Edition 34* 27th Oct, 2023

The Friday Journal

MSME
स म
MICRO, SMALL AND MEDIUM ENTERPRISES

Compiled & Prepared by:

Lalit Rajput
Company Secretary
+91 9625483520 PAN India
www.linkedin.com/in/cslalitrajput [email protected]
  From the Editorial Desk

Dear Readers!
Greetings to all of you!
Hope you and your family are safe!

About the Newsletter - “MSME सक्षम ” :

This Weekly E- Newsletter (The Friday Journal) aims to increase awareness regarding
various news / updated and activities that have been taken place for the MSMEs and to provide
information about the various schemes and programmes along with latest updations from time
to time. It is a digital tool used to share relevant and valuable information with the Readers.
MSMEs are an important sector for the Indian economy and have contributed immensely to
the country’s socio-economic development. MSMEs produce and manufacture a variety of
products for both domestic as well as international markets. MSMEs have played an essential
role in providing employment opportunities. MSMEs have driven India to new heights through
requirements of low investment, flexible operations, and the capacity to develop appropriate
native technology.
This newsletter has been released with an aim to educate MSMEs on various facets of business
development.

Compiled & Prepared by:

About the Author: Lalit Rajput is a Company Secretary and

Commerce Graduate, having 8+ years of post-qualification
experience in the Corporate Compliance Management & Advisory
Services. He has worked with Listed, Unlisted, Risk Advisory Firms,
Corporate Secretarial and Chartered Firms etc. He has a keen interest
in the Corporate Governance and Compliance Management. He has
authored many articles at various social media platforms and ICAI /
ICSI Newsletters & has taken seminars / webinars for professional
institutes including ICSI / ICAI/ LPU etc. He has participated in many
quiz / competitions and received recognitions at various platforms.
He is also a part of MAHARERA Study Group Experts Panel. The
CS Lalit Rajput WIRC – ICAI honoured for his contribution in “Quick Referencer
to Companies Act, 2013” and MAHARERA Law Manual.

He has also written articles in many Corporate Magazines, Taxmann and Books etc. Published article at
Corporate Magazine of “Merchants’ Chamber of Commerce and Industry” named “The Legal Eagle”.
He has contributed as Author in many Books and also publishing his own Newsletters on various matters
which includes: Weekly Taxation Newsletter, Weekly Corporate Affairs Newsletter, Monthly Corporate
Compliance Tracker, Monthly Food Law Newsletter, Monthly RERA Newsletter, Monthly Tech –
Torch Newsletter – A light to the Safe Tech Environment and many more. Received many certificates
on Quiz and programms organized at various platforms
 “MSME सक्षम - The Friday Journal”

❖ MSME IN INDIA
MSMEs are also instrumental in promoting regional
development and reducing poverty. The future of MSMEs
in India is bright. The sector is expected to continue to
grow rapidly in the coming years, driven by factors such
as the increasing urbanization of India, the growth of the
e-commerce sector, and the government's focus on
supporting MSMEs.

Our newsletter is an attemppt to provide brief about the developments in MSME

Sector on weekly basis.

OUR SPECIAL CORNER

• 'MSMEs top demand for unsecured loans'

Small businesses are emerging as the biggest drivers for unsecured loans, with a 73%
year-on-year growth in demand from MSMEs in the September quarter.

The demand is mainly from smaller cities, which experienced faster growth than
metros during the quarter leading up to the festival season, an analysis of loan
demand from 700 cities conducted by Paisabazaar showed. In Q2, demand in non-
metro cities increased by 74%, while in metro cities, it grew by 69%.

"The self-employed and MSME segments have traditionally been underserved,

resulting in a significant credit gap. However, with increasing digitisation, robust
digital public goods infrastructure, and a new data ecosystem powered by credit
bureaus, Aadhaar, GST, and account aggregator coming into play, we should witness
the lending industry expanding to reach credit-starved segments like MSMEs," said
Paisabazaar co-founder and CEO Naveen Kukreja.

