector. This is a very important subsidy provided by the Government to MSMEs.

Credit Guarantee Fund Trust for Micro and small Enterprises (CGTMSE) is jointly set up by the Ministry of Micro, Small & Medium Enterprises (MSME), Government of India and Small Industries Development Bank of India (SIDBI) catalyze flaws of institutional credit to Micro & Small Enterprises (MSMEs).

A credit guarantee scheme (CGS) was launched to strengthen the credit delivery system and facilitate the flow of credit to the MSE sector. CGTMSE has been instrumental in providing guaranteed cover to collateral and third party guaranteed free credit facilities extended by eligible member lending institutions to MSMEs.

During the Financial year 2020-21, a total of 8.36 lakh Guarantees has been approved for an amount of Rs. 36,954 Crore.Under ( CGTMSE) has introduced a new Hybrid security product allowing warranty cover for the the portion of the credit facility, not covered by collateral security.

Under this scheme the partial coolateral security will be allowed   to obtain collateral security in these credit facilities. Whereas the remaining part of the credit facility up to a maximum of 200 Lakhs can be covered under the Credit Guarantee Scheme of CGTMSE.

The CGTMSE will, however, have a pari-pass charge on the primary security as well as on the collateral security provided for the credit facilities. 


For MSE Retail trade it is 50% of the amount in default subject to a maximum is Rs 37.50 Lacs.M

MSME Loan scheme for business by the Government of India?

3.Subsidy Offered Through National Small Industries Corporation (NSIC):-

The NSIC (National Small Industries Corporation was constituted in 1955, as a part of central government undertakings with the primary objective to fulfill the machinery and equipment required for the development of small enterprises.

NSIC carries forward its mission to assist small enterprises with a set of specially tailored schemes designed to put them in a competitively advantageous position. The NSIC scheme giving faciliate to marketing support along with credit support, technology support and other support services to boost the business.


NSIC also facilitates customized schemes, thus enhancing the competitiveness, diligence and growth of MSMEs and overall development of the economy of the country.

Type of loan promoted by NICs:-

1. MSME Loan:-

2. Working Capital Loan:-

3. Term Loan:-

NSIC offers several schemes to foster the growth of the MSME sector and these schemes have been listed below.

1. Bank Credit Facilities:-To facilitate MSME in accessing credit assistance and private sector banks.

2. Raw Materials Assistance:-To offer financial support to the MSMEs for the purchase of raw materials (imported and exported), so that they can be used for producing quality products.

3. Single point Registration scheme:-To provide single-point registration for MSMEs to participate in various government purchases.

4. Government Schemes implemented by NSIC:-This scheme is launched by the Government of India to make this scheme successful have allocated Rs. 490 crores for the person from 2016 to 2020.

5.This scheme  promotes  innovation  which in turn strengthens the  business  competitiveness  of the MSME sector  in India.

4.CreditLinkedCapitalSubsidySchemeforTechnologyUpgradation (CLCSS):-


The objective of the scheme is to facilitate technology up-gradation in MSME by providing an upfront capital subsidy of 15%( on institutional finance of up to Rs. 1 crore) for induction of well-established and improved technology in the specified 51 sub-sectors and products approved. This is a very important  subsidy provided  by the Government to MSMEs.

The main objective is to upgrade the plant & machinery with state-of-the-art technology. The MSMEs sector only has UAM numbers only take advantage of the above scheme.

The credit-linked Capital Subsidy Scheduling was first initiated on 1st October 2020 to boost the competitiveness of MSMEs.

Nodal Banks & agencies for this scheme:-The Small Industries Development Bank of India (SIDBI) and the National Bank for Agriculture and Rural Development (NABARD) are the nodal agencies who implement this scheme.

 Nine public sector banks and government agencies were appointed as a nodal bank. What is needed for technology upgradation:-

The majority of SSI units in India operate with outdated technology, machinery and plants. This was due to insufficient investment and the lack of awareness regarding the quality standards as well as the lack of access to modern technology.

Their survival was critically based on modernisation and technological upgradation. This would reduce the cost of production and allow the SSI units to remain in the competitive market.


MSME Loan scheme for business by the Government of India?
MSME-Government-Business-Loan-Scheme through FDI-2022

5. Standup India Scheme:-

Stand up India was launched by the Government of India on 5th April 2016 to support entrepreneurship among women and SC & ST communities. This scheme is similar to startup India but distinct from startup India.

Stand up India Scheme facilities bank loans between Rs. 10 Lac and Rs. 1Crore to at least one Schedule cast (SC) or Schedule Tribe( ST) borrower and at least one female borrower per bank branch to set up a greenfield enterprise. This enterprise may be manufacturing, services 

or the trading sector. 

The eligibility for the Standup India Scheme is:- Individuals who belong to the SC/ST category and/or women and have completed a bare minimum of 18 years of age. For individuals who are planning to start Greenfield projects, that project can be established on pre-existing property or in fracture. 

Collateral-free Loan is given in the Stand India scheme:- In Standup India Program for extending loans between Rs. 10 Lac and Rs.100Lacs to Schedule caste( SC) or Schedule Tribe( ST) borrower and women borrowers to set up greenfield enterprises in the manufacturing, service sector or trading sector.

How can you apply to this scheme:- Directly from the Branch of the bank, through SIDBI stand-up India portal or through the Lead District Magistrate.


The Main purpose of the Standup India scheme:-At present, only established cities are encouragement from the establishment of new industries. But once this scheme is launched, the new industrial activity will be triggered by 2.5 Lakh people and 1.25 places across the country every year.


Bank nationalization was done to take more benefit from the poor sections of India. But for the 70 years of Independence, nearly only 40% of the population did not have access to banking services.

