PM's Diwali gift to MSMEs: Rs 1 crore loan in 59 minutes

New Delhi: In a Diwali bonanza, Prime Minister Narendra Modi on Friday announced a slew of measures, including sanction of loans of up to Rs 1 crore to small and medium enterprises in 59 minutes through a special portal, to give a boost to the nation’s second biggest employing sector.

The 12 new decisions announced will enhance small industries’ credit access, a move seen as a part of the government’s political outreach ahead of the Lok Sabha polls just months away.

GST-registered small and medium enterprises (MSMEs) can now avail of loan of up to Rs 1 crore in just 59 minutes, he said announcing the measures. Also, GST-registered MSMEs will get 2 per cent interest subvention or rebate on incremental loan of up to Rs 1 crore, he said.

Interest subvention on pre and post shipment credit for exports by MSMEs has been increased from 3 per cent to 5 per cent, the Prime Minister informed.

The decisions, which he termed as “historic”, were announced to boost MSMEs by improving their access to market, hand-holding and offering facilitation support. It also include relaxation in labour and company laws as well as easier compliance with environmental rules for MSMEs.

He said the government’s move will make Deepawali brighter for the sector and its millions of entrepreneurs and employees.

The Prime Minister also announced Rs 6,000 crore for creation of 20 hubs and 100 tool rooms for technology upgradation.

Talking of India jumping 23 places on World Bank’s “Ease of Doing Business” ranking, Mr Modi said in four years his government has achieved what many did not believe and achieved what no other nation in the world has done — leaping from rank 142 in 2014 to 77 now.

“Breaking into the top-50 rank is not far away,” Mr Modi claimed.

To rid the sector of inspector raj, Mr Modi announced that inspections of factories in the sector will be sanctioned only through a computerised random allotment and inspectors will have to upload reports on portal within 48 hours. “No inspector can now go anywhere. He will be asked why he went to a factory,” he said.

Easing compliance with environmental rules, MSMEs will need single air and water clearance to establish a factory.

MSMEs will have to file just one annual return on eight labour laws and 10 central rules, he said, adding that an ordinance has been promulgated to simplify levy of penalties for minor offences under the Companies Act.

He said public sector companies, which were mandated to source 20 per cent of their annual procurement from MSMEs, will now source at least a quarter of their requirement (25 per cent) from the sector.

At least 3 per cent of sourcing by PSUs would have to be done from MSMEs run by women, he added.

Also, all central public sector enterprises will have to take membership of the Government e-Marketplace (GeM) to facilitate online procurement of common use goods and services by various government departments and organisations.

Clusters for MSMEs in pharma sector will be created to boost production in the sector, he said.