MSMEs are known as the backbone of the Indian ecosystem due to their strategic role in nation-building through wealth generation, creation of employment opportunities, and harnessing of local talents which in turn plays a pivotal role in contributing to the GDP of the Company.
India is home to more than 65000 start-ups registered to date. The Indian start-up ecosystem is producing unicorns at a way faster speed than any time before receiving huge sums of investments from global investors and celebrating renowned exits such as the $16 bn Walmart-Flipkart acquisitions at the same time. Further, the micro, small, and medium enterprises (MSME) sector of India comprising 577 Cr companies is beating all difficulties coming on its way related to setting up and establishing a consumer base for itself. However, an entrepreneurial idea remains a mere idea, if it fails to be supported with the requisite working capital on time.
According to reports, less than 5% of MSMEs have access to formal credit and thus rely on informal sources to access funds for their businesses. Similarly, where there a large number of private equity and debt funding options are available, it is challenging to get funding at an early stage with a mere idea.
Therefore, as a much-needed move to address the problem of financing for businesses, the Govt. of India has rolled-out several schemes and initiatives offering business loans to start-ups and MSMEs through authorized channels. Various government start-up loan facilities have been introduced in these recent years for entrepreneurs that have lower eligibility criteria, flexibility in collateral, and lower interest rates which would not be available otherwise. The article presents a thorough description of Mudra Loans for MSMEs and other schemes which could be helpful for an entrepreneur looking for funds to support his business in Srinagar, Jammu and Kashmir-
Popularly known as the “Heaven on Earth,” Jammu and Kashmir are known for their mind-blowing and breathtaking views, snow-covered mountains, exquisite and pertinent monuments, exhilarating wildlife, and local handicrafts. After the Reorganization Act was passed on 31 October 2019, J&K regained its statehood and emerged as a union territory of India. It is located in the northern part of our country, and Jammu and Kashmir share their national boundaries with Ladakh, Himachal Pradesh, and Punjab and its International boundary with Pakistan.
Jammu and Kashmir is a beautiful and picturesque place for tourists from all over the world. Places like Vaishno Devi Temple, Shalimar Gardens, Dal Lake, Amarnath Cave, and many other places are among the major tourist spots. Jammu is known for its temples, whereas Kashmir is known for the lakes, valleys, and gardens. Demographically, there is various language, but the most widely spoken language is Kashmiri. Muslim comprise the majority of the population of Jammu and Kashmir.
The climate in J&K is favorable for agro-based products, horticulture, and floriculture. Horticulture is famous and widely used in rural areas, providing employment to many local inhabitants. This is a crucial and viable step toward fostering the rural economy and enhancing the production of exotic handicraft and handlooms. Jammu and Kashmirare well-known for their small-scale industries such as carpet weaving, silks, shawls, basketry, copper and silverware, pottery, and walnut wood. The Gross State Domestic Product (GSDP) has increased by 8.51% between 2015-16 and 2020-21.
Capital- Srinagar (Summer) and Jammu (Winter)
Top Business Ideas in Jammu and Kashmir
Jammu and Kashmir is a land full of opportunities where one can set up multiple business models. It is stretched from horticulture to the tourism sector and handicrafts. So, one can find numerous business ideas, employing the inhabitants, especially the local women. Given below is the list of ideas by which to start a business: –
Horticulture Business
If you are willing to find a flourishing and thriving business, then horticulture is the best business idea. As per the latest survey report, horticulture is the largest business idea as it constitutes 23% to 25% of the GDP of the Jammu and Kashmir alone. You can create substantial employment opportunities for the young generation through this business. Jammu and Kashmirare rich in mineral soil layers and contain various rivers and water bodies. As a result, Jammu and Kashmir are among the best places for agro-business or farming-related businesses.
You can choose any of the items mentioned below to start your business:
Onion
Vegetable Seeds
Mushroom
Apple
Strawberry
Saffron
Almond
Potato
Handicraft Business
Handicraft is one of the key strengths of Kashmir. In the business of handicrafts, local customization comes in handy. Hence, this state has a huge potential in the field of handicrafts. There are various business products such as carpet weaving, silks, shawls, basketry, etc. Hence, it would be best to have skilled labor and raw materials to start the business. As per the latest records, more than 3.4 lakhs of craftsmen are engaged in this business. So, if you are considering starting your business, a handicraft business is a good choice. As a fact, local handicraft is available in abundance here.
