The micro, small and medium enterprises (MSMEs) play a critical role in the economic development of a nation. Contributing close to 45 per cent of total manufacturing and 40 per centexports, the MSME sectoris an integral part of the India growth story. Given the large potential, it is already a key focus area of the new government. The MSME sector in India already enjoys a vibrant ecosystem and encouraging policy framework for development and growth.
The Government of India is planning to launch a INR 10,000 crore (US$ 1.7 billion) venture fund for MSMEs. The Fund aims at boosting startups in the country by lending funds on a seven year tenure in the priority sectors. Funding has always been a challenge for MSMEs not only in India but globally as entrepreneurs find it tough to raise equity in the initial phase. A formal announcement on the MSME venture fund is expected to be made during the budget, scheduled for the first week of July.
The planned dedicated Fund for MSMEs should further boost the confidence of budding and existing MSMEs across the country and expected to augment its contribution to the India growth story.