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PM Modi announces sanction of loans of up to Rs 1 crore in 59 minutes as Diwali gift

Also, GST-registered MSMEs will get a 2 per cent subvention or subsidy on a new loan or incremental loan of up to Rs 1 crore, Modi said, adding interest subvention on pre- and post-shipment credit for exports by MSMEs has been increased to 5 per cent from 3 per cent.

Prime Minister Narendra Modi Friday announced sanction of loans of up to Rs 1 crore in 59 minutes, relaxation in labour laws, easier compliance with environmental rules and changes in company laws for small and medium enterprises as a 'Diwali gift' to give a boost to the sector, the country's second-biggest employer.

Announcing a slew of measures for the sector, he said GST-registered micro, small and medium enterprises (MSMEs) will be sanctioned a loan in just 59 minutes through a new portal www.psbloanin59min.com.

Also, GST-registered MSMEs will get a 2 per cent subvention or subsidy on a new loan or incremental loan of up to Rs 1 crore, Modi said, adding interest subvention on pre- and post-shipment credit for exports by MSMEs has been increased to 5 per cent from 3 per cent.

"Now the GST portal will ask MSME, do you need a loan? Now the government is coming forward to provide loans to MSMEs. Now no one has to run from one bank to other for loans. In new India, no one should be compelled to visit a bank branch repeatedly," he said.

Besides, he said, "honest taxpayers will get the benefit. Registering with GST and filing of tax will become your strength. This will get you 2 per cent interest subsidy," he said.

To rid the sector of inspector raj, Modi announced that inspections of factories in the sector will be sanctioned only through a computerised random allotment and inspectors will have to upload reports on portal within 48 hours. "No inspector can now go anywhere. He will be asked why he went to a factory. This is an important decision to end inspector raj," he said.

Easing compliance with environmental rules, MSMEs will need single air and water clearance and just one consent to establish a factory.

MSMEs will have to file just one annual return on eight labour laws and 10 central rules, he said, adding that an ordinance has been promulgated to simplify levy of penalties for minor offences under the Companies Act.

Modi termed the 12 new measures as "historic" that will make Diwali brighter for the sector and its millions of entrepreneurs and employees.

Observing that MSME play an important role in the economy, he said, "These are not just Diwali gift to them but this will herald a new era for them which provide the highest employment after agriculture."

Public sector companies, which were mandated to source 20 per cent of their annual procurement from MSMEs, will now source at least a quarter of their requirement (25 per cent) from the sector, he said, adding 3 per cent of sourcing by PSUs would have to be done from MSMEs run by women.

Also, all central public sector enterprises will have to take membership of the Government e-Marketplace (GeM) to facilitate online procurement of common use goods and services by various government departments and organisations.

Modi announced Rs 6,000 crore for creation of 20 hubs and 100 tool rooms for technology upgradation.

Clusters for MSMEs in the pharma sector will be created to boost production in the sector, he said.

All companies with a turnover of more than Rs 500 crore would have to now come on Trade Receivables e-Discounting System (TReDS) platform so that there is no cash flow problem for MSMEs.

Joining this portal will enable entrepreneurs to access credit from banks, based on their upcoming receivables, he said, adding this will resolve their problems of cash cycle.

"The important benefit of this would be that cash problem of the sector would be addressed ... I would request big corporates to clear their bill and make payment without delay. In case they have a problem they can register their complaint on Samadhan Portal of MSME Ministry for the redressal," he said.

Noting that MSMEs are one of the principal employment generators in India, he recalled the glorious Indian traditions of small-scale industry, including Ludhiana's hosiery, and Varanasi's sarees.

Talking of India jumping 23 places on the World Bank's latest 'Ease of Doing Business' ranking, Modi said in four years his government has achieved what many did not believe and what no other nation has done -- leaping from 142nd rank in 2014 to 77th position.

Breaking into top 50 rank is not far away, he added.

Reform of processes will help MSMEs, Modi said.

The prime minister also spoke of social security for the MSME sector employees. He said that a mission will be launched to ensure that they have Jan Dhan Accounts, provident fund and insurance.

"These decisions would go a long way in strengthening the MSME sector in India," he said.

He said the implementation of this outreach programme will be intensively monitored over the next 100 days.

Speaking on the occasion, Finance Minister Arun Jaitley said various steps taken by the government will benefit the SME sector.

The finance minister said that the Mudra Scheme of the government has benefitted over 13 crore people and also helped in generating jobs.

Talking about the loan portal, Jaitley said over 72,000 loan application has been approved by the portal.

"We have just started the portal two weeks back and around 70,000 loans application has been sanctioned," he said.

MSME Minister Giriraj Singh said there are 6.5 crore units which provide employment to about 12 crore people. The mandatory sourcing norm for CPSEs has benefitted about 90,000 MSME unit, he outlined.

(With inputs from agencies.)



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