Sericulture Business
From ancient times, Jammu and Kashmir have been well-known for their silk generation as they have various scopes to succeed in the business paradigm. As a fact, Kashmir has the best quality Bivoltine Mulberry silk in India. This silk is famous for its superior quality, soft texture, extended length, and adaptability to all climate changes. The business model possesses a good position in the growth and contribution of the state GDP.
Fishery Business
States like Bihar, Jammu, and Kashmir are also blessed with the water assets stretched around their territory of about 0.4 lacs hectares. This constitutes various high-altitude lakes, rivers, springs, torrential streams, and reservoirs. As we know, stream water is good for fish growth and accumulation, making fisheries an amazing and ideal business model for Kashmir and Bihar.
Poultry Farming Business
Local poultry farming is a thriving and ever-growing business in Jammu and Kashmir. Jammu and Kashmirare well-known for producing the best quality poultry creatures. As a fact, the local people seem fairly interested in consuming more poultry products. You can increase the business reach to various states and cities by expanding the farms and exporting to other states. So, by this method, you can make your lucrative business model within the state.
Startup Ecosystem of Jammu and Kashmir
Scattered pearls cannot make the necklace on their own, so you need to weave them in a common thread that adds elegance, poise, and beauty to the necklace and the pearls. The Jammu and Kashmir state has a similar story. As per the latest changes, the Startup India team thinks the support could be extended to the entrepreneurs. There are over 100 technology-based startups registered with DPIIT and the startup India working across sectors. Various other volunteer organizations, such as Jammu Startup Community and ThinkPods. There is an NIT (National Institute of Technology) that has the required potential to ignite innovation among the bright and young students who study there.
Attempting to accomplish this startup ecosystem task, the government of Jammu and Kashmir government is focusing on various sectors such as food processing, agriculture, renewable energy, and handicrafts by promoting startups in these crucial sectors.
Startup JK is an online platform for all the startup ecosystem stakeholders in J&K, including investors, mentors, accelerators, service providers, and government bodies. This platform provides a medium to connect with other members of the ecosystem and access crucial resources like information about pertinent government schemes, Learning, and Development program, discuss issues, the latest news, and blogs, among others.
I. Pradhan Mantri Mudra Yojana(PMMY Scheme) in Srinagar, Jammu and Kashmir
The Pradhan Mantri Mudra Yojana (PMMY)scheme was initiated in the year 2015. Where MUDRA is the acronym for Micro Units Development and Refinance Agency Ltd (MUDRA), and it is an institution established by the government with the purpose to offer funds for income-generating activities to micro and small enterprises in the non-farming and non-corporate sectors to meet the requirements across various business sectors as well as business/entrepreneur segments.
Mudra operates through refinancing banks, NBFCs, or microfinance institutions (MFI) based on the specific Mudra loan eligibility criteria suited for their requirement, compliance with the terms and conditions, and avail of the financed amount.
The total amount of funds offered to MSMEs through this scheme is up to Rs. 10 Lakh collateral-free loans with a repayment tenure from one year to five years. Any applicant MSME who wishes to seek a loan under this scheme may approach any lending bank or financial institution or under the PSB (59 minutes portal).
What is the eligibility for Mudra Loan Application in Srinagar, Jammu and Kashmir?
It is to be understood that the business entities and enterprises following under this category will be eligible to avail of loans under the MUDRA scheme in Srinagar, Jammu and Kashmir-
i. Every non-corporate & non-farm business organizations;
ii. Businesses primarily engaged in the business of revenue generation through trading, services, and manufacturing activities.
iii. Where the credit requirement of a business is maximum up to ten lakh rupees or lower and
iv. Businesses involved in allied agriculture services since April 1, 2016.
Purposes of Mudra Loans in Srinagar, Jammu and Kashmir–
MUDRA loans in Srinagar, Jammu and Kashmir could be applied and availed by businesses for the following purposes-
- Business Growth & expansion
- Purchase of Business Assets
- Working Capital Needs
- Infrastructure Development
- Technology Upgrade
- Scaling Operations
- Product/Services Expansion
- Business Diversifications.
