MSME Innovative Scheme

The MSME Innovative Scheme is a comprehensive initiative by the Ministry of MSME, Government of India, designed to foster innovation, design excellence, and intellectual property protection in the MSME sector. It merges three key schemes-Incubation, Design, and Intellectual Property Rights (IPR)-into a single framework that supports MSMEs from idea generation to market commercialization.

This scheme addresses major challenges faced by MSMEs such as limited access to finance, technology, skilled manpower, and intellectual property protection. By providing financial grants, expert mentoring, and infrastructure support, it helps MSMEs create high-value products and scale up their businesses. The scheme operates through collaborations with premier institutions like IISc, IITs, and NITs, ensuring quality guidance and technical support.

The MSME Innovative Scheme empowers MSMEs to compete globally by promoting innovation culture, embedding design thinking, and safeguarding intellectual property assets. It thus plays a vital role in enhancing MSME competitiveness, driving economic growth, and generating employment.

The MSME Innovative Scheme focuses on the following core objectives to boost MSME growth:

• Promotion of Innovation: Encourage MSMEs to develop new products, processes, and technologies through comprehensive support from ideation to commercialization.
• Support Market-Ready Solutions: Provide infrastructure, funding, and expert guidance to help MSMEs build competitive products that meet quality and market demands.
• Foster Creativity and Collaboration: Promote partnerships among industry, academia, research institutions, and government to encourage creative problem-solving and knowledge sharing.
• Bridge Industry-Academia Gap: Facilitate connections between industrial experts, designers, and innovators to support product development and scaling.
• Promote Affordable and Sustainable Innovation: Encourage MSMEs to create cost-effective, sustainable solutions benefiting consumers while maintaining commercial viability.
• Strengthen Intellectual Property Culture: Support MSMEs in protecting their inventions, designs, and trademarks to enhance market positioning and attract investments.

The scheme consists of three main components, each designed to address critical aspects of MSME innovation:

Incubation Component

• Purpose: The incubation component nurtures MSME ideas from proof-of-concept to commercialization. It offers financial aid and infrastructure support via registered Host Institutes (HIs) functioning as Business Incubators.
• Host Institutes (HIs): These include technical colleges, universities, R&D centers, NGOs, MSME Development Institutes, and government organizations registered on the MSME Innovative Scheme portal. HIs provide mentoring, technical advice, and business development support to incubatees.
• Idea Approval Process:

1. HI-Level Screening: Internal expert committees shortlist innovative ideas.
2. Project Management Unit (PMU): Reviews applications for eligibility.
3. Domain Expert Selection Committees (DESC): Evaluate ideas in agriculture, healthcare, energy, services, and other sectors.
4. Project Monitoring and Advisory Committee (PMAC): Grants final approval and sanctions financial assistance.

• Financial Assistance: Selected projects receive up to ₹15 lakh, disbursed in two installments:

1. 70% after approval and agreement signing.
2. 30% after at least 60% fund utilization and physical verification.

• Cost Breakdown: It depends on

1. Technology expenses
2. Mentoring and handholding
3. Travel and administration
4. Students receive funding without co-contribution, MSMEs contribute 15% of project costs. Budget flexibility of 25% is allowed across heads.

• Capital Support for Host Institutes: HIs with two or more approved projects may get up to ₹1 crore to procure plant, machinery, software, and R&D facilities (excluding land and human resources).
• Role of Implementing Agencies(IAs): MSME-DIs and Technology Centres verify registrations, monitor fund use, prevent misuse, and submit progress reports.
• Governance: PMAC oversees the scheme, fund misuse leads to penalties, recovery, and exclusion from benefits.

Design Component

• Purpose: This component integrates design thinking into MSME product development to improve product competitiveness and market appeal.
• Design Projects: MSMEs receive expert industrial design support for new product creation and improvement of existing products. This enhances functionality, aesthetics, and consumer acceptance.
• Design Awareness Programs: Workshops, seminars, and talks raise awareness about the importance of design-led innovation.
• Eligibility:

1. MSMEs must be registered under Udyam or UAM.
2. Preferably profitable in recent years (criteria can be relaxed).
3. Designers must be qualified professionals.
4. Implementing Agencies verify applications.

• Financial Assistance:

1. Micro enterprises get a 75% government grant.
2. Small and medium enterprises get a 60% grant.
3. Maximum grant limit is ₹40 lakh.
4. Funds are released in three stages: 40% on strategy approval, 30% on detailed design, 30% on prototype and final report.

• Student Design Projects: Students in AICTE/UGC institutions can receive up to ₹2.5 lakh, with 75% grant and 25% contribution from students/institutions.
• Assessment Criteria:

1. Integration with business processes.
2. Potential for intellectual property creation.
3. Competitiveness and commercialization.
4. Cost efficiency, quality, innovation, and export impact.
5. Profitability benefits for MSMEs.

• Implementation: IISc, IITs, and NITs act as Implementing Agencies, managing evaluations, fund disbursement, and monitoring. IAs receive 15% of the government grant as fees. Future phases include establishing MoMSME Chairs and Centres of Excellence.

Intellectual Property Rights (IPR) Component

• Purpose: The IPR component promotes IP awareness, protection, and commercialization among MSMEs to strengthen their competitive edge.
• Intellectual Property Facilitation Centres (IPFCs): IPFCs provide MSMEs with assistance in IP filing, patentability studies, advisory services, and commercialization support.
• Eligibility for IPFCs: IPFCs include MSME-DIs, Technology Centres, government bodies, industry associations, research institutes, or NGOs with at least two years of experience and clear financials.
• Role of IPFCs: The role of IPFCs is:

1. Provide free professional IP services to MSMEs.
2. Assist with patent, trademark, copyright, design, and GI registrations.
3. Conduct technology gap analyses.
4. Facilitate IP commercialization.
5. Submit monthly progress reports.
6. Maintain governance via Steering Committees.

