Indian Government Backing Women in the MSME Sector

Nitin Konde, Apoorva Bajj

Aug 7, 2024 — 4 min read

Indian Government Backing Women in the MSME Sector

Since its launch on July 1, 2020, the Udyam Registration Portal (URP) of the Ministry of MSME has recorded that MSMEs owned by women make up 20.5% of all MSMEs registered on the Portal. The employment created by the total Udyam registered units is 18.73%, with 11.15% of the investment going to these women-owned MSMEs. Out of all the registered MSMEs in Udyam, the percentage of women-owned businesses accounts for 10.22% of total turnover. Results show that women-owned IMEs account for 70.49 percent of all IMEs (as of 11.01.2023) and 70.84 percent of all jobs, according to data from the Udyam Assist Platform (UAP), which records IMEs.

Appreciating and on the same line suggesting some changes to the current government, Shreya Sharma, Lawyer and Founder, Rest The Case stated, "Women’s participation in the MSME workforce has grown over the last couple of years and an increase in the Mudra loan upper limit to 20 lakhs, is surely an encouraging prospect for them. However, there are a few challenges that still hinder the further growth of the sector. There is a high level of compliance required to set up the business, and this is surely impacting the participation of women. Women entrepreneurs often face obstacles in securing credit due to the strict collateral requirements imposed by financial institutions. Additionally, the societal role of women as primary caregivers can restrict their time and mobility, limiting their ability to fully engage in and develop their businesses."

"The difficulties are further compounded by a shortage of effective mentorship and networking opportunities, which means many women lack the crucial guidance and support to successfully manage the business environment. Nevertheless, the future holds considerable promise," she added further.

Echoing similar sentiments, Bhavik Vasa, Founder, GetVantage opined, "The Indian government and Hon’b Prime Minister Narendra Modi’s initiatives, led by the Ministry of MSME, to empower women entrepreneurs are truly transformative. Programnes like Udyam Sakhi, Mahila Coir Yojana, and MUDRA are paving the way for women-led MSMEs to thrive. At GetVantage, we fully support these efforts, which is why we launched the INR 100 crore Rise-Up fund—India’s first non-dilutive fund dedicated to women entrepreneurs."

Steps Taken by the Ministry of MSME to Help MSMEs Owned by Women

Initiatives to register micro, small, and medium-sized enterprises (MSMEs) owned by women through the Udyam Registration Portal.
In 2018, the Public Procurement Policy was revised to ensure that Central Ministries, Departments, and Undertakings purchase a minimum of 3% of their yearly procurement from micro and small businesses owned by women. This change was made to support female entrepreneurs.
Two measures have been added to the Credit Guarantee Scheme for Micro & Small Enterprises to assist female entrepreneurs starting their businesses as of December 1, 2022. These include a 10% reduction in the annual guarantee payments and an extra 10% coverage of up to 85% for the guarantee, compared to 75% for other entrepreneurs.
As part of its Coir Vikas Yojana initiative, the Ministry of MSME runs the "Skill Upgradation & Mahila Coir Yojana," a training program specifically for women craftspeople working in the coir industry, with the goal of encouraging more women to start their businesses.

Initiatives by the Government to Increase the Participation of Women in MSMEs in the Country

To assist traditional artisans and young people without jobs in both rural and urban areas, the Ministry of Micro, Small, and Medium Enterprises (MSME) has launched the Prime Minister's Employment Generation Programme (PMEGP), a large credit-linked subsidy program that encourages the creation of micro-enterprises in non-agricultural sectors. Compared to the non-special category, women beneficiaries receive a greater margin money subsidy from PMEGP (35% vs. 25%). The percentage of women receiving benefits from the PMEGP is 39%. In addition, the Ministry's Procurement and Marketing Scheme (PMS) offers a 100% subsidy to female entrepreneurs, compared to an 80% subsidy for male entrepreneurs, so that they can participate in domestic trade fairs.

Providing Financial Support to Female Entrepreneurs

To promote gender equality in the business world, it is essential to support companies that are owned by women. The MSME Insights Report 2024, compiled by Kinara Capital, examined 44,821 MSMEs in six different industrial states of India. It found that compared to MSMEs owned by men, those owned by women hired 11% more women. Cost optimization, income growth, and repayment of business loans were all areas in which the survey found that MSMEs owned by women fared better than those owned by men. The societal benefits of economic progress can only be fully realized if women business owners are granted equal opportunity to compete and flourish, according to this data-driven argument.

“I believe that financial support schemes for women entrepreneurs, such as increased money subsidies, are essential to address the workforce divide that has persisted for centuries. However, financial aid alone will not achieve the ultimate goal of empowering women and recognising their contributions to the MSME sector. This must be complemented by robust skilling, training, and guidance to ensure their success and sustainability in the business world," commented Pallavi Jha, Chairperson and Managing Director of Dale Carnegie Training India and Walchand PeopleFirst Ltd.