SME Digital World

Category: SME

Digital Competition Bill Could Undermine MSME Ecosystem, Say Small and Medium Businesses

Digital Competition Bill Could Undermine MSME Ecosystem, Say Small and Medium Businesses

Members of the India SME Forum, the largest association of SMEs in the country, expressed concerns that the Digital Competition Bill (DCB) could adversely affect the MSME ecosystem and hinder India’s Viksit Bharat goals.
The industry body, representing small and medium enterprises (SMEs), warned on August 7 that the DCB could deter foreign direct investment (FDI) and limit the global competitiveness of MSMEs.
The Indian SME Forum hosted a roundtable in New Delhi to discuss the potential implications of the DCB on MSMEs and startups. The draft of the DCB, which was released in February, aims to address anti-competitive practices by Big Tech. However, it has faced widespread criticism from Indian businesses and startups, who argue that the bill could negatively impact their operations.
Vinod Kumar, President of the India SME Forum (ISF), emphasized during the roundtable that India has a unique opportunity to benefit from companies moving out of China. “Any regulation like the DCB could become a stumbling block in attracting FDI and promoting the global competitiveness of MSMEs,” Kumar stated.
Kumar also highlighted MSMEs’ concerns over the proposed ex-ante regulations—measures introduced in anticipation of certain impacts—especially those related to the use of personal data.
Aditi Madan, founder of Blue Pine Foods, stressed the importance of ensuring that SMEs have access to relevant information in the digital market economy. “Policy priorities should focus on directly engaging with SMEs during the creation process to ensure their needs and perspectives are adequately addressed,” she said.
Debashish Das, CEO of ElenchusHR Solutions, warned that overly stringent regulations could push businesses back to manual processes “reminiscent of the 70s and 80s,” hindering progress.
Amit Agrawal, founder of DSI Robotics, echoed these concerns, stating, “The Digital Competition Bill presents a safety paradox and could impose an undue compliance burden on small businesses, as has happened in the past.”

August 9, 2024
SEBI orders probe against SME IPO merchant banker for alleged violations while managing issues: Report

SEBI orders probe against SME IPO merchant banker for alleged violations while managing issues: Report

SEBI ordered an inspection of Corporate Capital Ventures and probed the operations and activities of the entity and its directors between August 2022 and June 2024.
Capital markets regulator Securities and Exchange Board of India (SEBI) is reportedly investigating Corporate Capital Ventures Limited. The Delhi-based merchant banker, which has managed some initial public offers (IPOs) of small and medium enterprises (SMEs), has come under the regulatory scanner for alleged violations of merchant banking regulations while managing public issues.
According to a report by news website Moneycontrol, SEBI has issued a notice to the merchant banking entity and named the company’s directors – Kulbhushan Parashar and Harpreet Kaur – along with a few other entities in the notice. The report added that the market watchdog’s investigation was triggered after it received an anonymous complaint alleging that Kulbhushan Parashar, through his relatives, bought shares in companies before taking them public.
SEBI ordered an inspection of the firm and probed the operations and activities of the entity and its directors between August 2022 and June 2024. During this period, Corporate Capital Ventures acted as the merchant banker for six SME IPOs: Oriana Power, Annapurna Swadisht, Droneacharya Aerial Innovations, Crayons Advertising, Creative Graphics Solutions India, and Rocking Deals Circular Economy.
According to the anonymous complaint received by SEBI, relatives of Kulbhushan Parashar were allotted 25,000 equity shares of Oriana Power on a private placement basis and 25,000 bonus shares. The allotment was made to Jagdish Kumar Prasad, and the IPO prospectus of Rockingdeals has listed Prasad as an immediate relative of Kulbhushan Parashar.
NSE imposes price control cap of 90% on SME IPO
Last month, NSE imposed a 90 per cent price control cap on SME IPOs amid rising concerns about froth in lesser-known SME stocks. “To standardise the opening price discovery and equilibrium price across exchanges during the special pre-open session for IPO on the SME platform, it has been decided to put an overall capping of up to 90 per cent over the issue price for SME IPOs,” said NSE in a circular.
The market regulator is already working on strengthening the eligibility criteria for the segment to ensure that fundamentally strong companies enter the market through the SME platform, launched in 2012. Earlier this year, SEBI chairperson Madhabi Puri Buch said some issuers and bankers were misusing the framework provided for SME listing. According to Buch, SEBI is collecting evidence following complaints of price manipulation in the segment.

