MSMEs have been instrumental in powering India’s growth story. During the pandemic, MSMEs stepped up their efforts and supplied shortfalls in essential goods and services like masks and medicines. The Prime Minister of India recently remarked “For us, MSME means- Maximum Support to Micro, Small and Medium Enterprises”. In this context, Compliance Calendar aims to highlight the top schemes for MSME entrepreneurs through a series of short articles. In this article, we discuss the ASPIRE scheme - its features and advantages, while also casting light on how entrepreneurs and venture capitalist funds in agriculture and rural India benefit from it.
» Maximum employment comes from MSMEs - MSMEs are an intermediary stage between an early startup and a large business, thus offering the best of both worlds. Specifically in the Indian context, MSMEs have been providing the maximum self-employment and non-agricultural employment opportunities.
» Role in regional development - MSMEs have been playing a major role in balancing regional development by setting up small-scale, cottage industry level units in far-flung areas.
» Economic growth and MSMEs - MSMEs, in the financial year 2022-23, contributed over 24% of service GDP of India. It is also noteworthy that roughly half (45%) of our exports are MSME-led, making them the backbone of India’s upward economic trajectory.
The ASPIRE scheme in India is a government initiative aimed at promoting entrepreneurship and enhancing the competitiveness of Micro, Small, and Medium Enterprises (MSMEs) in the country. ASPIRE stands for "A Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship."
Powering innovation in rural India
The ASPIRE scheme aims to promote innovation in rural industries, facilitate entrepreneurship among rural youth, and create employment opportunities in rural areas.
Operational period and Financial Assistance: Under the ASPIRE scheme, financial assistance is provided to MSMEs for setting up business incubators, technology incubators, and entrepreneurship development centres in rural areas. The scheme is operational from financial years 2021-22 to the years 2025-26, with an overall corpus of INR196 crores.
According to the International Finance Corporation and the Economic Survey (2017), about 78% of finance used by MSMEs is met by informal sources and self-finance. To enable access to credit by funding venture capitalists, ASPIRE aims to improve financing in MSMEs.
» The Small Industries Development Bank of India, with a corpus of 310 crores aims to contribute to Venture Capital Funds for investing in early stage MSMEs in the Agri-rural sectors.
» This fund can be utilized by startups in the agro-rural segments aiming to:
- Improve manufacturing
- Supply chain improvements
- Technology Adoption
- Diversification
- Market penetration
Essential condition - A venture capitalist must invest at least twice the amount received under the ASPIRE Fund in startups, early stage MSMEs.
The scheme also supports skill development training programs, awareness campaigns, and capacity building initiatives for rural entrepreneurs.
- Creating a network of skill development for rural entrepreneurs
- Facilitating formal, scalable micro-enterprise creation
- Providing support services like financial, legal, product designing, accreditation, compliances and trademarks
- Providing industrial training
- Assisting in developing product prototypes
- Any agency of the government
- Training centres under Ministries or departments
- Industry Associations
- Academic institutions
- Not for profit private institutions
» For Livelihood Business Incubators by private applicants, a one time grant of 75% of cost of plant and machinery (excluding land) or INR 75 lacs, whichever is lower shall be given
» A one-time grant of INR 100 lacs is given for day to day operations like hiring team, designing programs, regulatory and support services, procuring raw materials etc.
The ASPIRE scheme is implemented through the Ministry of Micro, Small and Medium Enterprises (MSMEs) and is funded by the Government of India. The financial assistance provided under the scheme is in the form of grants-in-aid, which do not require repayment.
These are national or state level agencies with experience of over five years in the rural industry. They would assist applicants and Livelihood Business Incubators in their day to day operations. A private mentoring institution needs to be registered on the NGO Darpan Portal before applying for the grant.
The scheme targets specific sectors such as agro-based industries, rural artisans, traditional crafts, khadi and village industries, and food processing units.
Agencies interested in availing financial assistance for MSMEs under the ASPIRE scheme need to apply through the designated online ASPIRE portal, as per the guidelines issued by the Ministry of MSMEs. The application process typically involves submitting a detailed project proposal along with relevant documents, necessary registrations and filing routine utilisation certificates and Monthly Progress Reports.
The ASPIRE scheme is a significant initiative by the Indian government to create a conducive environment for rural entrepreneurs to thrive and contribute to the overall economic growth of the country. Compliance Calendar caters to a host of regulatory and compliance needs of MSMEs. By connecting with our MSME experts, you can get the best advice on benefits of several government schemes such as ASPIRE, and let our experts take care of all your compliance needs.