Among metro cities, the highest growth was recorded in Kolkata at 121%, followed
by Chennai at 104% and Hyderabad at 70%. Among non-metro cities, Sagar (Madhya
Pradhesh) saw a 75% growth in demand for business loans, followed by Gorakhpur
(UP), Karimnagar (Telangana), Anantapur (Andhra Pradesh), and Kurukshetra
(Haryana), all of which grew by 74%, and Nalgonda (Telangana), which grew by 73%.

According to a report by Emkay Research, the credit gap in the MSME sector is
estimated at Rs 92 lakh crore.

• (Source: Click Here)

By: CS Lalit Rajput, +91 9625483520 // Vol. 34 1

 “MSME सक्षम - The Friday Journal”

 MSME SCHEMES:
The government has introduced many schemes to
encourage the micro and small industries.
Through many schemes, the Central government
is boosting the credit availability for the MSMEs.
MSME (Micro, Small and Medium Enterprises)
schemes are initiatives launched by the
Government of India to support and promote the
growth and development of small businesses in the
country.

 LET US HAVE A BRIEF DISCUSSION ON “CREDIT LINKED CAPITAL SUBSIDY

SCHEME FOR TECHNOLOGY UPGRADATION”
SMEStreet Gyan Manch Feature: Credit Linked Capital Subsidy Scheme for Technology
Upgradation

The Credit Linked Capital Subsidy Scheme for Technology Upgradation (CLCSS) is a government
initiative in India aimed at promoting technology upgradation and modernization of small and
medium enterprises (SMEs) in various sectors. The scheme is primarily designed to encourage
SMEs to invest in improving their manufacturing processes and productivity by adopting modern
technology and machinery.

Key features of the CLCSS include:

Subsidy for Technology Upgradation: Under this scheme, eligible SMEs can receive a subsidy on
the capital expenditure incurred for upgrading their technology and machinery. The subsidy helps
reduce the financial burden on SMEs, making it more affordable for them to invest in
modernization.

• Credit-Linked: The subsidy is linked to term loans and working capital loans obtained by
SMEs from eligible financial institutions. The government provides a subsidy to these
financial institutions, which is then passed on to the SMEs in the form of reduced interest
rates or a direct subsidy on the loan amount.
• SME Eligibility: Small and medium enterprises in sectors such as manufacturing and
service enterprises are eligible to apply for the CLCSS. These enterprises must meet
specific criteria related to their size, investments, and technology adoption plans to qualify
for the scheme.
• Technology Categories: The scheme covers various technology sectors and sub-sectors,
including agro-processing, textiles, food processing, chemicals, and more. SMEs can
choose to upgrade technology in any of these sectors, provided they meet the eligibility
criteria.

By: CS Lalit Rajput, +91 9625483520 // Vol. 34 2

 “MSME सक्षम - The Friday Journal”

• Capacity Building: The CLCSS also focuses on capacity building and skill development
by providing support for training and awareness programs related to modernization and
technology adoption.
• Application Process: SMEs interested in availing the benefits of CLCSS typically apply
through designated nodal agencies or financial institutions. These agencies assess the
eligibility of the SMEs and facilitate the disbursement of subsidies.
• Subsidy Amount: The subsidy amount varies based on the technology category and the
extent of modernization. The government periodically revises the subsidy rates and
guidelines to align with the changing needs of the SME sector.

The CLCSS is an important scheme in India's efforts to enhance the competitiveness of its small
and medium enterprises by encouraging them to upgrade their technology and infrastructure. It
helps SMEs access affordable financing for technological advancements, which, in turn, can lead
to increased productivity, improved product quality, and greater competitiveness in the global
market. It's worth noting that the specific details and eligibility criteria for the CLCSS may evolve
over time, so interested parties should consult the latest government guidelines and
announcements.