August 2, 2024
India Elected Vice-Chair of Indo-Pacific Supply Chain Council

India Elected Vice-Chair of Indo-Pacific Supply Chain Council

India has been elected as Vice-Chair of the Supply Chain Council, the Commerce and Industry Ministry announced on Wednesday.
In a significant milestone, the 14 partner countries of the Indo-Pacific Economic Framework (IPEF) have established three councils to enhance economic cooperation in the region. Under the Indo-Pacific Economic Framework for Prosperity (IPEF) Agreement related to Supply Chain Resilience, this step is seen as a move to find alternatives to China for the production of goods.
The inaugural virtual meetings of the Supply Chain Council (SCC), Crisis Response Network (CRN), and Labor Rights Advisory Board (LRAB) marked a major advancement in cooperation among partner countries for strengthening supply chain resilience in the region, according to the Commerce Ministry.
During these meetings, the 14 IPEF partners reaffirmed their commitment to closer cooperation to enhance the resilience and competitiveness of critical supply chains, preparing for and responding to supply chain disruptions that threaten economic prosperity while strengthening labor rights.
India is expected to play a crucial role in developing a resilient Supply Chain in the Indo-Pacific region. In June 2024, at the IPEF Ministerial meeting in Singapore, Secretary of the Department of Commerce, Sunil Barthwal, highlighted India’s potential to become a major player in the global supply chain due to its skilled manpower, natural resources, and policy support. Government initiatives are actively seeking solutions to ensure India’s participation in diverse and predictable supply chains.
As part of the Supply Chain Agreement, the IPEF partners established three supply chain bodies: a Supply Chain Council to focus on strengthening supply chains for critical sectors and goods, a Crisis Response Network to facilitate a collective emergency response to disruptions, and a Labor Rights Advisory Board to strengthen labor rights and workforce development across regional supply chains.
India shared its views on the importance of a resilient supply chain network and ongoing consultations with stakeholders on critical sectors from the perspective of national security, public health, and economic well-being. Emphasis was placed on collaboration in the skill development sector, identifying gaps, and ensuring the right skills across economies, including technical assistance for workforce development and digitalization for a resilient supply chain ecosystem.
During the meetings, each of the three supply chain bodies elected a Chair and Vice Chair for a term of two years. The elected chairs and vice chairs are:
– Supply Chain Council: USA (Chair) and India (Vice Chair)
– Crisis Response Network: Republic of Korea (Chair) and Japan (Vice Chair)
– Labor Rights Advisory Board: USA (Chair) and Fiji (Vice Chair)
The Supply Chain Council adopted Terms of Reference and discussed initial work priorities, which will be further explored at its first in-person meeting in Washington, D.C., in September 2024 during the Supply Chain Summit. The Crisis Response Network discussed priorities, including conducting a tabletop exercise, and planned its first in-person meeting alongside the Supply Chain Summit. The Labor Rights Advisory Board discussed priorities for strengthening labor rights across IPEF supply chains and focused on labor provisions in the IPEF Clean Economy Agreement and Fair Economy Agreement.
The IPEF partners emphasized the importance of the upcoming in-person meeting in Washington, D.C., in September 2024.
Launched on May 23, 2022, in Tokyo, the IPEF includes 14 partner countries: Australia, Brunei, Fiji, India, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, Vietnam, and the USA. The IPEF aims to strengthen economic engagement and cooperation among its member countries, promoting growth, economic stability, and prosperity in the region.

August 1, 2024
High Returns and Government Support Drive AIFs to Explore SME-Focused IPOs

