Executive Summary:
This document addresses challenges faced by Micro, Small, and Medium Enterprises (MSMEs) in India, specifically exploitation by larger firms and issues related to finance and technology. It outlines measures implemented by the government to tackle delayed payments and enhance competitiveness. Key initiatives include the establishment of Micro Small Enterprises Facilitation Councils (MSEFCs) and the SAMADHAAN Portal. The document also details financial support schemes and technology upgrades for MSMEs.
Key Points / Main Content:
Delayed Payments to MSEs:
Micro Small Enterprises Facilitation Councils (MSEFCs): Established in States/UTs under the MSMED Act, 2006 to handle delayed payment cases. Currently, 161 MSEFCs are set up across various States/UTs.
SAMADHAAN Portal: Launched on 30.10.2017 (http:samadhaan.msme.gov.in) for monitoring outstanding dues to MSEs.
Special Sub-Portal: Created on 14.06.2020 for Central Ministries/Departments/Public Sector Enterprises to report dues and monthly payments to MSMEs.
TReDS (Trade Receivables e-Discounting System): Facilitates discounting of trade receivables for MSMEs, reducing the turnover threshold for mandatory onboarding from Rs. 500 crore to Rs. 250 crore.
Reporting Requirement: Companies with payments exceeding 45 days to MSEs must submit returns to the Ministry of Corporate Affairs, stating the amount due and reasons for delay.
Financial Assistance for MSMEs:
PMEGP (Prime Ministers Employment Generation Programme): Provides credit-linked subsidies (15-35% of project cost) for setting up new micro-enterprises in the non-farm sector.
Self Reliant India (SRI) Fund: Equity infusion of Rs. 50,000 crore (Rs. 10,000 crore from the Government of India and Rs. 40,000 crore from Private Equity/Venture Capital funds) to provide growth capital.
Credit Guarantee Scheme: Provides guarantee coverage to Banks/Financial Institutions for loans up to Rs. 10 crore to Micro and Small Enterprises, without collateral security, with coverage up to 90% for various loan categories.
Technology and Competitiveness:
Technology Centres (TCs) and Extension Centres (ECs): Established across the country to provide technology support, skilling, incubation, and consultancy services to enhance MSME competitiveness.
Impact Analysis:
MSMEs:
Impact: Benefit from measures to address delayed payments, access financial assistance, and enhance technological capabilities.
Action Required: Utilize MSEFCs, SAMADHAAN portal, TReDS platform, and available financial schemes; engage with TCs/ECs for technology upgrades.
Larger Firms/Buyers:
Impact: Subject to monitoring and reporting requirements regarding payments to MSEs; required to onboard the TReDS platform.
Action Required: Ensure timely payments to MSEs; comply with reporting requirements to the Ministry of Corporate Affairs; onboard TReDS if applicable.
Central Ministries/Departments/Public Sector Enterprises:
Impact: Required to report dues and monthly payments to MSMEs through a dedicated portal.
Action Required: Utilize the special sub-portal within SAMADHAAN to report dues and monthly payments to MSMEs accurately and on time.
Banks/Financial Institutions:
Impact: Can provide loans to MSEs with guarantee coverage under the Credit Guarantee Scheme.
Action Required: Extend loans to Micro and Small Enterprises under the Credit Guarantee Scheme.
States/UTs:
Impact: Responsible for setting up and maintaining MSEFCs.
Action Required: Establish more MSEFCs for quicker disposal of cases related to delayed payments.
Key Entities Referenced
Micro, Small and Medium Enterprises (MSMEs): A sector of the Indian economy comprising enterprises classified based on investment and turnover criteria; the subject of the policy document.
Micro, Small and Medium Enterprises Development (MSMED) Act, 2006: An Indian legislation enacted in 2006 to facilitate the promotion and development of micro, small and medium enterprises.
Micro Small Enterprises Facilitation Councils (MSEFCs): Councils set up in various States and Union Territories of India to deal with cases of delayed payments to Micro and Small Enterprises, as per the MSMED Act, 2006.
SAMADHAAN Portal: A portal launched by the Ministry of MSME for monitoring outstanding dues to MSEs from buyers of goods and services.
Aatma Nirbhar Bharat: A campaign by the Government of India promoting self-reliance.
Trade Receivables e-Discounting System (TReDS): An electronic platform that facilitates the discounting of trade receivables of MSMEs through multiple financiers.
