Context:
Union Finance Minister Nirmala Sitharaman is set to launch a Rs 250 crore worth alternate investment fund (AIF) on August 2021 for small and mid-sized export-oriented companies.
Relevance:
GS-III: Indian Economy (Growth and Development of Indian Economy, Industrial Development, Government Policies and Initiatives)
Dimensions of the Article:
- “Ubharte Sitaare”: Alternate Investment Fund
- Other Initiatives to Promote MSME Sector
“Ubharte Sitaare”: Alternate Investment Fund
- The Alternate Investment Fund named Ubharte Sitaare will be jointly sponsored by the Exim Bank of India and SIDBI. While the fund size is Rs 250 crore, it will have a greenshoe option of Rs 250 crore.
- Exim Bank of India and SIDBI will invest in the fund by way of equity and equity-like products in export-oriented units, in both manufacturing and services sectors.
- A greenshoe option is an over-allotment option, which is a term that is commonly used to describe a special arrangement in a share offering for example an initial public offering (IPO) that will enable the investment bank to support the share price after the offering without putting their own capital at risk.
- The Alternate Investment Fund will identify Indian enterprises with potential advantages that are currently underperforming or unable to tap their latent potential to grow.
- It will offer a mix of both financial and advisory services and structured support through investments in equity or equity-like instruments, debt (funded and non-funded) and technical assistance (advisory services, grants and soft loans) to the Indian companies.
- A press release from Exim Bank’s Ubharte Sitaare Programme (USP) identified Indian companies that have the potential to be future champions in the domestic arena while meeting global demands.
- Exim Bank and SIDBI have together already developed a robust pipeline of over 100 potential proposals across a range of sectors, such as pharma, auto components, engineering solutions, agriculture and software.
Other Initiatives to Promote MSME Sector
- Scheme of Fund for Regeneration of Traditional Industries (SFURTI): It aims to properly organize the artisans and the traditional industries into clusters and thus provide financial assistance to make them competitive in today’s market scenario.
- A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE): The scheme promotes innovation & rural entrepreneurship through rural Livelihood Business Incubator (LBI), Technology Business Incubator (TBI) and Fund of Funds for start-up creation in the agro-based industry.
- Interest Subvention Scheme for Incremental Credit to MSMEs: It was introduced by the Reserve Bank of India wherein relief is provided upto 2% of interest to all the legal MSMEs on their outstanding fresh/incremental term loan/working capital during the period of its validity.
- Credit Guarantee Scheme for Micro and Small Enterprises: Launched to facilitate easy flow of credit, guarantee cover is provided for collateral free credit extended to MSMEs.
-Source: The Hindu
