Nirmala Sitharaman, the Union Finance Minister, inaugurated the Ubharte Sitaare Fund (USF) for export-oriented small and mid-sized businesses and startups in Lucknow this Saturday. During her Budget speech in 2020, Sitharaman proposed the fund in reference to the challenges experienced by small and mid-sized businesses in fulfilling their export goals, adding that micro, small, and medium enterprises (MSMEs) were essential to keeping “wheels of the economy moving”.
The fund, co-sponsored by Exim Bank and SIDBI, comprises Rs 250 crore in total, with a greenshoe option of Rs 250 crore. The funds will invest in export-oriented businesses in the manufacturing as well as services industries using equity and equity-like products. The fund’s goal is to find Indian businesses that have competitive advantages in terms of technology, products, or processes, as well as export potential, but are either underperforming or unable to reach their full potential.
Nirmala Sitharaman stated that the ambitious objective was to support champion sectors and that some developed nations, such as Germany, had already achieved this by identifying, encouraging, and hand-holding champion sectors, as well as providing them with the required technology and capital. Ubharte Sitaare follows a similar principle, she said, adding that the introduction of technology will make a significant difference in small and medium businesses.
The Finance Minister praised the government’s initiatives to strengthen the country’s MSME sector, such as the launch of the production-linked incentive approach and stated that the USF would participate in export-oriented small and mid-sized businesses through equity and equity-like products, thereby supporting to script a new framework of export growth. The project would act as a catalyst for the growth of the identified businesses, as well as providing subsequent benefits such as increased and diversification of India’s exports, a boost to brand India, with job creation.
India Exim Bank has created a healthy pipeline of over 100 potential proposals and backed various companies across a broad variety of sectors including pharma, auto components, engineering solutions, agricultural, and software according to India Exim Bank, Deputy Managing Director, Harsha Bangari. While Sivasubramanian Ramanan, chairman and managing director of SIDBI, noted a series of recent measures that have benefited MSMEs across the country, particularly in Uttar Pradesh.
Smt. Sitharaman further said, “In the last two years, the Centre has done a number of different things. The government has changed the definition of MSME in a very flexible manner. Recently, a bill was tabled in the Parliament through which the MSME sector will directly benefit.”
MSMEs have been at the center of attention of the Modi government’s economic policy, according to a tweet from Smt. Sitharaman’s office, with policies like changing the classification of MSMEs to ensure adequate flexibility, effective implementation of ECLGS, and the Factoring Bill increasing the number of designated NBFCs to 9,000.