The idea is to provide finance and loans not only to big business but also to the common people of India.

6. Lean Manufacturing Competitiveness for MSMEs:-

Under this scheme, MSMEs will be assisted in reducing their manufacturing costs, through proper personal management and better space utilization. This scheme also give  scientific  invetory management  and improved  procewss flow , reduce the  wastage loss of time.

Lean Manufacturing Competitive Scheme also brings improvement in the quality of the products and lower costs, which are essential for competing in national and international markets.

Most of the organizations in India adopting the scheme LMCS to remain better in the market. This is a very important subsidy provided by the Government of India to MSMEs.

Benefits of LMC for MSMEs:-

(1) Financial support from the Government of India up to a maximum of 80% of the consultant fees for each  Mini Cluster will be provided. The remaining 20% is to be borne by the beneficiaries’ MSME units.

(III) Lean Manufacturing consultants (LMCs) will raise bills for services provided to special purpose vehicles (SPV). The SPV will turn pay the first installment of 20% to the LMC and will obtain reimbursement from the NMIU. Thereafter MSME will transfer funds to NMIU.

MSME Loan scheme for business by the Government of India?
Benefits of MSME Registeration in india.

7. Government Subsidy for Small Businesses for Cold Chain:-

The main objective of this scheme of Cold Chain is the value addition and preservation of infrastructure is to provide integrated cold chain and preservation facilities, without any break from the farm gate to the consumer.

It covers the creation of fracture facility along with the entire supply chain, pre-cooling, weighing, sorting, grading, and waxing facilities at farm level and multi-product multi-temperature cold storage. This scheme  gives more flexibility in project planning  with special  emphasis on the creation of  cold chain infrastructure  at the farm level.


Currently the scheme for integrated cold chain and value addition in fracture by Government of India is published where the interested investors may get a grant /subsidy of 35% to 50% of the project cost based on predefined cost norms by the government.

8.Integrated Development for Leather Sector Scheme (IDLS):-

The IDLS or Integrated Development of Leather The scheme is an initiative by the Government of India. It was launched by the Department of Industrial policy and promotion (DIPP) 21st, in December 2017.This is a very important  subsidy provided by the Government of India to MSMEs.

The primary the main objective of this scheme is to upgrade the technology and production of the leather manufacturing industry. It enables footwear, Tanneries, footwear components, leather goods and accessories, Leather saddlers and leather garment manufacturing units.


The scheme is also aimed at improving employment opportunities in one of the most employment-intensive leather and product sectors.


All units in the footwear sector including the footwear component sector and establishment of the new sector have a cash profit for 2 years, undertaking viable and bankable programs on technology up graduation on or after 1st January 2016 are eligible for this assistance.


The expansion of projects in manufacturing units or the setting up of new manufacturing units should lead to 


(ii)Minimum 350 jobs for every Rs.. 5 crore Investment in tannery units or pro rata basis depending upon the level of Investment.

(iii) The scope of the units and the steering committee will lay down finalize the list of plants and machinery

(a) Modernization of tanneries

(b) Modernize of footwear & footwear 


(iv) Modernize the leather products & accessery units.

9.TechnologyandQuality Upgradation Support (TEQUP) Scheme:-

The main objective of this scheme includes Zero defects & Zero effects practices in manufacturing processes, ensuring continuous improvements and supporting the Make in India Initiative. This is a very important subsidy provided by the Government of India to MSMEs.

The ZED certification scheme is a very useful program for  creating the  awareness of the MSMEs. ZED certification is improving the manufacturing and motivates them to the assessment of their enterprises for ZED support.


After the ED assessment MSMEs can reduce wastage substantially, increase productivity, expand the market and have more IPRs to develop new products. Promote the adaptation of quality tools/systems and energy-efficient manufacturing.


Develop professionals in the area of ZED manufacturing and certifications.

In this scheme, all manufacturing Micro, Small and Medium Enterprises (MSME) having Udyog Adhar can apply.


MSME Loan scheme for business by the Government of India?
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10.Integrated Processing Development Scheme (IPDS):-

The (IPDS) was launched to solve the problems faced by the textile processing industry. This is a very important subsidy given by the Government of India to MSMEs.

The main objectives are as follows:-

(i) This scheme is designed to counter challenges such as non-availability of water for processing and environmental pollution caused by the discharge of untreated effluents.

(ii) To promote the textile sector so that it becomes competent in the global 


(iii)To encourage Research & Development (R&D) activities geared towards innovative and clean technology.

(iv) To create new processing parks and upgrade existing ones for better productivity.

(v) Under the IPDS parks, will be developed with common facilities such as 

effluent treatment plants and water supply systems that can be used by 

Clusters of processing units.

(vi) The IPDS scheme will facilitate the textile units to meet the 

required environmental standards.


Micro, Small and Medium Enterprises (MSMEs) play an important role in the growth of the Indian economy. MSMEs have grown enormously during the last five years in our country.


According to a statistics report, MSMEs have a vast network of around 30 million units over 70 million people are getting employment through MSME.


The MSME sector produces more than 8000 products, contributing about 45% of manufacturing output and about 40% of exports directly and indirectly.


After the agriculture sector, MSME is the biggest employment provider in the country. After the Independence of India, MSMEs help to boost the economy of the country.

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I am Ajay Kumar Patra. ( & MBA-Finance) with 27years of Accounts & Taxation Experience from Large Manufacturing Units of India. In 2021 I started my own Tax consultancy firm called “Ajay Tax Consultant” to give best of my services in Income Tax, GST, Different LOAN to individual and Business person. I am also a content writer and a Blogger. "".I have already published more than 150Blogs on Business, Finance, startups, Digital marketing & Tours & Travel for my viewers.

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