In the dynamic and ever-evolving landscape of India’s economy, Micro, Small, and Medium Enterprises (MSMEs) play a pivotal role in driving growth, fostering innovation, and generating employment opportunities. Recognising their significance, the Central Government of India has introduced a range of schemes to empower MSMEs, fuel their growth, and nurture innovation. One of the standout initiatives in this constellation of support is the MSME Innovation Scheme. This comprehensive program merges the Incubation, Design, and Intellectual Property Rights (IPR) Schemes to provide substantial backing, encapsulating the entrepreneurial spirit and innovative aspirations of these enterprises.
MSME Innovation Scheme
The Ministry of MSME’s Innovation Scheme is a holistic endeavour designed to nurture a culture of innovation within the MSME sector. By blending the strengths of the Incubation, Design, and IPR Schemes, this initiative not only encourages unexplored creativity but also provides a structured pathway to transform groundbreaking ideas into concrete business ventures.
Incubation Scheme
At the core of the MSME Innovation Scheme lies the Incubation Scheme, a crucial gateway for translating ideas into successful businesses. Focusing on propelling advanced technologies and validating concepts up to the proof-of-concept level, this scheme provides a robust platform for MSMEs, individuals, and students with innovative ideas to flourish.
Who Can Apply: MSMEs, individuals, and students with innovative ideas through registered Host Institutes (HIs).
Financial Support:
- Registered Host Institutes (HIs) receive up to Rs. 15 lakhs per idea.
- Approved MSME ideas cover 15% of the cost, with the Ministry contributing 85% (up to Rs. 15 lakhs).
- Students are eligible for full financial support.
- Funds are disbursed in two instalments: i) 70% after approval and ii) the remaining 30% after 60% utilisation of the 1st
- Role of Host Institutes: Establish Business Incubators (BIs) offering crucial support, labs, equipment, etc.
- Additional Details: Unfinished projects can be reassigned to ensure no opportunity is lost and unspent funds are returned, promoting efficient resource utilisation.
The Incubation Scheme nurtures untapped creativity and supports MSMEs seeking proof-of-concept validation. Eligible applicants can access financial assistance, including MSMEs, individuals, and students with innovative ideas. Host Institutes (HIs) manage Business Incubators (BIs) and receive up to Rs. 15 lakhs per idea. Approved MSME ideas cover 15% of the cost, while the Ministry contributes 85% (up to Rs. 15 lakhs). Students receive complete financial assistance. Funds are provided in two stages: i) 70% after approval and ii) 30% after 60% utilisation of 1st instalment. HIs play a pivotal role in establishing BIs that offer essential resources, and any unspent funds are promptly refunded, ensuring efficient resource usage and fostering innovation.
Design Scheme
In tandem with the Incubation Scheme, the Design Scheme bridges the gap between the manufacturing sector and design expertise. Through Design Projects and Design Awareness Programs, this initiative offers expert guidance and cost-effective solutions to design-related challenges faced by MSMEs.
Who Can Apply: Registered micro, small, and medium enterprises under the MSMED Act, 2006.
Financial Support:
- The government contributes 75% (Micro) or 60% (Small & Medium) of project costs.
- Maximum assistance: Up to Rs. 40 lakhs.
- Design Project: Develop design strategies and products through consultancy.
- Design Awareness Programme: Raise awareness about the value of design.
- Funding occurs in stages: Strategy and Concept (40%), Detail Design (30%), Completion and Final Report (30%).
- Student Project: Open to AICTE/UGC-accredited institution students.
- Funding: Up to Rs. 2.5 lakhs, with the government covering 75% and the remaining by MSMEs.
- Funding stages for students: Application Approval (50%), Completion (50%).
The Design Scheme focuses on connecting manufacturing with design expertise, offering cost-effective solutions to MSMEs. Eligible enterprises can access financial assistance, with the government contributing 75% (Micro) or 60% (Small & Medium) of project costs, up to a maximum of Rs. 40 lakhs. The Design Project component aims to develop design strategies and products, while the Design Awareness Programme promotes the value of design. Funding is provided in stages: 40% for Strategy and Concept, 30% for Detail Design, and 30% for Completion and Final Report. Additionally, student participation is encouraged, with funding of up to Rs. 2.5 lakhs, where the government covers 75%, and MSMEs contribute the rest. Funding stages for students include 50% upon application approval and 50% upon project completion.
Intellectual Property Right (IPR) Scheme
The Intellectual Property Rights (IPR) Scheme stands as a guardian of creativity, enhancing awareness of intellectual property rights and fostering their application within the MSME sector.
Who Can Apply: MSMEs seeking patents, trademarks, designs, or geographical indications.
Financial Support: The scheme offers reimbursement for filing costs to enable MSMEs to safeguard their intellectual property and promote innovation.
