MSME Benefits & Schemes

Key facts

• CGTMSE guarantees collateral-free loans to micro and small enterprises; the guarantee cover was raised to ₹10 crore from April 2025.
• MSME loans count as priority sector lending, which makes banks more willing to lend.
• Under the Public Procurement Policy, central ministries and PSUs must buy at least 25% of their annual requirement from micro and small enterprises, including 4% from SC/ST owners and 3% from women owners.
• Micro and small enterprises registered on Udyam are generally exempt from paying earnest money deposit (EMD) in government tenders and get tender documents free.
• Mudra loans (Shishu, Kishore, Tarun, Tarun Plus) fund micro enterprises without collateral.
• Many states offer electricity duty, stamp duty and capital subsidies to Udyam-registered units; check your state's industrial policy.

Common questions

What are the main benefits of Udyam registration?

Protection against delayed payments (45-day rule), collateral-free loans under CGTMSE, priority sector lending, EMD exemption and reserved purchases in government tenders, and access to state and central subsidy schemes.

What is CGTMSE?

The Credit Guarantee Fund Trust for Micro and Small Enterprises. It guarantees bank loans to micro and small enterprises so they don't need collateral or a third-party guarantee. Cover is up to ₹10 crore from April 2025.

Do MSMEs get benefits in government tenders?

Yes. Micro and small enterprises usually get free tender documents and EMD exemption, and government buyers must source at least 25% of purchases from them.

Sources

• MSMED Act, 2006 (sections 15–16: payment within 45 days, interest)