Ease of Doing Business for MSMEs: The Union Budget for the fiscal year 2023-2024 may come up with an industrial area development scheme for MSMEs for upgradation of existing industrial areas with basic infrastructure and develop new industrial areas, as per a report by Mint.
The industrial areas in question would be industrial parks designated especially for the small businesses, the report added, citing two people aware of the development. It also noted that the centre would provide the required financial support for setting up and upgradation of the industrial areas.
To finance these projects, multilateral lenders such as the Asian Development Bank and International Financial Corporation of the World Bank would also be asked to participate in addition to getting support from the states, and allowing a state implementing agency to set up the projects.
“The scheme would focus on both brownfield and greenfield projects and aims at getting more and more MSMEs under the ambit of cluster-based operations,” an official added.
The proposal is in accordance with efforts to make Indian MSMEs more competitive, the report noted citing another official. “Efforts would also be made to improve the market access of small businesses which are in these industrial areas. It would be done through a digital business match-making platform to showcase and integrate India MSMEs with the national and global supply chain,” added the official.
To promote technology adoption amongst MSMEs, special purpose vehicle (SPV) would be formed by bringing MSMEs together. The SPV would be allowed to borrow from banks as a single borrower and then further transfer the loan amongst their members.
Although the MSME ministry has a Micro and Small Enterprises Cluster Development Programme (MSE-CDP) since 2011-12, however, its progress has not been up to the mark. Therefore, the new scheme is expected to revamp the existing one.
Besides that, a draft policy for MSMEs, released in March last year, also lays out the need for financing a cluster development approach with special incentives, the report noted. “Create MSME clusters to collaborate with companies offering innovation infrastructure, R&D institutions and universities that specialize in a specific industry or knowledge area,” the policy stated.