High Returns and Government Support Drive AIFs to Explore SME-Focused IPOs

Approximately 900 SMEs are now listed on the SME platforms of both the National Stock Exchange and the BSE, with significant traction observed over the past 2-3 years.
The recent success of Initial Public Offerings (IPOs) for Small and Medium Enterprises (SMEs), coupled with robust government support, has spurred Alternative Investment Funds (AIFs) to tap into this lucrative sector.
An AIF is a fund established or incorporated in India, functioning as a privately pooled investment vehicle.
Paradise Moon Investment Fund, an AIF, has announced its launch with the goal of raising Rs 750 crore over the next few years, targeting investors keen to leverage the growth of the SME market both pre- and post-IPOs. The fund aims to provide investors with a unique opportunity to benefit from the expanding Indian stock market and capitalize on the dynamic landscape of SME IPOs, according to an official statement.
With around 900 SMEs now listed on the SME platforms of both the National Stock Exchange and the BSE, significant traction has been observed over the past 2-3 years. Naveen Bansal, Managing Director of Paradise Moon, stated, “We seek to invite investment in Category 1 Alternative Investment Fund (AIF), with the visionary goal of becoming a leading investor in SME (pre and post) IPOs. The SME sector has witnessed notable expansion and development, contributing to a third of Gross Domestic Product (GDP).”
The BSE SME Index has delivered annualized gains of up to 195 percent over the past decade. A Rs 1,000 investment in September 2013 would be worth Rs 1.03 lakh in 2023, representing a 100x return, Bansal added.
Officials noted that the growth and returns in the SME sector are expected to surpass those of larger companies on the main exchange board due to concerns over stretched valuations.
As part of the ‘Aatmanirbhar Bharat’ package, the government announced a Rs 50,000 crore equity infusion for MSMEs through a Fund of Funds in July 2023 under the Self-Reliant India (SRI) Fund. Led by NSIC Venture Capital Fund, this initiative aims to provide equity funding to MSMEs with the potential and viability to grow into large enterprises. The government has provisioned Rs 10,000 crore, with the remainder coming from private venture funds.

August 1, 2024
NSE Partners with Defence Ministry to Facilitate MSME Capital Access

NSE Partners with Defence Ministry to Facilitate MSME Capital Access

The National Stock Exchange (NSE) has partnered with the Defence Ministry to provide capital market access to MSMEs in the defence sector through its NSE Emerge platform.
New Delhi, Jul 29 (PTI) – The National Stock Exchange (NSE) announced on Monday that it has signed a memorandum of understanding (MoU) with the Ministry of Defence to facilitate capital market access for micro, small, and medium enterprises (MSMEs) in the defence sector.
The MoU aims to help MSMEs in the defence sector raise productive capital for their growth plans efficiently and transparently through the NSE Emerge platform. This platform offers new and viable options for raising equity capital from a diversified set of investors, according to a statement from the exchange.
The MoU will be in effect for five years. During this period, the Department of Defence Production (DDP) and NSE will conduct extensive awareness drives through seminars, MSME camps, knowledge sessions, roadshows, and workshops to guide corporates engaged with the Ministry of Defence on fundraising via the NSE Emerge platform.
Additionally, NSE will assist MSMEs in connecting with intermediaries such as merchant bankers, registrars, transfer agents, and depositories. The exchange will also guide them regarding the capital markets, capital-raising mechanisms, regulatory compliance, and requirements.
The MoU was signed by the Additional Secretary of the Department of Defence Production (DDP) and the Managing Director of NSE in the presence of Defence Secretary Giridhar Aramane.
This partnership aims to help MSMEs and emerging companies in the defence sector scale up their business operations, explore new markets, and fund their R&D activities.

July 30, 2024
39% of MSMEs in India Are Now Women-Owned: Government Data

39% of MSMEs in India Are Now Women-Owned: Government Data

According to recent data shared by MSME Minister Jitan Ram Manjhi, 39% of micro, small, and medium-sized enterprises (MSMEs) registered under the revised MSME definition of 2020 are owned by women. This includes GST-exempted informal micro units registered on the Udyam portal via the Udyam Assist Platform (UAP).
As of July 25, 2024, out of approximately 4.78 crore Udyam-registered units since July 2020, including UAP units since January 2023, 1.84 crore enterprises were women-owned.
“The percentage of women owners of Micro, Small, Medium Enterprises (MSMEs) registered on Udyam and Udyam Assist Platform (UAP) since the launch of Udyam on 01.07.2020 and the launch of UAP on 11.01.2023 in the country is 39 per cent,” stated Manjhi in his response.
Highlighting initiatives to increase the share of women MSMEs, Manjhi mentioned the amended Public Procurement Policy of 2018, which mandates Central Public Sector Enterprises (CPSEs) to procure at least 3% of their annual procurement from women entrepreneurs.
“To support women entrepreneurs under the Credit Guarantee Scheme for Micro and Small Enterprises, two provisions have been introduced effective from 01.12.2022: first, guarantee coverage of up to 85% as against 75% for others; and second, a 10% concession in annual guarantee fees,” added Manjhi.
In June this year, the MSME Ministry launched the Yashasvini initiative to campaign in Tier-II and III towns, aiming to empower women entrepreneurs by building their capacity.
Previously, the share of women-owned units in more than 2.10 crore MSMEs as of August 1 last year was 19.43%, according to government data cited by FE Aspire. This count also included UAP-registered enterprises.