• Financial Assistance: IPFCs can receive up to ₹1 crore, disbursed based on milestones. Initial installment is up to 40% with further payments tied to performance. Funds must be used within three years.
• Reimbursement for MSMEs: Registered MSMEs and eligible individuals can claim reimbursement for IP registration expenses as follows:

1. Rs. 5 lakh for foreign patents
2. Rs. 1 lakh for domestic patents
3. Rs. 2 lakh for GI registrations
4. Rs. 15,000 for design registrations
5. Rs. 10,000 for trademark registrations

Reimbursement covers professional fees, legal charges, and official fees but excludes renewals or corrections.

Key Participants Driving the Success of the MSME Innovative Scheme

• Ministry of MSME: The Ministry of MSME provides guidelines and frameworks to support the scheme’s implementation. It monitors progress through the Project Management Unit (PMU) and coordinates with various ministries, departments, and states for approvals. The Ministry promotes the scheme widely through media and offers incentives to encourage MSMEs to participate.
• MSME-Development Institutes (MSME-DIs): MSME-DIs help spread awareness of the MSME Innovative Scheme at the local level. They assist in enrolling MSMEs and support capacity building. MSME-DIs receive budgetary support but are not eligible for direct grants.
• Implementing Agencies (IAs): Implementing Agencies like IISc, IITs, NITs, Host Institutes, and IP Facilitation Centres guide MSMEs in adopting scheme guidelines. They assess on-ground progress and provide mentoring to help MSMEs become Innovative Champions.
• Micro, Small & Medium Enterprises (MSMEs): MSMEs participate in awareness programs and show dedication to improving their processes to qualify as MSME Innovative Champions.
• Other Ministries & Departments: These bodies explore benefits and incentives for MSMEs recognized as Innovative Champions and may extend preferential support to promote them.

The MSME Innovative Scheme includes several common components that support all sub-schemes:

• Project Monitoring and Advisory Committee (PMAC): Chaired by the Additional Secretary & Development Commissioner (MSME), PMAC guides, monitors, and approves funding.
• Awareness and Training Activities: Industry awareness programs, workshops, and training sessions are conducted to educate MSMEs and government officials about the scheme. Financial aid supports these activities.
• International Exposure: Foreign training, benchmarking visits, and collaborations are supported to enhance global competitiveness.
• Seed Capital Support: Up to ₹1 crore in equity funding is available to accelerate commercialization and scaling. SIDBI manages the funds with 5% management fees. Government provides 80% funding, MSMEs contribute 20%.
• Digital Platform: A dedicated portal manages registrations, funding, monitoring, and reporting to ensure smooth governance.
• Promotion and Outreach: Media campaigns, webinars, newspaper ads, and promotional films increase scheme visibility nationwide.

To apply under the MSME innovative scheme, here are the necessary steps to follow:

• Registration: The first step is to register on the official MSME Innovative Scheme portal. This registration is mandatory for MSMEs, students, institutions, Host Institutes (HIs), Implementing Agencies (IAs), and Intellectual Property Facilitation Centres (IPFCs). Registration allows access to all scheme features and resources.
• Application Submission: After registration, applicants must submit detailed proposals under the relevant component-Incubation, Design, or Intellectual Property Rights (IPR)-through the portal. Proper documentation and adherence to eligibility criteria are essential to ensure the application is considered.
• Screening and Evaluation: The application undergoes multiple levels of screening. Initially, Host Institutes conduct a primary review. Next, the Project Management Unit (PMU) checks the application for completeness and eligibility. Then, Domain Expert Selection Committees (DESC) or Project Assessment Panels (PAP) evaluate the project’s technical and commercial feasibility. The Project Monitoring and Advisory Committee (PMAC) grants the final approval.
• Financial Assistance Agreement: Once approved, MSMEs sign agreements to receive financial assistance. Funds are disbursed in stages based on project milestones to ensure effective fund utilization.
• Implementation and Monitoring: MSMEs execute their projects with mentoring and support from Implementing Agencies. These agencies continuously monitor progress and provide regular reports to PMAC.
• Reporting and Compliance: Regular progress reporting and physical verification ensure compliance with scheme guidelines and proper use of funds, helping MSMEs successfully leverage the MSME Innovative Scheme grant.

Corpseed is one of the top consulting firms, offering comprehensive assistance on government schemes and benefits, guiding businesses through the necessary processes. With deep expertise in the MSME Innovative Scheme, Corpseed plays a crucial role in facilitating innovation, design, and intellectual property protection for MSMEs. Our involvement enhances the overall MSME ecosystem by promoting collaboration between industry, academia, and government bodies. Through its work, we contributes to strengthening MSME competitiveness and fostering sustainable economic growth both nationally and globally.

• Registration Support: Corpseed guides MSMEs, students, and institutions through smooth and error-free registration on the MSME Innovative Scheme portal.
• Documentation Assistance: Ensures all necessary documents are complete, accurate, and compliant to avoid application rejection.
• Agency Coordination: Connects MSMEs with Host Institutes, Implementing Agencies, and IPFCs for expert mentoring and technical support.
• Funding Guidance: Provides advice on financial assistance, co-contributions, fund disbursement, and proper fund management.
• Progress Monitoring: Supports timely progress reporting and compliance to keep projects on track and eligible for benefits.
• Strategic Advice: Offers expert insights on innovation, design integration, and intellectual property protection to boost MSME growth and competitiveness.