Government Eyes Major Funding Boost for MSME Champions Scheme
The Indian government is planning a substantial increase in financial support for small businesses. Officials reveal plans to expand the MSME Champions Scheme budget to approximately ₹10,000 crore over the next five years.
Current Status and Timeline
The proposal has reached the Expenditure Finance Committee stage for review. This committee is chaired by Expenditure Secretary V. Vualnam. Once approved there, a cabinet note will circulate for final approval.
The entire approval process may require three to five more months. This includes both EFC clearance and Union Cabinet endorsement.
Driving Factors Behind the Increase
Multiple factors are pushing this budget expansion. Industry consultations revealed strong demand for more funding. Businesses need support for cleaner manufacturing practices and enhanced efficiency.
Global market challenges also play a significant role. Rising protectionism and new environmental taxes abroad create pressure on Indian exporters. The scheme aims to help MSMEs compete effectively in this changing landscape.
Scheme Components and Performance
The MSME Champions Scheme combines three key components. First, the Sustainable (ZED) certification promotes efficient operations with government subsidies. Second, the Competitive (Lean) component helps reduce costs through better resource management. Third, the Innovation component supports intellectual property creation through patents and trademarks.
Recent data shows promising results. Approximately 107,000 MSMEs obtained ZED certificates in FY25. Nearly 13,000 businesses registered under lean manufacturing initiatives. The scheme also facilitated 727 intellectual property creations by December 2024.
Industry Perspectives and Challenges
Experts welcome the increased funding but note varying impacts. Micro and small businesses will benefit significantly from the expansion. Medium enterprises may see less dramatic effects since many already implement advanced practices.
Industry representatives highlight ongoing challenges. Very few MSMEs currently meet high export certification standards. Intellectual property creation remains difficult without specialized talent and resources.
Recent surveys indicate business sentiment concerns. Global challenges and US tariff measures create uncertainty for many small enterprises. Only about 173,000 of India's 74 million MSMEs currently participate in exports.
Broader Context and Recommendations
The funding increase aligns with broader strategic recommendations. NITI Aayog recently suggested merging government schemes to reduce overlap. The policy think tank also emphasized leveraging artificial intelligence to support MSME solutions.
International examples demonstrate the importance of targeted support. Countries like Taiwan, China, and Brazil show how government assistance helps small businesses navigate global trade shifts.
Market diversification and digital transformation will be crucial for future resilience. While US tariffs pose significant challenges, proactive measures can help cushion their impact on small exporters.
The MSME Champions Scheme began with ₹875 crore in FY22. Subsequent allocations varied between ₹52 crore and ₹80 crore in following years. The proposed increase represents nearly a nine-fold expansion compared to the previous five-year allocation of ₹1,125 crore.
