Rs 10,000-crore SME Growth Fund, reform to boost liquidity for MSMEs, Pg7

Key Highlights:

• Union Finance Minister Nirmala Sitharaman announced a Rs 10,000 crore SME Growth Fund to improve liquidity for Small and Medium Enterprises (SMEs).
• The Self-Reliant India Fund, established in 2021, will be topped up with Rs 2,000 crore to support micro-enterprises.
• Four measures are proposed to maximize the potential of the Trade Receivables Discounting System (TReDS) platform.
• The government will facilitate affordable professional help for MSMEs to comply with regulatory requirements.

Detailed Insights:

• The SME Growth Fund aims to create future champions by incentivizing enterprises based on select criteria and ensuring timely payments.
• Measures to enhance TReDS include mandating it for central power sector companies' transactions with MSMEs and introducing a Credit Guarantee Support Mechanism (CGTMSE) for invoice discounting.
• Linking the Government E-marketplace (GeM) with TReDS will facilitate information sharing and encourage cheaper, quicker financing for MSMEs.
• TReDS was introduced by the Reserve Bank of India (RBI) in 2014 and became operational in 2018, helping MSMEs discount invoices and improve liquidity without collateral.
• The government plans to facilitate institutions to develop 'Corporate Mitras' in Tier-II and Tier-III cities to assist MSMEs in meeting compliance requirements affordably.
• The Comptroller and Auditor General (CAG) raised concerns about excessive regulatory requirements reducing the competitiveness of smaller companies.

Key Concepts Involved:

• MSME (Micro, Small, and Medium Enterprises): Enterprises classified based on investment and turnover, crucial for economic growth and employment.
• TReDS (Trade Receivables Discounting System): An electronic platform for financing trade receivables of MSMEs.
• CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises): A scheme to provide credit guarantee support to MSMEs.