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MSME – An Opportunity

It’s been more than a decade since the government realised that there was a need for special recognition for the small-scale industries (the MSMED Act was passed in 2006) and that they need separate legislation and incentives to grow and prosper. The classification of these was often a sore point. Finally, in June 2020 the government came out with a new set of classification parameters:



New (June 1, 2020)











< 10 lacs


< 25 lacs


< 1 Cr

< 5 Cr


10 lacs to < 2 Cr


25 lacs to < 5 Cr


1 Cr to < 10 Cr

5 Cr to < 50 Cr


2 Cr to < 5 Cr


5 Cr to < 10 Cr


10 Cr to < 50 Cr

50 Cr to < 250 Cr

Our Role

For most of the schemes that will be discussed below, while the basic information is available online, it’s application, processing and final approval is a tedious process. Furthermore, there is not just one authority where one can go and just get things done. Different departments are in-charge of different schemes and it becomes a challenge to determine whom to approach for which scheme.  Once that is known, the struggle starts to deal with the babus and to keep moving inch by inch. Even for the same scheme we have had to submit a different set of documents based on who is vetting them. Also, the information is scattered across different websites such as,,, etc. With so many sources one just doesn’t know where to look and for what!

That is why there is need for an experienced hand which is familiar with the approval process and can get things done in the least possible time.

Numerous schemes have been announced and regulations formed. These schemes can be broadly classified in two categories: Promotion and Protection.


For promoting MSMEs, Regulatory and Financial, both types of incentives are offered.


A number of schemes have been announced at different times to offer the MSMEs a launchpad for their businesses such as Incubator scheme, Quality Management and Quality Technology Tools (by NMCP*), IPR awareness, Marketing Assistance, Trade Fair Participation, Market Research Studies, Technology and Quality Upgradation (TEQUP) Support to MSMEs (again an NMCP*scheme) and many others. provides a good hunting ground for these

*NMCP – National Manufacturing Competitiveness Programme


The RBI, through the banks & NBFCs, along with the Ministry of Finance have been proactive in providing financial succour to the MSMEs.

Although there are scores of such schemes, a few of them are GECL, CCECL, CLP Mudra, SME e-Smart Score, CINB Saral, Stand-by Line of Credit (SLC), SME Assist, Export Credit [in INR and ForEx both], 20% of FBWC to Gold Exporters, Bill Discounting (through TReDS), FCNRB for Working Capital and Term Loans, Preapproved SME Term Loan for expansion, Corporate Loan for CapEx, R&D and implementing VRS, HealthCare business loan, SME Car Loan

  • Reservation of Products: It has been ordained that certain products can be manufactured only by the MSME sector. The list of such items can be found on
  • Reservation in Scale: Companies outside India will not be allowed to participate for all tenders upto Rs. 200 crore.
  • Reporting: Twice a year, all private limited and public limited companies have to report to the Ministry of Company Affairs if their payments to MSME enterprises have been late beyond 45 days.

There are multiple such schemes which provide a hedge against bigger competitors.

Are All Schemes Available for All MSMEs?

Each scheme has its set of conditions for eligibility. Most of the schemes are for Micro and Small enterprises and some for Medium enterprises. Therefore, a unit has to get its eligibility checked for each separate plan.

What about Traders?

It is pertinent to note here that though most of the MSME schemes are for Manufacturer and Service Providers since the Act covers only those enterprises that add value to a transaction, almost all the bank and NBFC schemes are open for traders as well – so long as they satisfy the investment and turnover criteria.

All the above Promotion and Protection schemes provide shoulders on which MSMEs can stand in their growth years. But once they grow out of the maximum turnover/investment criteria, they join the Big Boys club and are expected to create their own space – and make way for the new toddlers to occupy that shoulder.

We are happy to get you on that shoulder!

We cover the entire spectrum of Income Tax Compliance

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