Micro, Small, and Medium Enterprises (MSMEs) in India can avail the Credit Linked Capital
Subsidy Scheme for Technology Upgradation (CLCSS) for their business by following these steps:

1. Eligibility Check: MSMEs should first determine whether they meet the eligibility criteria
for the CLCSS. Eligibility criteria typically include factors such as the size of the
enterprise, the sector in which it operates, and its technology upgradation plans. These
criteria may evolve over time, so it's important to check the latest guidelines issued by the
relevant government authority.
2. Identify the Appropriate Technology Category: The CLCSS covers various technology
sectors and sub-sectors. MSMEs should identify the specific technology category or sub-
sector in which they plan to upgrade their machinery and equipment. The subsidy rates and
guidelines may vary based on the chosen category.
3. Prepare a Detailed Project Report (DPR): MSMEs need to prepare a comprehensive project
report that outlines their technology upgradation plans. This report should include details
of the proposed machinery and equipment, the estimated cost of the project, and the
expected outcomes, such as increased productivity or cost reduction.
4. Seek Financing: To avail the CLCSS subsidy, MSMEs should obtain term loans or working
capital loans from eligible financial institutions. These institutions are typically banks and
non-banking financial companies (NBFCs) that have been approved by the government to
disburse CLCSS-linked loans. The loans should be obtained specifically for technology
upgradation purposes.
5. Submit the Application: MSMEs should approach the designated nodal agency or financial
institution that administers the CLCSS in their region. They need to submit their project
report, loan application, and other required documents to this agency or institution.

By: CS Lalit Rajput, +91 9625483520 // Vol. 34 3

 “MSME सक्षम - The Friday Journal”

6. Loan Approval: Once the application is submitted, the financial institution assesses the
project's viability and creditworthiness of the MSME. If approved, the loan is sanctioned,
and the enterprise can proceed with technology upgradation.
7. Disbursement of Subsidy: The subsidy under CLCSS is typically provided as a
reimbursement to the financial institution after the technology upgradation project is
completed and verified. MSMEs must ensure that they meet all the requirements and
milestones specified in the scheme guidelines to claim the subsidy.
8. Completion of Technology Upgradation: MSMEs should complete the technology
upgradation project as per the approved project plan. It's important to maintain all
necessary records and invoices related to the project for verification purposes.
9. Verification and Subsidy Disbursement: After the project is completed, the designated
agency or financial institution will verify the project's implementation. Upon successful
verification, the subsidy amount is disbursed to the financial institution, which then reduces
the loan amount or interest rate for the MSME.
10. Compliance and Reporting: MSMEs should comply with any reporting and compliance
requirements specified under the CLCSS. This may include periodic reporting on the
project's progress and outcomes.

Source: Click Here

For eligibility, application process and other process, please get in touch with us.
===============================================

 Trade Receivables Discounting System

(TReDS) – Part 19

Trade Receivables electronic Discounting System (TReDS) is an online electronic platform

and an institutional mechanism for factoring of trade receivables of MSME sellers. It enables
discounting of invoices through an auction mechanism to ensure prompt realization of trade
receivables.

What Stopping Centre's TReDS Platform to Help Indian MSMEs

With an aim to facilitate the financing and discounting of trade receivables of micro, small
and medium enterprises (MSMEs) through multiple financiers, the Reserve Bank of India
(RBI) introduced Trade Receivables Discounting System (TReDS) in 2014.

Since then, the volume of invoice discounting facilitated by TReDS has sparked discussions
among industry insiders as many believe that this platform has failed to create meaningful
volumes of invoice discounting. While describing the drawbacks of TReDS, experts said that
MSME suppliers' identity is a major concern for big companies as they believe that their
competitors will be able to find out from where they source their materials. Apart from that

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 “MSME सक्षम - The Friday Journal”

large corporations prioritise providing lengthier credit terms to their suppliers and will not
recover receivables within 45 days.

"The TReDS mechanism has been partially successful in achieving its goal of providing an
alternative to the conventional bank financing of working capital. Very few MSME vendors
have been able to avail of the facility of TReDS due to the reluctance of their buyers to
onboard the TReDS platforms. While it is true that TReDS’ bill discounting platforms are yet
to see meaningful growth, the system is not restricting the growth of the MSME sector. The
system is sound in theory but it has failed to take off and create noticeable success," said
Saket Dalmia, President, PHD Chamber of Commerce and Industry.

