Finance minister Arun Jaitley on Thursday unveiled a slew of measures to revitalise the micro, small and medium enterprises sector, laying special thrust on promotion of start-ups.
Presenting the Budget 2014-15 proposals in Parliament, he said Rs 10,000 crore venture capital fund is to be set up for the sector.
MSMEs form the "backbone" of the country's economy, Jaitley said, adding that "financing to this sector is of critical importance, particularly as it benefits the weakest sections.
"There is need to examine the financial architecture for this sector. I propose to appoint a committee with representatives from the finance ministry, ministry of MSME, RBI to give concrete suggestions in three months".
Jaitley also announced that the definition of MSME will be reviewed to provide for a higher capital ceiling.
Acknowledging that promotion of entrepreneurship and start-up companies remains a challenge, Jaitley said: "In order to create a conducive eco-system for the venture capital in the MSME sector it is proposed to establish a Rs 10,000 crore fund to act as a catalyst to attract private capital by way of providing equity, quasi equity, soft loans and other risk capital for start-up companies."
Jaitley also proposed a technology centre network to promote innovation, entrepreneurship and agro-industry by setting up a fund with a corpus of Rs 200 crore.
To further promote SMEs, Jaitley said an entrepreneur friendly legal bankruptcy framework will be developed for SMEs to enable easy exit. Moreover, he said, a nationwide 'District level Incubation and Accelerator Programme' would be taken up for incubation of new ideas and providing necessary support for accelerating entrepreneurship.
National Small Industries Corporation CMD H P Kumar said: "The definition of MSME was last fixed in 2006. Over the last 8 years, the investment limit was required to be changed because of the increase in prices."
Founder and CEO of Power2SME R Narayan said: "The Budget is extremely encouraging for the start-ups and the SMEs. The proposal of establishing a Rs 10,000 crore venture capital fund for start-up firms will act as a catalyst to attract private capital by way of providing equity, quasi equity, soft loans and other risk capital for start-up companies."
"The revision of the MSME definition for high capital ceiling, will enable the SMEs to get greater credit from the market, in turn helping them to grow and expand," he added.