MUDRA incentives offered through these interventions in Srinagar, Jammu and Kashmir–
PMMY provides loans under three categories – Shishu, Kishor, and Tarun loans depending upon the stage of development of the MSME business. Besides, within these interventions, MUDRA ensures to meet the requirements of different sectors/business activities as well as business/entrepreneur segments as provided below-
| S.No. | Applicable Stage of Development | Eligible Loan Limit |
|
|
Shishu | Up to Rs. 50,000 |
| ii. | Kishor | Above Rs 50,000 – 5 Lakh |
| iii. | Tarun | Above Rs. 5 Lakh –Rs. 10 Lakh |
Benefits of Mudra Loans under PMMY Scheme in Srinagar, Jammu and Kashmir
i. The Mudra loan essentially offers term loans and working capital loans facilities to New and existing MSME units engaged in the business of manufacturing, trading, and service sector activities.
ii. MUDRA loans come with the flexibility of no security or collateral-free loans and could be availed without payment of any processing charges, however, the rate of interest may vary for each type of loan and bank to bank.
iii. The credit facilities extended under the PMMY scheme could be used for various purposes such as term loans, overdraft facilities, or to apply for letters of credit and bank guarantees.
iv. Entrepreneurs/Businessmen from SC/ST backgrounds may avail of special concessions on their interest rates on availing loans under the PMYY facility.
v. Like the flexibility of collateral, there is flexibility in the repayment period which could be anywhere between three to five years.
vi. The process of availing of loans could be easily completed within minutes using the portal through the Mudra cards.
II. Other MSME Loans in Srinagar, Jammu and Kashmir Include-
i. Credit Guarantee Fund Scheme in Srinagar, Jammu and Kashmir
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is the online scheme established by the Ministry of Micro, Small & Medium Enterprises (MSME), Government of India, with the primary objective to ensure the availability of credit facilities to MSMEs and entrepreneurs to set-up their MSME business unit, without any hassles of arranging collateral or third-party guarantee while seeking loans from banks or financial institutions. It seeks to reassure the lender to offer loan facilities on the viability of the business of the MSME unit and in the event of failure on the part of the borrower MSME to discharge its liabilities to the lender, the CGTMSE would make good the loss so incurred by the lender up to 50-85% percent of the credit facility.
The CGTMSE introduced the scheme with a “hybrid security” model that allows guarantee cover to the lender for the portion of credit facility not covered by collateral security.
Additionally, the scheme ensures that the lender availing guarantee facility should endeavor to provide composite credit facility to the borrowers to enable them to seek and obtain term loan and working capital facilities from a single agency respectively.
Eligibility Criteria for Credit Guarantee Fund Scheme in Srinagar, Jammu and Kashmir–
The scheme applies to all new and existing MSMEs involved in manufacturing or service activities, except that engaged in-
- Educational Institutions,
- Agriculture,
- Self-Help Groups (SHGs) And,
- Training Institutions, etc.
Fiscal incentives under the scheme in Srinagar, Jammu and Kashmir–
The CGTMSE scheme for entrepreneurs comes with a whole lot of benefits as mentioned below-
i. Availability of credit facilities with term loans and/or working capital loan facility up to INR 200 Lakh per
ii. Guarantee Cover facility through CGSTMSE to lending institutions as provided below-
- Typically the guarantee cover provided is up to 75% of the credit facility up to Rs. 150 Lakhs.
- For Micro Units, the guarantee cover will be available up to 85% of the credit facility for loans up to a total amount of Rs.5 Lakh.
- For MSMEs owned/operated by women and all loans to NER including Sikkim, up to 80% of the credit facility shall be available.
- For MSMEs in Retail trade, the guarantee cover applicable will be 50% of the amount in default subject to a maximum of Rs. 50 Lakh.
The credit guarantee will begin from the date of payment of the guarantee fee and will run throughout the agreed tenure of the credit facility in case of term loans/composite loans for five years where only working capital facilities have been availed by MSME or for such longer period as specified by the CGTMSE.
ii. MSME Business Loans in 59 Minutes in Credit Guarantee Fund Scheme in Srinagar, Jammu and Kashmir
The MSME Business Loans for Start-ups in 59 Minutes was launched in September 2018 and is administered by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) of India. Such a scheme supports MSMEs by not only helping them to raise funds for their business requirements but also simplifying the decision-making process for credit managers.
The scheme aims at the automation of several processes related to loan appraisal in a manner to fasten and ease the process of obtaining an eligibility letter & in-principle approval within 59 minutes from the bank of choice of the borrower MSMEs.
Eligibility Criteria for MSME Business Loans in 59 Minutes in Credit Guarantee Fund Scheme in Srinagar, Jammu and Kashmir–
i. Any applicant who wishes to avail of the MSME Business Loans in 59 Minutes should meet the following eligibility criteria in Srinagar, Jammu and Kashmir-
- The applicant should be a running micro, small or medium business entity as per the definition prescribed under the MSMED Act, 2006.