Low traction on the platform:

Modi government has mandated that all companies with a turnover of Rs 500 crore and
above should register on the TReDS platform, but there are various reasons for corporates
not being interested in utilising the TReDS facility.

There is a lack of any incentive for the corporate buyers for joining TReDS and secondly,
many corporate buyers already have their own corporate treasury departments that operate
their own reverse factoring programs for their supplier ecosystem.

In addition, only entities regulated by the Reserve Bank of India (RBI) can finance on these
platforms and not the other fintech companies which restrict participation.

According to the government data, only 35.2 per cent of the 4,714 large companies with Rs
500 crore turnover each (as identified by the Ministry of Corporate Affairs in April 2021)
were registered on TReDS as of April 2022.

Way forward:

Experts noted that all stakeholders should acknowledge its positive intent, assess its impact
holistically, and consider the evolving market dynamics. There is also a need to put forward
concerted steps to foster wider participation and maximise the utilisation of TReDS,
unlocking its full potential to empower and uplift the MSME landscape.

"The next step could be smooth integration and flow of invoices from GST and other e-
procurement platforms. Also, encourage more lenders with appropriate credit enhancement
measures. Overall a mindset shift is needed to address this vexing delayed payment problem,
holistically," added Dharmaji.

Dalmia added that to make the TReDS system successful, there is a need for onboarding more
corporate buyers, MSME sellers, public sector enterprises and state governments on the
TReDS platform.

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 “MSME सक्षम - The Friday Journal”

Meanwhile, as several firms have not joined the TReDS platforms due to their inability to
provide sufficient comfort to the Bankers for discounting their vendors' bills, authorities
should make more attractive and certain concessions to PSUs/large companies.

• Source: Media News (Click Here)

➢ MSME Corporate News:

1. Axis Bank Chief urges MSMEs to maximise digital
tools for growth

Micro, Small and Medium Enterprises (MSMEs) must ride on the Digital India movement and
adopt in a big way the digital channels offered by banks and financial institutions, Amitabh
Chaudhry, Managing Director and CEO, of Axis Bank said on Friday.

Addressing the 10th edition of India SME 100 Awards in the capital, Chaudhry highlighted
that Axis Bank has enhanced its digital lending channels to facilitate quicker turnaround time
for sanction and disbursement of loans to MSMEs.

He also highlighted that Axis Bank, which has an MSME loan book of over ₹2 lakh crore, has
taken several initiatives to offer services beyond banking to its MSME customers in order to
help them thrive in this dynamic environment.

‘Dil Se Open’

Currently, Axis Bank has close to 200 dedicated centres in small and medium enterprise groups
catering to MSMEs and a network of 5,000 plus branches. It also has 500 plus branches under
the platinum branch concept for Small Business Banking (SBB) that provides various finance
and banking service assistance.

“We intend to use our network extensively to continuously reach out to our customers and
prospects and live up to our credo of being ‘Dil Se Open’, Chaudhry added.

Key Focus

Indian MSMEs—which are the power engines of the economy —are increasingly focusing on
improved production methods, penetrative marketing strategies and modern scientific
management capabilities to sustain and strengthen their operations. They also have the
potential to absorb the latest technologies from diverse fields. The ‘Indian MSME sector’ is a
role model for other several other countries, Chaudhry added.

The MSME network in India is vast and covers around 630 lakh units manufacturing 8000+
products contributing about 45 per cent to manufacturing output and about 44 per cent to direct

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 “MSME सक्षम - The Friday Journal”

and indirect exports. The MSME sector is reportedly the second-largest employer in the
country after agriculture.

‘Multi-fold growth’

The ‘Make in India’ theme revolves around import substitution through strategic
manufacturing by MSMEs. Additionally, MSMEs are not limited to a few sectors anymore but
are spread across sectors like pharma, auto components, food processing, technology etc, some
of which have seen multi-fold growth in recent years.

