Centre eases norms, credit access to boost MSME growth

The Centre has introduced regulatory relaxations and enhanced credit access to support MSME growth. Measures include BIS exemptions under quality norms, RBI-mandated loan benchmarking, credit guarantees and collateral-free lending to ease compliance and boost expansion

New Delhi: The Centre is taking special steps to boost the growth of Micro, Small and Medium Enterprises by easing rules to facilitate the ease of doing business and providing them better access to credit for expanding their business operations, according to an official statement issued on Sunday.

The Centre’s Bureau of Indian Standards, which implements Quality Control Orders (QCOs) issued by various Ministries, gives special exemptions and relaxations for MSMEs, to ensure that the QCOs do not disrupt domestic production, the statement said.

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Some of the key relaxations and exemptions include an additional 3 to 6 months extension in time for Micro and Small Enterprises (MSEs) and an exemption for imports by domestic manufacturers for producing export-oriented products.

Exemption for import of up to 200 units for research & development purposes and provision for clearance of legacy stock (manufactured or imported before implementation) within six months from the effective date are other relaxations that have been provided for MSMEs.

The BIS has also implemented financial and technical relaxations to the MSME sector, which include concessions ranging from 10 to 80 per cent in the annual minimum marking fee with concession. An additional concession of 10 per cent is also provided to enterprises that are either located in the northeast region or women entrepreneur MSME units.

Besides, the requirement of maintaining an in-house laboratory has been made optional for MSME units. MSME units are allowed to utilise the services of outside BIS-recognised laboratories, NABL-accredited labs, or even share resources like cluster-based labs or laboratories of other manufacturing units.

The ‘Levels of Control’ in the Scheme of Inspection and Testing (SIT) are made recommendatory in nature. The manufacturer has the choice to define their own control unit/batch/lot and their own Levels of Control and inform the BIS.

The BIS has also made the product certification process guidelines publicly available on the BIS website and is issuing product-wise manuals as guidance documents for conformity assessment as per various Indian Standards.

With a view to improving monetary policy transmission, banks have been advised by the Reserve Bank of India (RBI) to link loans to MSMEs to an external benchmark. The reset clause for loans has been reduced to three months under the external benchmark system. Further, to make the benefit of the external benchmark-based interest regime available to the existing borrowers, banks have been advised to provide a switchover option as per mutually agreed terms.

Further, the RBI also took various other measures for improving credit flow to the MSME sector, such as the Mutual Credit Guarantee Scheme for MSMEs. This scheme offers a credit guarantee, making it easier for MSMEs to obtain loans, especially for purchasing essential equipment and machinery. The Scheme provides credit guarantee cover to lenders (Scheduled Commercial Banks, All India Financial Institutions, NBFCs) for their term loans up to Rs 100 crore to MSMEs for their projects involving the purchase of equipment and machinery.

Schedule Commercial Banks have also been mandated not to accept collateral security in the case of loans up to Rs 10 lakh extended to units in the MSE sector to provide them easier access to credit in order to help them expand business.