Industry And Cluster | News & Insights

Centre Approves Changes to MSME Interest Scheme.

Published: December 18, 2019
Author: TEXTILE VALUE CHAIN

Move aims to give a fillip to sector; govt also extends date for submission of claims

The government has approved changes to operational guidelines of the interest subvention scheme for micro, small and medium enterprises (MSMEs), in a move aimed at providing a fillip to the sector. MSME minister Nitin Gadkari on Monday reviewed the scheme, which was launched by Prime Minister Narendra Modi in November 2018, ahead of the Lok Sabha elections in May this year.

As part of access to credit, Modi announced 2% interest subvention for all GST-registered MSMEs on fresh or incremental loans.

Among major changes, the government has done away with the requirement of Udyog Aadhaar Number (UAN) for units eligible for GST. When the scheme was introduced in February this year, UAN and GSTN numbers were both mandatory for availing the scheme.

Units that are not required to obtain GST may either submit income tax Permanent Account Number (PAN) or their loan account must be categorised as an MSME by the concerned eligible institutions.

“The minister has approved changes to the interest subvention scheme, and other measures relating to easy flow of credit to MSMEs were also discussed at the meeting,” said a government official aware of the matter.

The government has also extended the last date for submission of claims for half-yearly period ended March 31, 2019 to December 31, and made trading activities without UAN eligible for the scheme. In a statement issued on Monday evening, the ministry quoted Gadkari as saying, “It is expected that the modifications in the scheme guidelines will lead to fulfilment of objectives of the scheme, i.e. to increase productivity in MSMEs through access to credit at reduced cost.”

Small Industries Development Bank of India (SIDBI) is the sole national-level nodal implementation agency for the scheme.

The scheme, operational over 2018-19 and 2019-20, aims at encouraging both manufacturing and service enterprises to increase productivity and provides incentives to MSMEs for onboarding on GST platform, which helps in formalisation of economy while reducing the cost of credit.

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