During the year, Axis Bank has focused on augmenting small ticket size loans, crop loans to
small and marginal farmers and microfinance business loans for women borrowers from low-
income households, he said.

➢ (To read more – Click Here)

2. Policy and data support can boost MSMEs’ role as drivers of future growth: ADB
report

Providing policy and data support to micro, small and medium enterprises can boost their role
as drivers of growth in the economy, according to Asia Small and Medium-sized Enterprise
Monitor 2023, published today by the Asian Development Bank. Further, it states that the
MSME sector played a vital role in the recovery of the economies of Asia and the Pacific
region.

According to the report, initiatives such as “the formalization of small businesses, reskilling,
and upskilling of workers, along with the integration of digital tools and technology, economic
diversification, and increasing access to new and innovative financing can create a fertile
environment” for these businesses to contribute to sustainable growth.

“Job creation is a critical challenge for Asia and the Pacific,” said ADB Chief Economist
Albert Park. “In the Pacific, remittances sent by emigrants to advanced economies can support
small businesses and create employment opportunities for women and younger workers.
Tourism and agribusiness—where MSMEs actively participate—drive Pacific economies.
Their sustainable growth helps strengthen MSME dynamism and raises national productivity.”

As per the report, the average lending to MSMEs in these countries was 10.6 per cent of the
country’s gross domestic product and 22 per cent of total bank lending in the developing
countries of the Asia-Pacific region. ADB emphasizes developing digital financial solutions
for small businesses and startups.

The report attributes the low business diversification as the barrier to the country’s growth
potential and calls for innovation in startups and small firms. Other factors such as lack of

By: CS Lalit Rajput, +91 9625483520 // Vol. 34 7

 “MSME सक्षम - The Friday Journal”

digitization, underdeveloped infrastructure, limited e-payments, and a lack of a supportive

legal framework restrict the growth of small enterprises.

• (To read more – Click Here)

3. Axis Bank To Boost Small-Ticket And Microfinance Loans, MSME Book

Surpasses Rs 2 Lakh Crore

Axis Bank, one of India's leading financial institutions, has disclosed plans to enhance its
small-ticket loans, crop loans for small farmers, and microfinance business loans aimed at low-
income women. The announcement was made by the bank's CEO, Amitabh Chaudhry, at the
India SME 100 Awards earlier this week.

The bank has established a 'Bharat Bank' unit that focuses on rural-centric products. This unit
operates in collaboration with Common Service Centers (CSCs), village entrepreneurs, and
agri-commodity ecosystems. The initiative is part of Axis Bank's broader strategy to transform
the banking paradigm through digital innovations and robust digital infrastructure, enhancing
customer experiences.

As of September 2023, Axis Bank's Micro, Small, and Medium Enterprises (MSME) book
stands at over Rs 2 lakh crore, a significant component of the total lending book. The bank's
Priority Sector Lending (PSL) in agriculture exceeds Rs 91,000 crore.

In addition to supporting MSMEs, Axis Bank is committed to equitable lending practices. It

has provided approximately Rs 53,000 crore in loans to weaker sections of society. These
include artisans, village and cottage industries, and individual beneficiaries.

• (To read more – Click Here)

4. How e-commerce glittered small businesses this festival season?

Over the last decade, the marketplace in india is heavily dominated by the e-commerce space.
With time, this space has also developed trust of the buyers.

The burgeoning middle class is relying heavily on the Open Network for Digital Commerce
(ONDC) platforms that has led to India’s e-commerce valuation at USD 72 billion in 2022,
and this is expected to surge to USD 325 billion by 2030, according to a report by Deloitte.

E-commerce platform has also glittered the small businesses providing them a direct platform
to reach the masses.

MSME and SME businesses are harnessing the potential of this space very diligently, specially
during the festive season. Artisans, weavers, women-led businesses, and persons with
disabilities are able to increase their business penetration in the online space.

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 “MSME सक्षम - The Friday Journal”

Online platforms are also taking an extra step to help up these businesses as the e-commerce
giant – Flipkart – has its ‘Flipkart Samarth program’ with the goal of creating a sustainable
and inclusive platform for underserved domestic communities.