- The business should be registered under GST and should be GST compliant.
- The applicant must submit cash flow statements to the lender for verification purposes.
ii. Further, the loan eligibility for each applicant business shall be determined based on factors such as-
- Periodical Income/ Revenue of the business;
- Capacity of repayment
- Existing credit facilities availed by the business
- Any other factors as set by the lender (if applicable).
Fiscal Incentives under the scheme in Srinagar, Jammu and Kashmir–
The MSME Business Loans for Start-ups in 59 Minutes scheme offers contactless business loans to start-ups for value between Rs.1 Lakh up to Rs 1 Cr with an interest rate up to 8% onwards.
iii. The 4E End to End Energy Efficiency Scheme in Srinagar, Jammu and Kashmir–
The 4E (End to End Energy Efficiency) Scheme was launched in September 2016 under the administration of the Small Industries Development Bank of India (SIDBI). This MSME scheme has been introduced jointly by the India SME Technology Services Ltd (ISTSL) in association with World Bank with the primary objective to implement energy efficiency measures across Indian industries on an end-to-end basis and support start-ups &MSMEs for financing purchases of second-hand machinery/equipment.
The business loans for start-ups under this scheme shall be provided to fund costs related to –
- Capital expenditures, including those required to purchase machinery, installation costs, civil works, etc.
- Any other similar expenditures are required to be fulfilled provided these are not more than 50% of total capital expenditure.
Eligibility Criteria for 4E End to End Energy Efficiency Scheme in Srinagar, Jammu and Kashmir–
- MSME start-ups engaged in either manufacturing or services sector have been in existence for at least three years and have earned cash profits in the last two years.
- Such MSME unit should have undertaken a process of a detailed energy audit (DEA) under a technical agency/consultant which is a Bureau of Energy Efficiency (BEE)-certified energy auditor.
- The detailed project report (DPR) prepared by the Bureau of Energy Efficiency (BEE)-a certified energy auditor should be scrutinized by the Energy Efficiency Cell (EEC), SIDBI.
- Such MSME units should not have availed of a performance-linked grant under the World Bank-Global Environment Facility (WB-GEF) Project previously for the proposed energy efficiency (EE) Project and should have complied with the Environment and Social Management Framework
Fiscal incentives under the scheme in Srinagar, Jammu and Kashmir–
- Under the 4E Scheme, the MSME unit shall only be required to pay Rs.30, 000 as the remaining fee to be paid by SIDBI to the energy auditor.
- The eligible MSME start-up will be eligible to seek loans up to 90% of the project cost with a minimum loan value of Rs. 10 Lakh which could go up to Rs. 150 Lakh under this scheme. The eligible loan amount shall not exceed Rs. one-fifth of the total turnover of the applicant unit.
- The repayment period along with the initial moratorium period which could be a maximum of up to six months should not be more than 36 months (3years) for loans up to Rs. 100 Lakh and 60 (5 years) months for loans above Rs. 100 Lakh.
iv. Credit Linked Capital Subsidy Funds Scheme in Srinagar, Jammu and Kashmir
The Credit Linked Capital Subsidy Scheme (CLCSS) was launched on 1st October 2000 with the primary objective to boost the competitiveness through technological up-gradation of MSMEs under the administration of the Development Commissioner appointed by the Ministry of MSMEs. These business loans are offered to enable technological upgradations to MSMEs through upfront capital subsidies to small-scale industrial units comprising khadi, village, and coir industrial units on the institutional credit facilities availed by them for modernization of their production equipment and techniques.
Eligibility Criteria Credit Linked Capital Subsidy Funds Scheme in Srinagar, Jammu and Kashmir–
- All Existing small-scale industries (SSI)registered with the State Directorate of Industries have advanced their existing equipment with state-of-the-art technology either with or without expansion.
- New small-scale units registered with the State Directorate of Industries tend to use the appropriate and proven technologies duly approved by the Governing and Technology Approval Board (GTAB)/Technical Subcommittee (TSC).
Fiscal incentives under the scheme in Srinagar, Jammu and Kashmir–
The ceiling on business loans for MSME start-ups under this scheme could go up to Rs. one crore with a subsidy rate of 15%.
v. SIDBI Make in India Soft Loan Funds Scheme in Srinagar, Jammu and Kashmir
The SIDBI Make in India Soft Loan Fund for MSMEs or SMILE scheme was launched in August 2015 under the direction of the Small Industries Development Bank of India (SIDBI) with the basic intent to offer soft loans to MSMEs which are in nature quasi-equity and term loans on comparatively soft terms to MSMEs to meet the required debt-equity ratio in the establishment of newer MSMEs to enable their development and growth.
