Encouraging Micro-Entrepreneurship : Daily News Analysis

Date : 16/11/2023

Relevance: GS Paper 3- Economy- MSMEs

Keywords: Micro-entrepreneurship, MSMEs, Self reliance, Startup


  • Promoting micro-entrepreneurship in rural India can address many of its pressing challenges. It can provide employment opportunities for the rural youth, boost household incomes, and reduce the migration of people from rural to urban areas.
  • With a population of around 1.5 billion, India has historically relied heavily on agriculture, but this overdependence has led to issues like shrinking cultivable land, smaller landholdings, and limited use of technology.
  • Policymakers have recognized that to enhance rural per capita income, younger generations need to explore alternative livelihoods due to these long-standing challenges.

Benefits of Encouraging Micro-Entrepreneurship in Rural India

  • Solving Rural Problems: Promoting micro-entrepreneurship can address various challenges in rural India, including unemployment, increased household income, and reduced rural-to-urban migration.
  • Indirect Agricultural Benefits: Micro-entrepreneurship indirectly benefits the agricultural sector by attracting more investments and encouraging the use of technology in farming practices
  • Economic Growth: Micro-businesses offer flexibility, have low barriers to entry, and create jobs, contributing to local economic growth and innovation.
  • Innovation: Small firms frequently introduce new products and ideas to the market, fostering innovation within their specialized markets.
  • Local Economic Growth: Micro-enterprises help the community by supporting local vendors and employing citizens, leading to increased tax revenue and neighborhood improvements.
  • Self-Reliance: Micro-business owners have more control over their financial destinies, promoting independence and empowerment.
  • Diverse Offerings: Micro-firms often provide specialized goods or services that may not be offered by larger companies, diversifying the market.
  • Economic Resilience: Smaller companies can adjust quickly and contribute to economic stability during downturns in larger industries.
  • Startup Ecosystem: India's thriving startup environment, with numerous initiatives and government support, contributes to entrepreneurial success, including tax incentives, skill development programs, and financial support.

Micro-entrepreneurship has its challenges, such as financial uncertainty and resource limitations, but it can be a rewarding career path for those with an entrepreneurial spirit and determination.

Major Schemes for Promoting micro-entrepreneurship

ASPIRE (A Scheme for the Promotion of Innovation, Rural Industries, and Entrepreneurship):

  • Establishes technology and incubation centres across India to promote innovation in the agri-business sector.
  • Provides financial support for building livelihood and technology business incubators.
  • Aims to boost economic growth at the district level, particularly in rural areas.

Pradhan Mantri Mudra Yojana:

  • Supported by Micro Units Development and Refinance Agency Ltd. (MUDRA) to expand the micro-enterprise market.
  • Offers refinancing assistance for loans up to Rs. 10 lakhs, categorized as Tarun, Kishore, and Shishu, based on business stages and loan requirements.
  • Loans do not require collateral security and cater to various job and income-producing activities.

Support for International Patent Protection in Electronics and Information Technology (SIP-EIT):

  • Aids Indian micro, small, and medium-sized businesses (MSMEs) and start-ups in filing foreign patent applications.
  • Promotes innovation, brand recognition, and global intellectual property protection.
  • Provides financial assistance for the electronics, communication, and technology sectors.

Multiplier Grants Scheme (MGS):

  • Encourages companies to collaborate with governmental and academic R&D groups to develop products and packages.
  • Closes the gap between proof-of-concept and global product commercialization.
  • The Government matches industry investment for R&D projects up to Rs. 2 crore per project, with a maximum of Rs. 4 crore for a group of industries.

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE):

  • Strengthens the loan delivery system and facilitates credit flow to start-ups, small businesses, and micro-firms.
  • Offers loans at discounted rates without requiring collateral for manufacturing and service-based businesses.
  • Provides fund- and non-fund-based credit facilities up to Rs. 200 lakh per eligible borrower.

Single Point Registration Scheme (SPRS):

  • Managed by the National Small Industries Corporation (NSIC) to support MSEs.
  • Enables MSEs to participate in government acquisitions without an Earnest Money Deposit (EMD).
  • Ensures a minimum of 25% of annual purchases by central ministries, departments, and public sector undertakings from MSEs.

Extra Mural Research or Core Research Grant (CRG):

  • Supports academic institutions, research labs, and R&D organizations in conducting research in various science and engineering areas.
  • Promotes competitive, individual-centric funding for researchers.

High Risk and High Reward Research:

  • Encourages innovative concepts and initiatives in science and technology.
  • Focuses on bold and daring suggestions with the potential for significant scientific and technological impact.
  • Funding covers consumables, unforeseen expenses, equipment, and travel, with flexible budgets.

Design Clinic Scheme:

  • Promotes a design-centric approach for MSMEs and start-ups.
  • Supports continual training and skill development to encourage innovative product designs.
  • Offers financial support for attending design seminars and learning about the latest design practices.

Zero Defect Zero Effect (ZED) Scheme:

  • Encourages manufacturers to produce high-quality, defect-free, and reliable products.
  • Provides resources, technology, and financial assistance for quality improvement.
  • Offers a comprehensive certification and evaluation process to enhance product quality and reliability.


Through numerous government schemes and initiatives, including Start-up India, the Indian government actively promotes and encourages start-ups and business owners. The primary objective of these programs is to cultivate a robust ecosystem that fosters innovation and entrepreneurship in India. This, in turn, leads to the creation of a substantial number of job opportunities and contributes to the sustainable economic growth of the nation. In alignment with this, the Indian government introduced the Aatmanirbhar Bharat mission and the 'Make in India' program, aiming to position India as a global hub for manufacturing and design exports. By complementing these endeavors with the promotion of micro-entrepreneurship, the government has effectively expedited this transformative process.

Probable Questions for UPSC mains Exam-

  1. Question 1: How can micro-entrepreneurship in rural India address challenges such as providing employment opportunities for the rural youth, boost household incomes, and reduce the migration of people from rural to urban areas ? (10 Marks, 150 Words)
  2. Question 2: Discuss the Major Schemes for Promoting micro-entrepreneurship in rural India and what are the challenges that persist with these schemes ? (15 Marks, 250 Words)

Source- The Hindu