Ease of Doing Business for MSMEs: The Cluster Development Programme (CDP) for micro and small enterprises (MSE) by the MSME Ministry, which aims to strengthen capacity building for MSEs through projects such as Common Facility Centers (CFCs) and Infrastructure Development (IDs) centers, has reported its lowest number of annual projects completed in the financial year 2021-22 since FY18. Data on MSE-CDP from the ministry’s Dashboard showed the number of projects completed in FY22 dropped to 16 from 20 in FY21, 22 in FY20, 28 in FY19, and 24 in FY18.
Moreover, the number of projects approved in the five-year period was second lowest in FY22 at 31 after 21 projects approved in FY18. The number peaked at 74 in FY20 before declining to 68 in FY21. CFCs look at developing common production or processing centres for balancing, correcting, and improving production lines for businesses that cannot be undertaken by individual units, apart from design centres, testing facilities, training centres, etc. On the other hand, ID centers consist of projects for infrastructural facilities such as power distribution network, water, telecommunication, drainage, pollution control facilities, roads, banks, raw materials storage, and more.
During FY22, three CFCs and 13 IDs were completed out of 17 CFCs and 14 IDs approved. In comparison, 8 CFCs and 12 IDs were completed in FY21 out of 26 CFCs and 42 IDs approved. In the current financial year, as of September 2, five projects were approved while one was completed.
The scheme provides grant for setting up CFCs and IDs. Importantly, the government in May this year approved revised guidelines of MSE-CDP to be implemented during the 15th Finance Commission cycle – FY22-FY26 in order to reduce layers of various processes and also the time required for approval of the projects. Under the new guidelines, the grant provided is up to 70 per cent of the cost of the project from Rs 5 crore to Rs 10 crore and 60 per cent of the cost of the project from Rs 10 crore to Rs 30 crore. For new IDs, the government grant is up to 60 per cent of the cost of the project from Rs 5 crore to Rs 15 crore, and for upgrading existing IDs, the grant is up to 50 per cent of the project cost from Rs 5 crore to Rs 10 crore.