Government Initiatives to Support MSMEs with Emerging Technologies
The Indian government has implemented several schemes and programs to improve the welfare of MSMEs, with a focus on providing payment solutions through emerging technologies. These initiatives aim to streamline operations, improve access to finance, and empower MSMEs to thrive in the digital age.
Key Initiatives for MSME Support
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TReDS: Streamlining Trade Receivables
The Trade Receivables Discounting System (TReDS) tackles the issue of delayed payments for MSMEs. It facilitates the financing of trade receivables from corporate buyers, government departments, and PSUs through electronic platforms. This system allows MSMEs to access funds quickly and efficiently by discounting their invoices to financiers. Currently, three TReDS platforms are operational, including Receivables Exchange of India Limited (RXIL), Mynd Solutions Private Limited, and A-TReDS.
The platform has already onboarded over 80,000 MSMEs and facilitated invoice discounting worth over ₹3 lakh crore. -
TEAM Scheme: Empowering MSMEs with ONDC
The Ministry of MSME launched the “MSME Trade Enablement and Marketing Initiative” (MSME-TEAM) under the “Raising and Accelerating MSME Performance” scheme. This initiative aims to help 5 lakh MSMEs leverage the Open Network Digital Commerce (ONDC) platform. ONDC is a decentralized e-commerce network that seeks to create a more inclusive and accessible digital marketplace. The TEAM scheme provides awareness workshops, hand-holding assistance, and subsidies for catalogue preparation, account management, logistics, packaging materials, and design.
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FIT Rank: Improving MSME Credit Access
The Finance, Income, and Trade Rank (FIT Rank) is a credit rating model designed to provide a clearer picture of MSME creditworthiness. Developed by CIBIL under the guidance of SIDBI, and in collaboration with Online PSB Loans Limited (OPL), FIT Rank leverages GST, bank statements, and income tax return (ITR) data.
This ranking system uses machine learning algorithms to predict the probability of an MSME becoming a non-performing asset (NPA) within the next 12 months. The ranking is on a scale of 1 to 10, with FIT Rank 1 being the least risky and FIT Rank 10 being the most at-risk.
These initiatives demonstrate the government’s commitment to supporting MSMEs and empowering them to succeed in the digital economy. By leveraging emerging technologies, the government aims to create a level playing field for MSMEs and promote their growth and development.
