NEW DELHI: The Indian government plans to include the service sector in a scheme earlier meant to make small manufacturing companies globally competitive and help them get easier access to capital, a top official said.<\/p>\n
Work on the proposed inclusion of the service sector in the Zero Defect Zero Effect (ZED) scheme comes in the backdrop of the passage of the Micro, Small, and Medium Enterprises Development (Amendment) Bill in Parliament this month.<\/p>\n
Discussions are underway with the Quality Council of India (QCI), which implements the ZED scheme, and the National Productivity Council to determine the quality parameters for services to be included in the scheme, MSME secretary Bharat Khera said in an interview.<\/p>\n
\u201cWe have a vision now to bring in services also into this (ZED scheme) \u2026 There are certain service sectors also in which quality can be evaluated and assessed. For example, healthcare and hospitality\u2026 These are again service sector enterprises in which there could be parameters for quality,\u201d said Khera.<\/p>\n
The amendments passed by parliament seek to reduce payment-related constraints, make dispute resolution time-bound and simplify compliance. The broader objective is to facilitate the growth and competitiveness of MSMEs while promoting the ease of doing business.<\/p>\n
Service sector MSMEs account for 38% of the 92 million small businesses in the country, according to ministry data. Manufacturing MSMEs make up 20% and trading MSMEs account for 42%. Registered MSMEs contribute about 30% to India\u2019s gross domestic product, 35.4% of manufacturing output and over 48% of India\u2019s exports.<\/p>\n
From April to December, 281,391 MSMEs were ZED-certified, according to the ministry\u2019s FY26 annual report.<\/p>\n
The ZED scheme provides 80% subsidy on the certification cost for micro enterprises, 60% for small enterprises and 50% for medium enterprises. It funds technology upgrades and product testing to ensure quality compliance.<\/p>\n
The government also offers handholding and consultancy services and supports technology upgrades for pollution control and cleaner production. There is an additional 10% subsidy for units owned by women and Scheduled Caste\/Scheduled Tribe entrepreneurs.<\/p>\n
ZED-certified MSMEs get subsidized stalls and airfares for participating in overseas businesses exhibitions and fairs.<\/p>\n
\u201cThere are much more parameters required to be fulfilled, but if the MSMEs have to become part of global value chains, they have to look at conformity to quality,\u201d Khera said.<\/p>\n
The ZED scheme does not have a direct budgetary allocation. It is part of the MSME Champions Scheme implemented by the ministry and also receives funds under the World Bank-backed Raising and Accelerating MSME Performance (RAMP) scheme. The MSME Champions Scheme includes incentives for generating intellectual property rights and building competitiveness.<\/p>\n
According to the ZED portal, the central government has spent \u20b9964.19 crore since 2022, when the scheme started. The Centre spent \u20b9241.24 crore under the ZED scheme in FY25, up from \u20b9192.79 crore in the previous fiscal, according to an MSME ministry statement to the Lok Sabha on 3 April 2025, the latest publicly available record.<\/p>\n
The government\u2019s focus on the MSME sector will be on continuing the formalization of smaller businesses and improving their access to capital. It aims to make Indian MSMEs more competitive globally by ensuring quality compliance to boost exports and push more businesses to become part of global value chains, said Khera.<\/p>\n
Speaking about global disruptions that India\u2019s MSMEs have faced over the past few years, including the covid-19 pandemic, harsh tariffs on exports and conflict-led supply chain breakdowns, Khera said Indian MSMEs are resilient and should leverage free trade agreements with multiple nations to build market access to weather high tariffs.<\/p>\n