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Saturday, February 4, 2023

FISME for higher incentives to start-ups for using green tech


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New Delhi: As the government firms up a new scheme to offer incentives to micro and small enterprises (MSEs) for adopting new technology, industry body Federation of Indian Micro and Small & Medium Enterprises (FISME) has proposed to raise the upper limit for incentives and give support to green start-ups.

The Ministry of Micro, Small & Medium Enterprises (MSME) has been working on the new scheme on the lines of erstwhile Credit Linked Capital Subsidy Scheme (CLCSS).

In order to upgrade technology, the CLCSS provided 15 per cent upfront capital subsidy to MSEs, including tiny, khadi, village and coir industrial units on loans availed by them for induction of well established and improved technologies in specified sub-sectors/products.

The subsidy ceiling under the CLCS scheme was Rs 15 lakh.

Apart from incentives for adopting new technology, the new scheme would also provide support to MSEs in overcoming natural disasters like floods and earthquakes.

“It is worthwhile to consider improvements in the erstwhile scheme and consider other areas which the older scheme did not cover such as support in rebuilding post a natural disaster or funding for new projects/ start-ups using green technologies,” FISME has said while giving its suggestions on the new scheme.

The industry body has proposed to raise the projects coverage to Rs 5 crore and incentives upto 15% or Rs 75 lakh. The CLCSS covered projects upto Rs 1 crore and subsidy was capped at Rs 15 lakh (15% of the project).

It has also suggested that wherever and whenever MSME units are affected by a natural disaster, a Covid support like package could be triggered with three components — amnesty against regulatory compliances, immediate availability of ECLGS type loan and a grant provided by a fund to be created for the purpose.

“For units in disaster prone areas (Cyclone & flood) as per NDMA (National Disaster Management Authority), an insurance scheme could be devised premium of which could be paid by GoI (Government of India) through a Fund created for the purpose. Insurance companies could be asked to develop a product for MSMEs,” FISME further said.

The industry body also said that the new scheme may have a component for new projects/ start-ups using ‘green technologies’.

“In this case a Joint Committee could be established comprising of representatives of industry associations and tech institutions especially such as TERI & CSE,” FISME said.

It noted that Constitutional courts and regulatory bodies like NGT from time to time pass orders which require units to discontinue use of a technology/ process or direct them to use of green fuels etc.

“These orders plunge units into existential crisis. Recent NGT order for banning use of generators in NCR from 1st Oct 2022 is a case in point. To help units comply with suitable upgradation an incentive scheme could be devised with similar thresholds as in old CLCS (S) without any loan linkage. GoI may come out with a list of admissible compliances to be covered under the scheme,” the industry body said in its suggestion to MSME Ministry.

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