India Aspiration Fund to boost prospects of MSME start-ups

CRISIL has analysed 1,050 start-up micro, small, and medium enterprises (MSMEs) that were rated on the basis of their 2013-14 (financial year April 1 to March 31) financials. For arriving at start-ups, CRISIL has considered MSMEs that started business operations after 2010. The MSMEs featured in the sample are primarily non-e-commerce enterprises that are in the manufacturing and services space.

The analysis reveals that seven sectors - engineering; construction; agri products; textile; printing & packaging; transport & logistics; and outsourcing & support services - account for 68 per cent of these, and 41 per cent are operational in the engineering, construction, and agri products sectors. Several of these sectors form part of the government's 25 sectors under the 'Make in India' programme.

Additionally, the Government of India has recently announced a Rs 10,000-crore India Aspiration Fund to provide equity capital for MSMEs-based start-ups. The average net worth of the CRISIL-rated MSME start-ups in the sample was Rs 35 lakh as on March 31, 2014. CRISIL believes that the new fund provides start-ups with the opportunity to raise capital and to grow, and thus contribute to strengthening the economy.

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Note: CRISIL has rated over 75,000 MSMEs in India. This fortnightly tracker presents to our readers insights on MSMEs, a key element of the Indian economy.