Make in India – Fulfil this Dream with SMEs of India

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msme loans

India’s small and medium scale enterprises act as the financial backbone of the nation. Currently, it is the second-largest MSME base in the world and acts as a key driver to the increasing consumerism of Indians, fuelled by financing options like MSME loans.

The recent change in the definition of ‘what is MSME’ has only re-emphasised the importance of this sector and widened its scope.

  • The total number of registered MSMEs increased by over 18% in FY 2020. Between FY 2019 and FY 2020, approximately 3.90 lakh new units registered under micro, small and medium-scale enterprises.

These enterprises play a critical role in maintaining India’s manufacturing prowess. A recent survey shows that MSMEs manufactures more than 6,000 different types of products, along with making components for large-scale manufacturers.

MSME and the Make in India initiative

MSMEs and SMEs currently stand at the front line in India’s ‘Make in India’ initiative, thanks to the Government of India’s efforts to create a less import-dependent economy.

These businesses are poised for rapid growth and are likely to integrate with major global value chains in the upcoming years.

With the relaxation of the definition of what is MSME, a larger number of organisations are currently benefitting from the Government’s assistance programs.

  • Official estimates show that there are approximately 5,000 medium-scale enterprises, 0.33 million small scale enterprises, and 63.05 million micro-enterprises in India.

This trend is likely to benefit both consumers and business owners. Locally manufactured products will be more affordable as well as easy to mend, maintain, and upgrade.

Manufacturing businesses that are booming have already shown how such changes could benefit the country’s economy significantly.

Unfortunately, despite several assistance programs and Government initiatives, several SMEs and MSMEs encounter financial roadblocks every year.

It is also the primary reason why a large number of micro and small businesses fail to convert into medium scale organisations.

Identifying the financial roadblock

Shortage of funds has always been one of the major factors prohibiting the growth of SMEs and MSMEs over the decades. The limited finance available to these companies often gets used up early, forcing businesses to slow down their operations.

  • Anticipating the slow turnover during the current economic slowdown, equity infusion worth Rs.500 billion was introduced through special funds for Indian businesses that require assistance.

Fortunately, to prevent such situations, several financial institutions have started offering MSME loans to eligible businesses across India.

These business loans are essential to keep an organisation financially healthy, providing the necessary working capital, funds for growth and such necessities.

Benefits of a business loan

Business loans for SMEs and MSMEs offer several unique benefits to organisations. Unsecured MSME loans of up to Rs.30 lakh provide the much-needed boost to enterprises without hindering with their repayment capacities.

Let’s take a look at some of the benefits of these business loans:

  1. Unsecured financing –

The availability of short-term, unsecured financing offers the much needed monetary boost to small-scale businesses. The absence of lengthy documentation and instant disbursal offers them the support whenever required.

  1. Flexibility in end-use –

MSME loans can be used for various purposes, like renovating working space, leasing or repairing essential machinery and equipment, refilling inventory, hiring seasonal workforce, increase business cash flow, etc. Such flexibilities allow an organisation to build a business brand and keep up with its competition.

Lenders like Bajaj Finserv also offer additional features, like Flexi Loan facility, which allows a borrower to withdraw money when required from a pre-sanctioned loan amount and pay interest on the utilised funds only.

The lender also provides pre-approved offers to existing customers, which simplifies the process of applying and availing a business loan substantially.

Such offers are also available on other types of finances, including credits such as personal loans. You can check your pre-approved offer online by sharing only some essential details.

MSME loans act as one of the key drivers of India’s SME sector. With the availability of such credits, businesses can easily overcome any monetary gap that might otherwise cripple their growth and expansion.

Conclusion

Make in India was introduced in 2014 as an initiative to increase India’s manufacturing prowess and reduce import dependency.

Along with large-scale enterprises, SMEs and MSMEs took the lead in the Make in India campaign. The sheer number of such industries ensured an unmatched manufacturing capacity, contributing significantly to lower dependency on product and service imports.

Government initiatives, as well as private funding, played a key role in the rapid growth of SME and MSME sector of the country.

Financing in the form of MSME loan offered these businesses the much needed monetary boost to continue operating and grow their business.

Short-term, unsecured business loan offered by various financial institutions fulfil the funding requirements of India’s SMEs and MSMEs to a great extent.

A well-timed capital infusion has saved thousands of organisations during the current economic slowdown when other businesses experienced significantly slower turnover.