Undeniably, the MSME sector is under critical conditions due to COVID-19 outbreak! The policymakers in India are swiftly formulating policies that can protect the MSME sector from its adverse effects.

It is absolutely significant for the government to support the MSME sector with utmost dedication and commitment during this period of crisis. And, that’s the major reason they are coming up with several policies and schemes to mitigate the risks and losses.

When talking about the Indian economy, the MSME sector plays a major yet vital role in it. Therefore, it becomes immensely crucial to provide urgent finance stimulus to MSME sector business owners along with a safety net.

Now, let’s just have a look at what schemes and policies are formulated by the government till now to protect the MSME sector or MSME companies in India.

  • Reserve Bank of India (RBI) has passed on a list of COVID-19 operations and business continuity measures to all the payment banks, commercial banks and nonbank financial companies.
  • All financial institutions are instructed to list down the impact of coronavirus on balance sheets, liquidity, asset quality and so forth in tandem with the contingency measure to minimize the risks and losses to the MSME companies in India.
  • RBI recently announced a moratorium on term loans, which made it easier for the loan payers to defer their interest payments. Not to mention it, working capital financing has also been eased by RBI for MSME sector.
  • Public sector banks have also announced emergency credit lines for up to 200 crores to the MSME companies. The Small Industries Development Bank India (SIDBI) has announced a working capital of up to 1 crore to MSMEs at 5% interest rate along with the benefit of minimum paperwork, no collateral and loan will be provided within 48 hours.


Therefore, MSMEs who are directly involved in manufacturing or service delivery and are struggling hard to fight against the coronavirus impact on their business is eligible for it. Moreover, the government has also provided some measures for the GST payments, which can be delayed up to June, 2020 and without any interest or late fee charges!

Now, what becomes essential for the government is to frame MSME policies with multiple scenarios that should clearly include how to do the business operations during the emergency or crisis-like situations. Throughout the world, there are several policy frameworks are being formed by the governments of different states to deal with the economic crunch.

Let’s dive-in to understand different policy frameworks that can be proposed for different MSME sectors to cover it holistically. Have a look!

  1. Undertake Measures for Easy access to Loans/Credits

MSME sector is already declining at a continuous pace due to the coronavirus pandemic. And, ultimately, it becomes quite understood that there is a lot of burden on them, specifically talking about financial burden. Unpaid salaries, Unpaid EMIs, loss-making balance sheets and what not, it only impacts the economy.

Hence, banks come into action to provide easy access to loans and credits to the MSME companies. Lending money to the MSMEs is equally a core business activity for the banks itself. Just like SIDBI has come up with their SAFE PLUS scheme, which offers the working capital of up to 1 crore to deal with the financial crisis.

  1. Undertake Measures to Minimize the Impact on Labour/Workers

MSME sector is majorly dependent upon the workers or labour workforce because they are employed in units and factories. Labour workforce works upon the daily wage system usually and due to the spread of COVID-19, labour workforce has been impacted severely!

In some foreign countries, temporary wage subsidy scheme is formulated for the workers for at least three months so that they don’t suffer. Now, talking about India, there is no such subsidy package or wage support announced by the government yet to deal with this crisis. Even for the employees, there is no wage or incentive package until announced by the government of India. However, the government has directed the commercials to pay the employees salaries on time without any deductions.

During such a challenging time, it is completely important to frame policies for the labour workforce and employees. Whether they are working on wages or salaries, there should be a strict policy framework proposed for it by the government to at least ensure that the families don’t suffer from the financial crisis.

  1. Undertake Measures for Business Owners/ Self-Employed

If there is a policy framework for employees and labour workforce, then there should be a policy for the business owners or those who are self-employed. It is essential for them too to navigate their business or MSME units, isn’t it?

The government can provide some sort of compensation in several ways and forms. What all measures this policy framework will include for the business owners? Well, first of all, it is imperative to understand that the situation of COVID-19 spread around the world is quite critical. Secondly, this will include cash flow forecasts i.e. how the business will operate if compensation is provided to them for a fixed period of time. From small shopkeepers to those who offer services, all these will be covered into this policy framework.

New Zealand and Germany, these both the countries provided direct subsidies to the one-businesses and also, to those who run micro-units.

  1. Undertake Measures to Defer Utility and security payments

In a situation when there is a complete lockdown in the country, all types of bills, be it commercial, water or electricity bills, all can be thoroughly assessed! Isn’t it necessary for the governments to take some serious steps to offer some free units or maybe partially pay the utility bills to avoid any further financial crisis? Obviously, paying rents, utility bills and other important taxes is must for the MSMEs. Then, why not such frameworks can be proposed for such challenging situations where MSMEs can either pay partially or some deferment is offered to them up to a certain period?

In many foreign countries, such policies have been introduced for small businesses. Now, when it about India, the government has presently proposed a policy where employees will get the provident fund contribution, especially for the businesses having less than 100 workers and 90% of workers are earning less than 15,000 bucks per month. To retain the employees, 24% of wages will be credited to the provident fund accounts of the workers for the next three months.

However, there is one thing still not clear that which MSMEs will benefit from such a proposed policy framework.



Besides undertaking such measures mentioned above, it is equally critical for the businesses to create plans well in advance. Social distancing and quarantine measures are still into action by the government to prevent coronavirus cases in India. Slowly and gradually, business operations will restart in tandem with the precautionary measures.

Of course, the situations with COVID-19 is unpredictable. Nevertheless, the situation has to be dealt with utmost commitment and dedication whether it is a small scale or large-scale business. All have to come together to fight in this situation of ultimate crisis. And, now you must be aware how India is protecting MSME sector through different policy frameworks and schemes to maintain the cash flow.


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