How do MSMEs Benefit from the...

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How do MSMEs Benefit from the Government Subsidy Schemes?

How do MSMEs Benefit from the Government Subsidy Schemes?

Micro, small, and Medium enterprises are like the backbone of the country, especially for a developing country like India. The MSMEs play a crucial role in the development of the country. The MSMEs play a crucial role in the development of the country. However, to sustain and flourish, these industries often require support and assistance on which the government is working and constantly launching schemes for the industry.

To support MSMEs, the government extends several collateral-free loans, better interest rates, subsidies and many other benefits. However, to avail of such benefits, an enterprise must be registered with the government and have an MSME or Udaym certification.


Classification of MSMEs

Here is the category-wise classification of MSMEs according to their size and turnover:

Micro Enterprise: These enterprises have less than Rs. 1 Crore investment in machinery and have less than Rs. 5 Crore annual turnover.

Small Enterprise: Enterprises having less than Rs. 10 Crore investment in plant and machinery with an annual turnover of less than Rs. Rs. 50 Crores are categorized in small.

Medium Enterprise: Having an investment of less than Rs. 50 Crores in plant and machinery and an annual turnover of less than Rs. 250 Crores are medium enterprises.


The Need to Invest in MSMEs

MSMEs are one of the biggest contributors to the growth and development of the economy in India. These are flexible industries that can adapt quickly to the changing markets. Also, they facilitate bringing new ideas and innovations into the market by spreading economic activity in wider geographical areas. There are various benefits that MSMEs provide towards the country's growth which are:

  • Promoting innovation and industrialization.
  • Supporting local communities by boosting local development
  • Decentralizing economic activity
  • Equitable distribution of national income
  • Promote Entrepreneurship
  • Creating better employment opportunities

Apart from the above benefits, MSMEs represent 40% of the exports, 6.11% of the manufacturing sector GDP, and 24.63% of the service sector GDP in India. Therefore, as MSMEs are the driving industries for growth, it is important to invest in and support them.


MSME Subsidy and Loan Schemes 2023

To provide loans to the MSMEs, especially after the business situation due to COVID-19, the government has introduced various schemes and subsidies that MSMEs can avail, which are:

  • Pradhan Mantri Mudra Yojana (PMMY)
  • Credit Linked Capital Subsidy Scheme (CLCSS)
  • Emergency Credit Line Guarantee Scheme (ECLGS)
  • Credit Guarantee Scheme for Subordinate Debt (CGSSD)
  • Fund of Funds for equity funding
  • Industrial Promotion Subsidy
  • Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT MSE)
  • Capital Subsidies
  • Reimbursement of ISO Certification costs
  • Micro and Small Enterprises Cluster Development Programme (MSE-CDP)

These are some of the major schemes and subsidies provided by the government. However, there are various other schemes to support the MSMEs.

 The Benefits of Subsidies to MSMEs

With these subsidy schemes, the micro, small, and medium enterprises can overcome the challenges they face in their growth. So, the benefits that MSMEs can avail are:


Financial Aid

One of the biggest challenges that enterprises have is the lack of resources and capital to expand their business. With government incentives, such companies can avail of subsidies and collateral-free loans under different schemes to sustain, support, and expand their business.


Credit Support

In most cases, MSMEs are unable to take loans from the financial institution due to the lack of collateral or higher interest rates. So, with the low-interest rate and collateral-free loans under the MSME schemes, businesses can have credit guarantees and resolve their business financial problems.


Tax Exemptions

As financial support or cost deductions, start-ups under MSMEs under the government schemes are eligible for up to 100% tax exemptions under specific terms. Also, any business established under the MSME scheme or having up to 10 years of exemption is eligible for this scheme.


Innovation Support

MSMEs are the foundation for innovations and ideas in business. Therefore, under the incubation schemes or other subsidies, MSMEs can avail capital support for promoting innovations and new ideas.


Overall Industrial Promotion

For industrial growth and promotion, various schemes are launched and implemented. These include subsidies for business expansion, R&D support, infrastructure development, employment generation, and more.

Therefore, with subsidies, MSMEs can take their business to a higher level without compromising their needs or facing financial challenges.



To assist and promote the MSMEs, the government is launching schemes and subsidies frequently to help them overcome the challenges. By supporting MSME, they are also supporting the economy and development of the country. Before availing of these benefits, it is essential to have awareness of it.

Also, there are tons of schemes and subsidies by the government. It is impossible for a person to know about every policy. Therefore, consultation with an expert is essential and for that, you can contact Subsidy Pro, regarding subsidies that can help with MSME's expansion and betterment.