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MSE-CDP: Govt approves revised guidelines of cluster development scheme to boost small businesses’ productivity

Ease of Doing Business for MSMEs: In October 2007, the erstwhile cluster development scheme Small Industries Cluster Development Programme (SICDP) was renamed MSE-CDP and was last revised in 2019. The scheme intends to support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills, quality, market access, etc., through a cluster approach.

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Ease of Doing Business for MSMEs: The government has approved revised guidelines of its key scheme for cluster development – Micro and Small Enterprises-Cluster Development Programme (MSE-CDP) to be implemented during the 15th Finance Commission cycle – FY22-FY26. In an office memorandum, the Office of the MSME Development Commissioner on said various consultations with MSME-Development Institute, Special Purpose Vehicle and state governments suggested to bring simplification in the scheme guidelines so as to reduce layers of various processes and reduce the time required for approval of the projects and which can help in better execution.

“Impact of Covid-19 pandemic on MSME sector and various initiatives of government such as Atma Nirbhar Bharat Abhiyan, Vocal for local to Global and Zero effect to Zero defect to boost indigenous manufacturing and industry has started a new interest in this scheme,” the memorandum said on Friday. 

Under the new guidelines, the central government grant will be restricted to 70 per cent of the cost of common facility centre (CFC) project from Rs 5 crore to Rs 10 crore and 60 per cent of the cost of project from Rs 10 crore to Rs 30 crore. In case of north-east (NE) and hill states, island territories, aspirational Districts, government grant will be 80 per cent of the cost of project from Rs 5 crore to Rs 10 crore and 70 per cent of the cost of project from Rs 10 crore to Rs 30 crore, the guidelines said. 

In October 2007, the erstwhile cluster development scheme Small Industries Cluster Development Programme (SICDP) was renamed MSE-CDP and was last revised in 2019. The scheme intends to support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills, quality, market access, etc., through a cluster approach. 

For infrastructure development, the guidelines noted that government grant will be restricted to 60 per cent of the cost of project from Rs 5 crore to Rs 15 crore for the setting up of new industrial estate/flatted factory complex. For upgradation of existing industrial estate/flatted factory complex the grant will be 50 per cent of the cost of project from Rs 5 crore to Rs 10 crore for upgradation of existing industrial estate/flatted factory complex.

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In case of NE and hill states, island territories, aspirational districts, grant will be 70 per cent of the cost of project from Rs 5 crore to Rs 15 crore for setting up of new industrial estate/flatted factory complex and 60 per cent of the cost of project cost from Rs 5 crore to Rs 10 crore for upgradation of existing industrial estate/flatted factory complex. 

The projects would have to be completed within 18 months from the date of approval order of the project by the National Project Approval Committee (NPAC) chaired by Secretary MSME. Moreover, the existing digital portal of the scheme would be revamped to digitise different stages of the journey of the project.  

“The portal should capture the entire scheme workflow including application submission for MSE CDP proposals (both CFC and infrastructure development), uploading of approvals by states, application routing to the desired bank branch, uploading of sanction letter by banks, final approval order by the ministry, marking of disbursement by Banks, etc. The portal should also be used to map all the clusters in the country,” the ministry said in the guidelines. 

During FY22, 31 projects (17 CFCs and 14 infrastructure development projects) were approved of which 16 were completed in comparison to 20 projects completed in FY21 and 22 projects completed in FY20, according to the data available on the MSME Dashboard portal.

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