Prime Ministers Employment Generation Programme: A credit-linked subsidy program for setting up new micro-enterprises in the non-farm sector.
Self Reliant India (SRI) Fund: An equity infusion fund aimed at providing growth capital to deserving and eligible units of the MSME sector.
GOVERNMENT OF INDIA
MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES
LOK SABHA
UNSTARRED QUESTION NO. 1859
TO BE ANSWERED ON: 31.07.2025
CHALLENGES FACED BY MSMEs
1859. SHRI RAJESH NARANBHAI CHUDASAMA:
Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:
(a) whether in today's competitive market, the exploitation by larger firms is a significant issue
for smaller entities which also affects the Micro, Small and Medium Enterprises (MSMEs) sector, if
so, the various measures and initiatives implemented by the Government to tackle this problem; and
(b) the steps taken by the Government for the MSMEs which are experiencing issues
involving financial difficulties, outdated equipment and technologies that make them
uncompetitive against imports and in issue of foreign export markets?
ANSWER
MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENTERPRISES
(SUSHRI SHOBHA KARANDLAJE)
(a): One of the challenges faced by Micro and Small Enterprises (MSEs) is the delay in payment by
buyers. A number of measures and initiatives have been taken by Government to address this issue:
(i) Under the provisions of the Micro, Small and Medium Enterprises Development (MSMED)
Act, 2006, Micro & Small Enterprises Facilitation Councils (MSEFCs) have been set up in
the States/UTs to deal with cases of delayed payments to Micro and Small Enterprises
(MSEs).
(ii) SAMADHAAN Portal was launched on 30.10.2017 (http://samadhaan.msme.gov.in/
MyMSME/MSEFC/ MSEFCWelcomer.aspx.) for monitoring of outstanding dues to the
MSEs from the buyers of goods and services.
(iii) A special sub-portal was created within SAMADHAAN Portal on 14.06.2020, after the
Aatma Nirbhar Bharat announcements, for reporting the dues and monthly payments by
Central Ministries/Department/Public Sector Enterprises to MSMEs.
(iv) Ministry of MSME has requested States/UTs to set up more number of MSEFCs for quicker
disposal of cases related to delayed payments. So far, 161 MSEFCs have been set up, with
more than one MSEFC set up in States like Delhi, Jammu & Kashmir, Karnataka, Kerala,
Maharashtra, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal.
(v) To enhance access to credit for MSMEs through digital platforms and other innovative
mechanisms for facilitating MSMEs, Trade Receivables e Discounting System (TReDS), an
electronic platform, facilitates the discounting of trade receivables of MSMEs through
multiple financiers. To unlock their working capital by converting their trade receivables into
cash the Government of India has announced to reduce the turnover threshold of buyers for
mandatory onboarding on the TReDS platform from Rs. 500 crore to Rs. 250 crore.: 2 :
(vi) Companies which get supplies of goods or services from Micro & Small Enterprises and
whose payment to Micro and Small Enterprises exceeds 45 days from the date of acceptance
or the date of deemed acceptance of the goods or services, also need to submit returns to
Ministry of Corporate Affairs stating the amount of payments due and the reasons of the
delay.
(b): A number of steps have been taken by Government for the MSMEs with respect to the
financial difficulties faced by the MSMEs.
i). Under Prime Minister’s Employment Generation Programme, credit linked subsidy for setting
up new Micro-Enterprise in non-farm sector is provided ranging from 15% to 35% of project
cost.
ii). Rs. 50,000 crore equity infusion through Self Reliant India (SRI) Fund, which has a provision
of Rs.10,000 crore from Government of India and Rs. 40,000 crore through Private Equity /
Venture Capital funds. This Scheme is aimed at providing growth capital to the deserving
and eligible units of MSME sector.
iii). Under Credit Guarantee Scheme for Micro and Small Enterprises, guarantee coverage is
provided to Banks/Financial Institutions, for loans up to Rs. 10 crore, extended by them to
Micro and Small Enterprises, without collateral security and third party guarantee, with a
guarantee coverage upto 90 % for various categories of loan.
Further, the Ministry of MSME, in order to help the MSMEs to grow technologically and to
enhance their competitiveness, has established Technology Centres (TCs) and Extension Centres (ECs)
across the country. These TCs/ECs provide various services like technology support, skilling,
incubation and consultancy to MSMEs and skill seeker, which makes them capable to deal with the
issue of import and foreign export markets.
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