Source: PIB

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Context

• As a sub-scheme under the Central Sector Scheme “Raising and Accelerating MSME Performance”, the Ministry of MSME launched a sub-scheme “MSME Trade Enablement and Marketing Initiative” (MSME-TEAM Initiative), which aims at assisting five lakh Micro, Small and Medium Enterprises (MSMEs) to onboard the Open Network Digital Commerce (ONDC) platform.

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Details

MSME-TEAM Initiative

• The  Initiative was launched to bolster the digital and e-commerce capabilities of Micro and Small Enterprises (MSEs) in India.
• This initiative, introduced by the MSME Minister, is part of the broader efforts to enhance the competitiveness of MSMEs and align them with modern digital marketplaces.

Objectives and Funding

• Objective: To help 5 lakh MSEs, including 50% women-owned enterprises, access e-commerce through the government's Open Network for Digital Commerce (ONDC).
• Duration: The scheme will run for three years.
• Funding: The government has allocated Rs 277.35 crore for this initiative​​.

Key Components

• Onboarding and Cataloguing: Support for MSEs to develop digital catalogs and onboard them onto the ONDC platform.
• Account Management: Assistance in managing online accounts to facilitate smoother operations.
• Logistics and Packaging: Subsidies for transportation, logistics, and packaging, including packaging design.
• Workshops and Training: Organization of 150 e-commerce workshops in tier 2 and 3 cities to raise awareness and encourage participation​.

Implementation and Support

• Implementing Agency: The National Small Industries Corporation (NSIC) will be responsible for the implementation.
• Collaboration: This initiative is part of the World Bank-supported Raising and Accelerating MSME Performance (RAMP) program​.

Strategic Pillars

The MSME TEAM Initiative is built upon six strategic pillars:

1. Formalization and Access to Credit: Enhancing formalization and ensuring easier access to financial services.
2. Market Access and E-commerce Adoption: Increasing market reach and encouraging e-commerce adoption.
3. Productivity through Technology: Leveraging modern technology to boost productivity.
4. Skill Development: Enhancing skills and promoting digitalization in the service sector.
5. Globalizing Traditional Industries: Supporting traditional industries like Khadi, Village, and Coir to compete globally.
6. Empowerment through Enterprise Creation: Fostering enterprise creation among women and artisans.

Complementary Campaigns

• Alongside the MSME-TEAM Initiative, the Yashasvini Campaign aims to support 1 lakh women entrepreneurs in smaller cities through skill development, capacity building, and mentorship.
• This campaign focuses on formalizing women-owned informal micro-enterprises and is a collaborative effort with various Central Ministries, State Governments, and Women Industry Associations​.

Central Sector Scheme “Raising and Accelerating MSME Performance” (RAMP)

• The scheme is a World Bank-supported initiative aimed at enhancing the performance of Micro, Small, and Medium Enterprises (MSMEs) in India.
• Launched by the Ministry of Micro, Small, and Medium Enterprises (MoMSME), the scheme intends to improve market access, finance, and technological upgradation for MSMEs by strengthening the existing MSME ecosystem at both the central and state levels.

Objectives

• Strengthen Centre-State Collaboration:Foster closer collaboration between central and state governments in MSME promotion and development.
• Enhance Existing Schemes:Improve the effectiveness of existing MSME schemes focusing on technology upgradation, innovation, and digitization.
• Support for Receivable Financing:Strengthen the receivable financing market for MSMEs to address issues related to delayed payments.
• Credit Guarantees and Greening Initiatives:Enhance the effectiveness of the Credit Guarantee Trust for Micro & Small Enterprises (CGTMSE) and promote guarantees for green initiatives and women-owned enterprises.
• Capacity Building:Enhance the capacity of MoMSME and state institutions to implement, monitor, and evaluate MSME development programs.

Key Components

• Strategic Investment Plans (SIPs):
  • Each state/UT is invited to develop SIPs that outline the specific needs and gaps in the MSME sector.
  • SIPs will include an outreach plan for MSMEs, identification of key constraints, milestones, and required budgets.
  • Focus areas include renewable energy, rural and non-farm businesses, women enterprises, and more.
• Funding and Budget:
  • Total outlay: ₹6,062.45 crore (approximately USD 808 million).
  • Funding sources: ₹3,750 crore (USD 500 million) from World Bank loan and ₹2,312.45 crore (USD 308 million) from Government of India.
  • Funds will be allocated based on objective criteria and rigorous appraisals of SIPs.
• Implementation Structure:
  • National MSME Council:Apex body for overall policy and monitoring, headed by the Minister for MSME.
  • RAMP Programme Committee:Oversees specific deliverables, headed by the Secretary of MoMSME.
  • Programme Management Units (PMUs):Established at both national and state levels to support implementation and evaluation.

Impact

• Market Access and Finance:Improve MSMEs' access to markets and financial resources, reducing barriers and enhancing competitiveness.
• Capacity Building:Focus on capacity building, skill development, quality improvement, technological advancement, and digitalization.
• Employment Generation:Promote job creation and support vulnerable sections of society through MSME development.
• Green and Inclusive Growth:Support environmentally sustainable practices and encourage women-owned enterprises.

Background

• The RAMP initiative aligns with the recommendations from the U.K. Sinha Committee, K.V. Kamath Committee, and the Economic Advisory Council to the Prime Minister.
• The scheme was approved by the Union Cabinet in March 2022, following consultations with states, stakeholders, and assessments by the World Bank​​.

Sources:

PIB

PRACTICE QUESTION Q: Discuss the significance of Micro, Small, and Medium Enterprises (MSMEs) in the Indian economy. Highlight the challenges faced by MSMEs and suggest measures to address these challenges. (250 words)