July 30, 2024
SEBI Urges Stricter Norms for SME IPO Approvals: Report

SEBI Urges Stricter Norms for SME IPO Approvals: Report

The market regulator is reportedly also working on tweaking the eligibility criteria for SME IPOs to ensure only fundamentally strong companies make the cut.
The Securities and Exchange Board of India (SEBI) has instructed stock exchanges to exercise increased vigilance when approving initial public offerings (IPOs) for small and medium enterprises (SMEs).
A report from Moneycontrol, citing sources, mentioned that SEBI has directed both BSE and NSE to enhance due diligence during the application review process, even if it results in slower IPO approvals.
The report further noted that SEBI’s advice for heightened caution on SME IPO approvals has led the exchanges to request more detailed information from applicants regarding their capital expenditure plans and the purpose of the public issue.
The market regulator is also reportedly working on revising the eligibility criteria for SME IPOs to ensure that only companies with strong fundamentals are approved. Under the current criteria, any SME that has achieved an operating profit in two out of the three years preceding the IPO document filing is eligible for listing on the SME platforms of the stock exchanges.
According to Prime Database, a total of 56 SMEs raised ₹1,633 crore from the primary market in the first quarter of this fiscal year.
Several experts, including SEBI Chairperson Madhabi Puri Buch, have expressed concerns about potential manipulation in SME IPOs.
Earlier this month, NSE issued a circular imposing a 90% cap on the listing price of shares under the SME segment compared to the IPO price. This decision aims to prevent scenarios where a company’s stock price significantly exceeds its intrinsic value.
“To standardise the opening price discovery/equilibrium price across exchanges during the special pre-open session for initial public offers (IPOs) on the SME platform, it has been decided to impose an overall cap of up to 90% over the issue price for SME IPOs,” the NSE circular stated.

July 29, 2024
MSME Credit to Benefit from Budget Boost, Counter Unsecured Loan Stress

MSME Credit to Benefit from Budget Boost, Counter Unsecured Loan Stress

To enhance credit flow to MSMEs, the government is urging banks to offer collateral-free term loans and additional support during financial stress. The FY25 budget includes a new credit guarantee scheme to help MSMEs in manufacturing secure loans for machinery and equipment without needing collateral or a third-party guarantee.
Indian lenders are beginning to balance expectedly slower growth in unsecured lending due to rising stress with larger financing allocations to MSMEs, which the Centre believes are core to last-mile job creation and deserve greater access to formal funds and budgetary support.
“Lowering growth estimates on the retail side will not bring down overall loan growth, I see it supported by the MSME segment,” said Prashant Kumar, managing director of Yes Bank. “That book is growing at a fast clip of 25%, we are also not seeing any stress in that book.”
To boost credit flows to MSMEs, the government has encouraged banks to give term loans to small businesses without collateral and top-up loans during stress. In the FY25 budget, the finance minister proposed a new credit guarantee scheme to help MSMEs in the manufacturing sector avail term loans for purchasing machinery and equipment without collateral or third-party guarantees.
“Budget proposals are expected to boost financing to the MSME segment and improve MSME assessment,” said MV Rao, chairman of the Indian Banks Association.
A separately constituted self-financing guarantee fund will provide each applicant with a guarantee cover of up to ₹100 crore.
Bank loans to MSMEs climbed to ₹10.4 lakh crore at the end of May 2024, from ₹8.2 lakh crore at the end of May 2022.
Risk Weight Caution
Banks that have reported earnings through July have seen greater stress in their unsecured advances, particularly personal loans. The central bank had raised risk weightings on sections of retail exposure late last year to cool loan disbursements to the segment it believed could pose risks to the broader financial system in the event of rising delinquencies.
Lately, the regulator has also been cautioning against increasing stress related to personal loans and credit cards.
Unsecured loan growth slowed to about 18% in May this year from 23% in November 2023, when the central bank made it less attractive for lenders to advance such credit.
Axis Bank has seen fresh slippages during the June quarter increase to ₹4,793 crore out of which ₹4,200 crore came from the retail segment. “What we continue to indicate is (that) for certain parts of the unsecured portfolio, we are seeing credit costs rise, but they remain well within our risk guardrail,” Puneet Sharma, chief financial officer at Axis Bank said after the bank’s earnings call.
Under Scrutiny
HDFC Bank had said it is cautious of unsecured exposures. “On the unsecured side, we have seen regulators talking about being cautious of credit quality. We are cautious of the credit and calibrate accordingly,” chief financial officer of HDFC Bank, Srinivasan Vaidyanathan said after the bank’s earnings call.
Recently, Axis Bank announced a co-lending partnership with Piramal Finance to offer loans to middle and low-income segment borrowers. A Mumbai-based MSME-focused non-banking financial company, Ashv Finance, and HDFC Bank also announced that they will co-lend unsecured business loans to small and micro enterprises across India. Muthoot Microfin has also made a co-lending partnership with the State Bank of India to extend loans to women entrepreneurs in rural and semi-urban regions across India.