It emphasises on empowering and integrating artisans, weavers, womenled businesses, and

persons with disabilities. Flipkart has been collaborating with many government agencies and
NGO partners to bring on rural entrepreneurs from all across the nation into the ecommerce
fold.

Tale of entrepreneurs on e-commerce

Maniabandha, a small village in Odisha, nestled a community steeped in the timeless art of
handloom weaving.

Post-Covid, the business was severely hit and their livelihoods were jeopardized and soon,
they found their lives at a standstill.

Priyadarshini Panda and her husband Sandeepta Kumar Kar, who belong from the same
community narrated their tale saying, “On social media, I saw all these small businesses that
showcased great work and did well. This is when the inspiration to start an online business
hit.” The duo worked tirelessly to create opportunities, and in the span of two years, they have
a unit of 10 dedicated weavers offering their expertise. (To read more – Click Here)

5. MSME -Industrial Policy of Government of Gujarat

After the launching of a new Industrial Promotion Policy, effective for commercial production
on or after 1st April, 2004, the rules and procedures were modified accordingly to facilitate
employment generation.

As the draft of the new policy was prepared in consultation with the entrepreneurs,
industrialists, financial institutions and top banking officials, therefore it is expected that the
initiative would be taken to give employment opportunities to the educated youth of the
middle-class group.

The Government of India has realized that small scale industries have major potential to
contribute to the economic development and employment generation. Many research studies
have observed that Small scale Industries (SSIs) can easily fulfil the employment gaps and
requirements of domestic customers within a lower price range. Hence, in comparison to large
scale industries, the small sector is contributing hugely to the GDP growth of the country. With
the help of technology, it is expected that small scale industries can be easily developed and
promoted to every corner of the rural area with achieving major employment and economic
growth. (To read more – Click Here)

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By: CS Lalit Rajput, +91 9625483520 // Vol. 34 9

 “MSME सक्षम - The Friday Journal”

 How we can help MSMEs?

 Choose Best Business model
 Choose suitable business form
 to choose the most suitable source of funding
 Claims / recovery matters filings
 Agreement / contracts vetting & preparation
 to approach financial institutions to get funds keeping in view their specific
schemes.
 Evaluate and compare the terms and conditions, including rate of interest and
repayment period of loan offered by the different financial institutions
 Select the financial institution, which offers funds at minimum interest rate as
per Entrepreneurs repayment plans.
 Arrange / Prepare set of documents as required for getting Loan.
 Prepare application in prescribed proforma and has to be submitted along with
project report including proof of ownership/availability of land/building,
proof of residence, collateral securities (wherever applicable) etc.

Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite
of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our
notice which shall be taken care of in the next edition. In no event the author shall be liable for
any direct, indirect, special or incidental damage resulting from or arising out of or in
connection with the use of this information. Many sources have been considered including
newspapers (ET, BS & HT etc.).

“Ideas are no one’s monopoly Think big, think fast, think ahead.”

– DHIRUBHAI AMBANI

Compiled & Prepared By:

Lalit Rajput
Company Secretary
Cell: +91 8802581290 & +91 9625483520
Email: [email protected]

By: CS Lalit Rajput, +91 9625483520 9

MSME सक्षम - THE FRIDAY JOURNAL
Union Ministry of Micro, Small and Medium
Enterprises (M/o MSMEs) has issued Gazette
notification to pave way for implementation
of the upward revision in the definition and
criteria of MSMEs in the country.

MSMEs are complementary to large

industries as ancillary units and this sector
contributes enormously to the socio-
economic development of the country.

MSMES: THE GROWTH

ENGINE OF INDIA
THE MSME SECTOR CAN NOT ONLY
PLAY A VITAL ROLE IN MAKING
INDIA A US$5 TRILLION ECONOMY
IN THE NEXT FIVE YEARS BUT CAN
ALSO BECOME A GROWTH ENGINE
FOR MAKING INDIA A DEVELOPED
COUNTRY BY 2047.

"MSME Booster - A Friday Journal"