UP Government Signs MoU With NSE To Explore Financing Opportunities For SMEs

Taking another step forward for the growth of startups and Small and Medium Enterprises (SMEs), the Uttar Pradesh government has signed a Memorandum of Understanding (MoU) with the National Stock Exchange (NSE) to enable SMEs to get listed on NSE’s SME platform, NSE Emerge.

According to a report, under the MoU signed, UP startups and SMEs would be informed about the opportunities to raise capital, SME exchange guidelines, listing processes, compliances with listing agreement, among others.

The startups would receive mentorship from NSE about capital markets, capital raising mechanism and regulatory compliances. With this, the government wants the SME sector to be prepared for the increasing competition, while also upgrading its technology to boost economic activity and industrialisation.

Also, the UP government would look at the possibility of helping the SMEs with one-time financial assistance/subsidy for its public issue expenses, subject to a ceiling to be predetermined regularly.

The government is also expected to explore setting up a government-sponsored SME equity participation fund in partnership with national banks. These SMEs would be enrolled in NSE’s Capital Markets Program comprising physical and virtual participation in the scheme.

On the occasion, Anil Kumar, the state’s MSME and Export Promotion Principal Secretary, said, “MSMEs need to adopt new age financing routes. The state has flourishing handicraft & handloom industries, leather industry, tourism industry and agro-industry etc.”

At present SME Emerge platform has 123 companies, which includes three enterprises from UP, including Reliable Data Services Limited (Noida), Jalan Transolutions (Ghaziabad) and Jet Knitwears (Kanpur).

Vikram Limaye, MD and CEO of NSE, said, “SMEs are crucial for economic growth, employment generation and broad-based inclusive development. We would provide access to capital to SMEs and look forward to supporting the sector in their growth and capital raising initiatives.”

At present, UP has a recorded MSME base of over 5 Mn, which contributes 60% to the state’s annual industrial output. Also, the sector employs 40 Mn people, which in turn, generates direct economic activity worth almost $23 Bn (INR 1.5 Tn) annually.

The sector is the second largest employer after agriculture.

The Uttar Pradesh government has long been working to promote the growth of startups and SMEs in the state. In August 2017, UP CM Yogi Adityanath announced $156.2 Mn (1000 Cr) startup fund for helping startups.

Soon after, reports surfaced that the government will set up an incubator for startups. It was suggested that, with the incubator centre, the allocation will go up to about $615 Mn (INR 4,000 Cr).

Under the Startup India initiative, several states have been setting up policies and framework to boost the growth of startups. At present 18 states have already announced their startup policies which include Andhra Pradesh, Bihar, Chattisgarh, Rajasthan, Goa, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Odisha, Telangana, Uttarakhand, Uttar Pradesh and West Bengal.

Amid the growing startup growth, the MoU, which gives SMEs chance to list on NSE, is a huge step ahead for the UP government.