Eligibility Criteria Stand-up India Scheme in Srinagar, Jammu and Kashmir–
All new MSME enterprises functioning in the manufacturing as well as the services sector shall be eligible to apply for this scheme in Srinagar, Jammu and Kashmir.
All existing enterprises seeking either expansion, modernization, technology upgrades, or other projects to meet the growing needs of their businesses would be eligible to avail of this scheme in Srinagar, Jammu and Kashmir.
Fiscal incentives under the scheme in Srinagar, Jammu and Kashmir–
- For applicants belonging to the general category, the loan amount could be 10% of the project cost, subject to an upper limit of Rs. 20 Lakhs.
- For MSME enterprises promoted by Scheduled Caste (SC) /Scheduled Tribe (ST) / Persons with Disabilities (PwD), and women the loan amount could be15% of the cost of the project subject to an upper limit of Rs. 30 Lakh
- However, the persons belonging to these categories must hold a controlling stake in the business which must be either 51% or higher.
On the expiry of a term of three years from the date of the first disbursement of the outstanding soft loan along with any outstanding dues, the amount shall be converted into a secured term loan and the entire loan shall carry an applicable rate of interest as per internal rating of the borrower MSME. The repayment period shall be generally up to a maximum period of seven years including a moratorium period of one-and-a-half years in case of term loans and up to two years in case of soft loans.
vi. Stand-up India Scheme in Srinagar, Jammu and Kashmir
The Stand–up India scheme was launched in April 2016 under the control & guidance of the Small Industries Development Bank of India (SIDBI). The basic objective of the Stand-up India scheme is to promote the spirit of entrepreneurship among women and people from SC/ST backgrounds.
The business loans so offered are like composite loans (includes both term loans and working capital). The scheme proposes to offer assistance in setting up a new business enterprise in either manufacturing, trading, or services sector by the eligible applicants to encourage participation in the business industry.
Apart from the primary security, loans may be either secured through either collateral or under the guarantee cover provided under the Credit Guarantee Fund Scheme for Stand-Up India Loans (CGFSIL) as per the decision of the lender bank/financial institution.
Eligibility Criteria for Stand-up India Scheme in Srinagar, Jammu and Kashmir–
- Applicants belonging to SC/ST and/or woman entrepreneurs above the age of 18 years.
- Loans under the scheme shall only be approved for the greenfield project, which indicates the first-time business venture of the beneficiary in either manufacturing or services, or the trading sector.
- In the case of non-individual enterprises, at least 51% of the controlling stake must be held by either any person from SC/ST background and/or by any Women Entrepreneur.
- Borrower should not have committed any default in the repayment of any payments to any bank/financial institution.
Fiscal Initiatives under the scheme in Srinagar, Jammu and Kashmir–
- Composite loan up to the 75% costs of the projects including the term loan as well as the working capital.
- The condition related to the loan to cover upto75% of the project cost shall not apply if the borrower’s contribution including convergence support from any other schemes is above 25% of the costs of the project.
- The repayment period of loans shall be a maximum of up to seven years with a maximum moratorium period of 18 months.
Therefore, in recent years the Government of India has realized the importance of strengthening MSMEs in India to promote growth & development of the economy and resolve the problem of unemployment in the nation. Meanwhile, it is generally at the initial stages of a business, when they tend to struggle to raise finances or arrange funds to expand or grow their business, all the above-mentioned schemes help small business owners to meet their capital needs and operating costs through financing schemes.
It is also noteworthy to mention the fact that since the launch of the Start-up India Scheme in 2016 and the setting of a Funds of Funds corpus of Rs.10 thousand crores, more than fifty government schemes have been launched to support early-stage start-ups. These business loan schemes are a handful of the numerous initiatives taken by the Indian government to enhance the ease of doing business in the country. In the year 2018 itself, India ranked 77thon the World Bank matrix in ease of doing business policies.
All these efforts made by the Government of India and the related government agencies have made the process of applying, getting in-principle approval, and transfer of funds has been made even simpler, faster, and more efficient. It is tirelessly working towards the promotion of MSME businesses by encouraging entrepreneurship and opening up international start-up corridors between India and the world on a macro –level as well as offering the necessary assistance to start-ups and MSMEs on a micro-level which will ultimately make India a leader in the business industry and entrepreneurship for the world to look up to it.