Here’s a summary of the maximum financial assistance provided for each type of intellectual property:
- Patent: 100% reimbursement for patent registration costs, up to INR 1 Lakh for Indian patents and up to INR 5 Lakhs for foreign patents (excluding renewal fees).
- Trademark: 100% reimbursement for trademark registration costs, up to INR 10,000, regardless of classes.
- Design: 100% reimbursement for design registration costs, up to INR 15,000, regardless of classes.
- Geographical Indication (GI): 100% reimbursement for GI registration costs, up to INR 2 Lakhs for each registered GI.
- Reimbursement requires an MSME Udyam Registration Certificate, relevant registration certificates, bank mandate form, and original bills.
Maximising Impact through Interlinking Benefits:
The true strength of the MSME Innovation Scheme lies in its ability to connect benefits across its components. MSMEs can leverage various combinations of incubation, design, and IPR support, enhancing their impact and accelerating the journey from innovation to commercialisation.
Seed Capital Support:
Recognising that innovation must translate into tangible products and services, the Seed Capital Support component of the scheme aims to provide financial aid for commercialising ideas, designs, and patents. In collaboration with SIDBI, this effort underscores the government’s commitment to nurturing entrepreneurship.
Other MSME Schemes
Procurement and Marketing Support (PMS) Scheme
Marketing is an essential strategic tool for developing businesses. It plays a crucial role in the growth and survival of MSMEs. However, the MSME sector often faces challenges when it comes to exploring new markets and retaining existing ones. This is due to the lack of information, scarcity of resources, and unorganised ways of selling/marketing. The Procurement and Marketing Support Scheme has been introduced to address these issues. This scheme aims to enhance the marketability of products and services in the MSME sector.
Who Can Apply: Manufacturing / Service sector MSEs with valid Udyam Registration (UR) certificates.
The scheme aims to promote new market access initiatives like organising or participating in National or International Trade Fairs, Exhibitions, MSME Expo, etc., conducted nationwide. The aim is to raise awareness and educate MSMEs about
the significance, methods, and packaging processes in marketing. This includes the latest packaging technologies, import-export policies and procedures, GeM portal, and MSME Conclave, as well as the latest developments in international and national trade.
SELF RELIANT INDIA (SRI) FUND Empowering MSMEs for Aatmanirbhar Bharat
India aims to achieve self-sufficient economic growth and become an economic superpower. The Government of India has launched the Self-Reliant India (SRI) Fund to achieve this. The Fund is designed to utilise the potential of the private sector to provide growth capital to viable Micro, Small, and Medium Enterprises (MSMEs) with a well-defined growth plan. By leveraging the strength of the private sector, the Fund aims to promote self-sufficiency and sustainable economic growth in India. The eligible applicants for the Fund are viable MSMEs with a growth trajectory.
Key Support:
- Total Corpus: Contribution INR 10,000 crore
- Tenure of Fund: 15 years
- Scope: Disbursement to MSMEs nationwide
- Type: Daughter Funds can be categorised as AIFs I or II registered with SEBI
- Exclusions: Non-Profit Institutions, NBFCs, financial inclusion sector, SHGs and other financial intermediaries.
Raising and Accelerating MSME Performance (RAMP)
Launched on 30th June 2022, RAMP is a Central Sector Scheme supported by the World Bank to improve access for MSMEs to market, finance, and technology upgrades by enhancing the outreach of existing MoMSME schemes. The program also aims to strengthen institutions at the Central and State levels while enhancing Centre-State collaboration.
Who can Apply: Individual MSMEs through State Government/Agencies.
Key Support: The RAMP scheme aims to improve the performance of Micro, Small and Medium Enterprises (MSMEs). This is achieved through promoting technology upgradation, innovation, digitisation, market access, credit, greening initiatives, and more. The scheme is designed to involve the active participation of state governments to ensure that the benefits reach all corners of the country.
The scheme also accelerates collaboration between the Centre and the states for MSME promotion and development. It aims to enhance the effectiveness of existing MoMSME schemes for technology upgradation, strengthen the receivable financing market for MSMEs, and augment the effectiveness of Credit Guarantee Trust for Micro & Small Enterprises (CGTMSE). Additionally, it aims to promote the guarantee for greening initiatives of MSEs and women-owned MSEs. Finally, the scheme aims to reduce delayed payments to MSEs.
Unveiling a Promising Future
The Central Government’s MSME Innovation Scheme resonates as a call to action for MSMEs across India. By integrating incubation, design, and IPR support, this initiative celebrates the spirit of innovation, guiding the nation’s economic growth and paving the path for a future driven by creativity and enterprise. As MSMEs harness the benefits of the scheme, India’s entrepreneurial landscape is poised for growth and innovation on the global stage.
Authors: Manisha Singh and M. Suthakar
First Published By: Mondaq Here