Investment in MSME Sector

The State Governments are primarily responsible for promoting and supporting MSMEs. Therefore, Government has not specifically assessed the need for investments for setting up new and growth of existing Micro, Small and Medium Enterprises in the country.  However, the Central Government supports and supplements the efforts of the State Governments through implementation of various schemes / programmes. 

 

One of the major problems faced by MSME entrepreneurs is lack of adequate capital required for raising funds from banks and institutions. For the purpose, Planning Commission had constituted a Committee on Angel Investment and Early stage Venture Capital, which in its report in June 2012, inter alia recommended to facilitate investment flows in early stage ventures by angels and venture capital; consequent incentive structures and easing of investment norms; provide a framework for easier exits for early-stage investors; SIDBI should provide risk capital and equity linked products to MSMEs directly as well as indirectly through banks and Alternate Investment Funds (AIF); enhance and make venture debt and credit guarantees more widely available by banking sector by emulation schemes of SIDBI; early stage lending focused NBFCs; promotion of mutual credit guarantee schemes as that of UNIDO.

Angel investment in India is still in its early stage and is not comparable to international levels particularly in comparison to the USA. However, access to angel funding in India is improving gradually.