An Insight into the Government Subsidy for SMEs


The subsidy provided by the government to the Small and Medium Scale Enterprises (SMEs) proves very effective for their success and promotion. The Central and the State governments provide several incentives to enhance the growth of the MSMEs. The various kinds of subsidy provided by the government to the SMEs might include:

  • The Credit Guarantee Fund Scheme: This subsidy or scheme is for the micro and small organizations and enterprises and is completely known as the CGMSE. It has been launched by the Indian Government to offer a collateral or insurance-free credit to the various MSMEs. The recent and the existing business enterprises are eligible for this scheme. Under this scheme, the enterprises are provided credit which is in the form of working capital and loans up to the limit of hundred lakhs denominations of the Indian currency. The amount which the Government and SIDBI contribute, stands at 4:1 ratio with the scheme offering assistance of rehabilitation to the units which are sick.
  • Technology Upgradation Fund Scheme (TUFS): This particular scheme is for the textile industry introduced by the Ministry of Textiles in April, 1999; especially for the textile and jute industries. The main aim of this scheme is to enhance the technology that is being used in the textile industry. The benefits provided by this scheme include five percent of reimbursement of the interest which is levied upon by the lending parties on RTL or five percent of interest with an additional ten percent of capital subsidy for the processing of the machinery.
  • Technology Upgradation or Modernization or Establishment Scheme: This scheme is specifically meant for the food processing industries. The activities covered under this scheme include inauguration, modernization, and expansion of the various food processing units like the milk, fruits and vegetables, fishery, oil, meat, poultry and many others. This scheme also includes the industries like food colors and flavors. The assistance given to these SMEs include twenty-five percent of the machinery and plant including the technical work which is subjected to fifty lakh of Indian denomination at the maximum in the normal areas; whereas, around thirty-three percent accounting to seventy-five lakhs in Indian denomination in the difficult or the specialized areas.
  • Integrated Development of Leather Sector: This scheme is specifically meant for the leather industry. It aims to establish and promote the industries like footwear, tanneries, footwear components, and several other leather items. The main motive of this scheme is to achieve profits, cost minimization, development and design of innovation and technology advancements in the particular SME. The recently launched units which are eligible for the scheme can avail the same by submitting the copy of the registration and NOCs from the various respective departments of the Government.

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