NEW DELHI: Prime Minister Narendra Modi on Friday announced a 59-minute loan facility of up to Rs 1 crore for small and medium businesses.

Launching the MSME support programme, PM Modi said his government has finalised 12 policies to boost the sector. Calling it a "Diwali gift", the prime minister said these policies would enhance credit access to micro, small and medium businesses. The move will give a boost to the micro, small and medium enterprises sector and help generate employment.

PM Modi also stated that, "12 new historical decisions have been taken for the small industries which are like a Diwali gift for the sector." The 59-minute loan facility is one of the key decisions.

Also, GST-registered MSMEs will get 2 per cent interest subvention or rebate on incremental loan of up to Rs 1 crore, PM Modi said.

Interest subvention on pre- and post-shipment credit for exports by MSMEs has been increased from 3 per cent to 5 per cent, he added.

State-owned or 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.

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

All companies with 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.

To rid the sector of inspector raj, PM 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," 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.

He further said that "India has become an economic powerhouse due to the MSME sector."

The outreach programme will run for 100 days covering 100 districts throughout the country.

The MSME sector constitutes a vast network of over 63 million units and employs 111 million people, contributing around 30 per cent to the GDP. It accounts for about 45 per cent of manufacturing output and around 40 per cent to total exports.

A major obstacle for growth of MSMEs is their inability to access timely and adequate finance as most of them are in niche segments where credit appraisal is a major challenge.

As per the RBI's Mint Street Memo report, note ban imposed in November 2016 has led to further decline in the already falling credit to the MSME sector, while GST roll out has not made any significant positive impact on overall credit to the sector but has deeply dented their exports.

About 97 per cent of MSMEs operate in the informal sector.

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

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

(With PTI inputs)

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In Video: PM Modi's Diwali gift for MSMEs: Loans up to Rs 1 crore in 59 minutes