The MSME ministry last week launched a revamped Zero Defect, Zero Effect (ZED) scheme. The erstwhile ZED scheme was launched in October 2016, with an objective to boost MSMEs' competitiveness, by reducing wastage in their manufacturing process, increasing their productivity while enhancing the environmental consciousness. Under the new scheme, a number of changes have been introduced for further benefit of the sector.

Under the new scheme, the parameters that must be met for certification have been reduced from 50 in the previous scheme to 20. According to a top official, this decision has been taken after considering feedback received from MSMEs and industry associations which pointed out difficulties in complying with all 50 parameters. The official, however, added that there will be no compromise on the quality and safety of products despite the changes.

It is proposed to provide an 80% subsidy on the certification cost for micro enterprises, 60% for small enterprises, and 50% for medium enterprises. Also, there will be an additional subsidy of 10% for the MSMEs owned by women/SC/ST entrepreneurs or MSMEs in NER/Himalayan/LWE/Island territories/aspirational districts. There will be an additional subsidy of 5% for MSMEs which are also a part of the SFURTI or MSE - Cluster Development Programme.

The changes are welcome. According to a recent report, the Centre's expenditure on ZED scheme was not encouraging in FY22, with nothing spent as of December-end out of the total allocated fund of Rs 16 crore for the financial year, due to redesigning of the scheme. Now with the changes finally introduced, we expect that the situation will improve, with MSMEs benefitting further from it. The scheme will succeed only if its implementation succeeds.

I invite your opinions.