FM Nirmala Sitharaman launches new fund for MSMEs

The new fund will be co-sponsored by EXIM Bank and SIDBI and was formed as per the announcement in 2020 Union Budget.

Finance Minister Nirmala Sitharaman on August 21 launched a new fund for MSMEs.

The announcement for the funds were done in the 2020 Union Budget but the launch was delayed to Covid-19 and followed by lockdowns.

During the launch she said Uttar Pradesh’s ‘One District One Product’ (ODOP) programme will aid in effective identification of “champion sectors” amongst MSMEs under the ‘Ubharte Sitaare Fund’.

The fund in form of Alternate Investment Fund is co-sponsored by Exim Bank and SIDBI is with a corpus of Rs 250 crore with a green shoe option of Rs 250 crore and the fund will look at investing in certain identified MSMEs by way of equity-like products.

Sitharaman said, “Some developed countries like Germany have tried this where they have identified champion sectors and tried to support and handhold them, give them the necessary technology and fund infusion which made a league of a difference for many of these champion sectors. For Ubharte Sitaare, largely the principle is being followed similarly.”

She highlighted on how Uttar Pradesh has the highest number of MSMEs in the country and has facilitated the identification of champion sectors already through its ODOP programme. The programme aims at encouraging district wise specialised products, some of which are also GI-Tagged, through credit support.