Streamlining MSME Support: NITI Aayog’s Push for Scheme Convergence

Context: The NITI Aayog has released a roadmap to converge MSME-related schemes across the Centre and States with the objective of reducing duplication, improving outreach, and strengthening the delivery of credit, innovation, skills, marketing, and infrastructure support. The initiative responds to long-standing concerns that fragmented scheme architecture weakens the effectiveness of public spending for India’s vast MSME sector.

Convergence Framework Proposed by NITI Aayog

1. Information Convergence

• Integration of government-generated MSME data across Centre and States.
• Enables better targeting, governance, monitoring, and outcome tracking.
• Reduces data silos and beneficiary duplication.

2. Process Convergence

• Alignment of scheme design and implementation across ministries.
• Merging of overlapping components and harmonisation of guidelines.
• Simplifies compliance and reduces administrative redundancies.

Why Scheme Convergence Is Necessary

• Scheme Fragmentation: The Ministry of MSME alone runs 18 schemes across credit, skill, marketing, innovation, and infrastructure, while similar schemes exist in other ministries, leading to overlaps.
• Low Awareness Reach: Multiple schemes with different entry points reduce discoverability, leaving many eligible MSMEs unsupported.
• High Compliance Load: Separate documentation, verification, and reporting requirements increase transaction costs for small firms.
• Weak Monitoring: Absence of shared beneficiary databases results in fragmented oversight, leakages, and mis-targeting.

Key Recommendations by NITI Aayog

1. Centralised MSME Digital Portal

• Unified Window: An AI-enabled portal integrating all MSME schemes.
• Smart Support: AI chatbots, dashboards, and mobile access for real-time guidance and tracking.

2. Cluster Scheme Integration

• SFURTI–MSE-CDP Merger: Combines traditional industry regeneration with cluster development for scale efficiency.
• Traditional Industries Sub-Window: Dedicated support with earmarked funding.

3. Skill Programme Rationalisation

• Three-Tier Model:
  1. Entrepreneurship & business skills
  2. MSME technical skills
  3. Rural and women artisan training
• Removes overlap while preserving targeted inclusion.

4. Marketing Assistance Rationalisation

• Domestic Wing: Exhibitions and structured market linkage platforms.
• Global Wing: Curated international buyer linkages to promote exports.

5. Innovation Scheme Integration

• ASPIRE Integration: Subsumed under MSME Innovative as a special agro-rural category.
• Budget Ring-Fencing: Existing ASPIRE funds protected; future innovation budgets earmarked.

Safeguards Built into the Framework

• Targeted Schemes Protected: National SC/ST Hub and MSME promotion in the North Eastern Region remain intact.
• Flagship Schemes Standalone: PMEGP and PM Vishwakarma retained independently due to scale and strategic importance.

Why It Matters: MSMEs in the Indian Economy

• ~30% of Gross Value Added (GVA).
• ~45.7% of India’s exports (FY 2023–24).
• Employment to 11 crore+ people, the largest non-farm job creator.
• ~6.3 crore MSMEs, forming the backbone of decentralised production.