Institutional Support Agencies for MSMEs

Beyond the named entrepreneurship schemes, a set of standing institutions provides continuing support to micro, small, and medium enterprises across the country.

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), established in the year 2000 jointly by the Ministry of MSME, Government of India, and SIDBI, exists to solve the single biggest obstacle a new, asset-light enterprise faces when approaching a bank: the lack of collateral. CGTMSE guarantees a portion of the loan a bank extends to an eligible micro or small enterprise, which allows the bank to sanction the loan without demanding collateral security or a third-party guarantee from the borrower, and without that missing collateral by itself becoming a reason to refuse the loan.

The National Small Industries Corporation (NSIC), a Government of India enterprise established in 1955 under the Ministry of MSME, supports small enterprises in ways that go beyond finance. Its Single Point Registration Scheme registers small units so that they can participate in government purchase programmes on favourable terms; it also extends raw material assistance (helping units procure raw materials at reasonable terms) and marketing support (helping small units find buyers, including through government tenders), so that a small enterprise is not left to compete for orders entirely on its own against larger, better-connected firms.

District Industries Centres (DIC), launched in 1978 by the Government of India, are the local, single-window face of all this institutional support. Set up in every district, a DIC guides a prospective entrepreneur through registration, project-report preparation, access to available government schemes, and general handholding, so that a first-time entrepreneur does not need to approach a dozen different offices to start a small or village industry — one district-level office is meant to be enough for most of the initial steps. …