Kerala Govt Rolls Out Insurance Cover For State MSMEs

The MSME sector in Kerala has received a significant boost with the introduction of a comprehensive insurance scheme by the state government. The initiative aims at safeguarding these businesses from a spectrum of risks, fostering confidence, and enabling them to flourish in a competitive business environment.

The Department of Industries and Commerce formalized agreements with four public sector insurance companies in the presence of P Rajeeve, Minister for Industries, Law, and Coir. Rajeeve, while highlighting the vitality of the scheme, said the initiative serves as a proactive measure to offer financial protection to MSMEs against a multitude of risks that could potentially impact their operations adversely.

Kerala houses over three lakh MSMEs, with approximately 1,40,000 of them registered as part of the government's ‘Year of Enterprises’ Project. However, merely around 15,000 of these businesses possess insurance coverage against diverse risks.

Suman Billa, Principal Secretary for Industries and NORKA, emphasized that this insurance scheme not only bolsters the state's industrial and investment ecosystem but also bolsters entrepreneurial confidence.

S Harikishore, Director of the Department of Industries and Commerce, noted that this insurance scheme offers essential support to MSMEs in recovering from unforeseen risks they may encounter.

“The insurance coverage covers a wide array of risks, including natural disasters, fire accidents, theft, accidents, and market fluctuations, all of which have the potential to result in substantial financial losses for MSMEs,” Harikishore said.

The scheme extends its benefits to all MSMEs in the manufacturing, service, and trade sectors with UDYAM registration in Kerala and enrollment in the ‘Bharat Sookshma/Laghu Udyam scheme’ from any of the four public sector insurance firms post-April 1, 2023. Eligible enterprises can receive a reimbursement of 50 per cent of their annual premium, capped at INR 2,500.

Eligible MSMEs can purchase the insurance policy by paying the full annual premium and subsequently submit the reimbursement application, along with supporting documentation, to the relevant District Industries Centre (DIC) through the online portal.

The scheme's implementation will be overseen by the District Industries Centers (DICs), which will process the applications and directly reimburse eligible assistance to the bank accounts of MSMEs.

'Mission 1,000' Initiative To Boost MSMEs

Apart from the insurance scheme, the state government is set to extend a significant 40 per cent capital investment subsidy, with an upper limit of INR 2 crore, to MSMEs chosen for the Mission 1,000 initiative. The core objective of this initiative is to identify and propel 1,000 MSME units in the state towards achieving a collective turnover of Rs 1 lakh crore within a span of four years.

The government has recently granted its approval to the proposal put forth by the industries department for this ambitious initiative. The plan outlines a range of incentives aimed at fostering the growth of selected units.

The most prominent among these incentives is a substantial capital investment subsidy, which stands at 40 per cent with a maximum cap of INR 2 crore. Additionally, there will be interest subvention available for working capital loans, covering 50 per cent of the interest rate, with an upper limit of INR 50 lakh, spanning a four-year period. The selected enterprises will benefit from personalized guidance provided by an officer from the industries department to facilitate their development.