July 26, 2024
MSME Experts Highlight Gaps in Budget 2024

MSME Experts Highlight Gaps in Budget 2024

The MSME ecosystem has collectively praised the measures announced in the Budget 2024, including a Rs 100 crore Credit Guarantee Scheme for manufacturing units, a new credit assessment model based on MSME digital footprints, credit support for MSMEs under stress, enhanced Mudra loan limits, and a reduced turnover threshold for TReDS. However, key voices have also pointed out several gaps left unaddressed.
Prominent MSME body, the Federation of Indian Micro and Small & Medium Enterprises (FISME), appreciated the steps taken in the budget, such as the announcement of a fund to help stressed MSMEs red-flagged under the ‘special mention account’ (SMA) category. However, they noted that the major issue of a lack of empowered officials at branch levels remains unresolved.
Vijay Kalantri, Chairman of WTC Mumbai & President of the All India Association of Industries (AIAI), observed that the budget lacks major policy measures to support capacity building, manufacturing investment, and infrastructure. Kalantri suggested that incentives for MSMEs to increase production capacity and invest in R&D should have been included. He also mentioned that measures to further improve the ease of doing business for MSMEs and startups were missing.
Kalantri pointed out that many startup founders prefer to register their companies abroad due to complex local regulations for registration, fundraising, unfavorable tax treatment when exiting investments, and restrictive FEMA guidelines for doing business with foreign clients.
Mukul Goyal, Co-founder of management consulting firm Stratefix Consulting, highlighted the absence of significant taxation-related announcements for businesses. While he acknowledged the budget’s focus on ease of doing business, including measures to streamline regulatory processes and extend tax holidays for startups, he noted that the lack of substantial changes in GST rates was a missed opportunity. Simplifying compliance and reducing the GST burden on essential goods for MSMEs would have provided immediate relief and improved cash flow management.
Despite these gaps, the MSME ecosystem has largely welcomed the measures announced in the budget, including the Credit Guarantee Scheme for manufacturing units, a new credit assessment model based on MSME digital footprints, credit support for stressed MSMEs, enhanced Mudra loan limits, and a reduced turnover threshold for TReDS.
The expenditure outlay for the MSME Ministry in this year’s budget stood at Rs 22,138 crore, the same as the previous year. However, the amount for central sector schemes for MSMEs was marginally increased to Rs 21,868 crore from Rs 21,852 crore in the 2023-24 budget estimates.

July 25, 2024
Government and Industry Collaborate to Boost India’s Toy Sector

Government and Industry Collaborate to Boost India’s Toy Sector

Government and industry leaders will convene on July 8 to discuss strategies for enhancing the growth of India’s toy sector, focusing on boosting manufacturing capabilities and increasing exports. The meeting, organized by Invest India in collaboration with the Toy Association of India, aims to address key issues such as regulatory developments, India’s positioning as a global toy hub, and integrating local manufacturers into the global supply chain.
Naresh Kumar Gautam, Senior Vice-President of the Toy Association of India, highlighted that the government has already implemented several initiatives to stimulate sectoral growth. An international fair is concurrently being held from July 6-9 at Pragati Maidan, showcasing products from over 400 domestic toy manufacturers to more than 150 foreign buyers representing 35 nations. The Prime Minister’s endorsement of the sector in his ‘Mann ki Baat’ address has further galvanized efforts to bolster this labor-intensive industry.
Gautam emphasized the need for fiscal support measures for stallholders and announced the upcoming ‘Toy Industry CEOs Meet’ on July 8, which will be attended by senior officials from DPIIT, Invest India, and industry representatives.
Highlighting significant developments, Gautam noted that toy exports have surged by 240% since 2014, while imports have decreased by 52% during the same period. He underscored substantial opportunities for women, with an estimated 70% of the workforce in the sector being women. Construction has also commenced on a major toy cluster in Noida, which is poised to become India’s largest, with 150 individuals already allocated land for setting up toy manufacturing units.

July 9, 2024