Revised MSME Competitive (LEAN) Scheme Launched in India to Boost Industry

India has launched a revised version of the MSME Competitive (LEAN) Scheme to aid micro, small, and medium-sized companies to improve their global competitiveness by utilizing LEAN manufacturing tools with the guidance of trained LEAN consultants. The scheme aims to reduce waste, optimize resources, and enhance various aspects of MSME operations. Eligible MSMEs will receive financial assistance and graded incentives, and a nationwide publicity campaign will be conducted to raise awareness. A single-window digital platform will be used to support the scheme’s execution.

On March 10, 2023, the Indian central government launched a revised version of the MSME Competitive (LEAN) Scheme to encourage micro, small, and medium-sized companies (MSMEs) to adopt specific manufacturing techniques.

The initiative, initially introduced under the MSME Champions Program, will aid Indian MSMEs in improving their global competitiveness by enhancing their quality, productivity, and performance. Through the scheme, MSMEs will utilize LEAN manufacturing tools, such as 5S, Kaizen, KANBAN, visual workplace, and Poka Yoka, with the guidance of trained LEAN consultants, to achieve the basic, intermediate, and advanced levels of the LEAN Scheme.

The central government will now contribute 90 percent of the expenses related to the implementation of this program, including consulting and handholding costs, up from the previous subsidy rate of 80 percent.

All you need to know about the MSME Competitive (LEAN) Scheme

What prompted the launch of the MSME Competitive (LEAN) Scheme?

As domestic and international competition increases and global supply chains face disruption, MSMEs need to adapt to a rapidly transforming business environment. Collaboration between large corporations and small suppliers is crucial in every value chain, and MSMEs play a vital role in this ecosystem.

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To improve the productivity, efficiency, and competitiveness of MSMEs, India plans to implement the Competitive (LEAN) Scheme. This scheme aims to reduce waste in processes, inventory management, space management, and energy use. By adopting LEAN practices, MSMEs can keep up with the changing business landscape and remain competitive.

What are the components of the scheme?

Industry awareness programs and workshops

Nationwide awareness programs will be conducted to make MSMEs aware of the scheme, with the assistance of various stakeholders, such as industry associations, implementing agencies, MSME-DFOs, district industries centers (DICs), and large enterprises/OEMs.

Training programs

To ensure the effective implementation of the MSME Competitive (LEAN) Scheme by implementing agencies, such as QCI and NPC, all stakeholders involved, including MSME officers, assessors, and consultants, will undergo appropriate training.

Handholding

MSMEs will receive handholding in the deployment of lean tools and methods at three different levels: basic, intermediate, and advanced. Verification of completion at each stage will occur at the end of the project or during an evaluation by the implementation agency and MSME-DFOs, as applicable.

Benefits and incentives

To encourage participation and engagement of MSMEs, the Ministry of MSME will announce graded incentives. These incentives will be offered based on the following activities:

• Implementation of Lean (generation of LEAN ID)
• Taking a Lean Pledge and providing Assurance (generation of LEAN Pledge Level)
• Implementing LEAN at basic, intermediate, and advanced levels

Before implementing LEAN tools and processes, every MSME adopting the LEAN methodology at basic, intermediate, or advanced levels will be required to sign a “LEAN Pledge”. The purpose of this pledge is to encourage MSMEs to commit seriously to upholding the principles of LEAN techniques and philosophy in their daily operations, thereby promoting a culture of continuous improvement.

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MSME units may request handholding from implementing agencies, depending on their level of readiness, interest, and necessity after taking the LEAN Pledge. MSMEs can implement the LEAN Scheme at the three levels mentioned above.

PR campaign, advertising, and brand promotion

To raise awareness about the LEAN scheme, a nationwide publicity campaign will be conducted.

Digital platform

A single-window digital platform will be used to electronically enable the LEAN scheme process and support its execution.

Eligibility criteria for MSMEs to participate in the LEAN Scheme

All MSMEs registered with the UDYAM registration portal of the Ministry of MSME are eligible to participate in the MSME Competitive (LEAN) Program and avail any associated incentives. The benefits under this scheme are also available to Common Facilities Centers (CFCs) under the Micro and Small Businesses-Cluster Development Program (MSE-CDP) and SFURTI (Scheme of Financing for Regeneration of Traditional Industries) schemes.

Financial assistance under the scheme

MSMEs are eligible for a 90 percent subsidy on implementation costs and consultant fees. MSMEs located in the Northeast region, owned by women or people from minority communities – scheduled tribe (ST) and scheduled caste (SC), and a part of SFURTI clusters, will receive an additional 5 percent contribution.

In addition, MSMEs that register through industry associations or overall equipment manufacturing (OEM) groups after completing all levels will receive an extra 5 percent assistance. To encourage OEMs and industry organizations to promote participation in this initiative by their supply chain vendors, a special feature has been included. After completing all stages of lean intervention, OEMs or associations will receive US$6088 per MSME.

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