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Promoting Self-Employment: Closer Look at the Stand Up India Scheme

Created on 29 Nov 2023

Wraps up in 6 Min

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Bhaiyon aur behno, let's talk about something that hits close to home- unemployment. It's like that stubborn guest who overstays at the party, right? Now, getting jobs for millions of Indians sounds like conquering Mount Everest, given our massive population. And guess what? Between January and April 2023, 41.29 crore folks landed themselves some work, according to the Centre for Monitoring Indian Economy!
 
Hold up, that's not just a number – it's 86 lakhs more than the pre-pandemic days of January-April 2019. Kuch toh baat hai! And guess what's cooking here? The Government of India is making bold moves with schemes like Stand Up India, tackling unemployment head-on. 

So, while unemployment might be that annoying guest, it seems like we're showing it the exit door, thanks to some solid plans. Let’s start by knowing…

What is the Stand Up India Scheme?

The government launched the Stand Up India scheme on 5th April  2016. The mission? Empower every Indian to stand tall and be self-reliant. This initiative zooms in on the unique challenges faced by Scheduled Caste (SC), Scheduled Tribe (ST), and women entrepreneurs out there looking to kickstart their own businesses.

Why? Because the struggle is real and can feel like trying to solve a Rubik's Cube blindfolded. The programme aims to create an ecosystem that facilitates and continues to provide a supportive environment for doing business. 

Objectives and Goals of the Stand Up India Scheme

The goal of the scheme is to make getting bank loans easier, ranging from ₹10 lakh to ₹1 crore, with a comfy 7-year repayment period that includes a cool 18 months of no-pressure moratorium. The beneficiary must be one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise. 

Now, what's a greenfield enterprise, you ask?  So, an enterprise that is a first-time venture is known as a greenfield enterprise. This enterprise may be in manufacturing, services or the trading sector; it's all about that fresh, first-time venture vibe! 

Let’s move on to the…

Eligibility Criteria for the Stand Up India Scheme 

To be eligible for the Stand Up India Scheme, an applicant must meet these four criteria:

- SC/ST and/or Women entrepreneurs above 18 years of age.

- In the case of non-individual enterprises, 51% of the shareholding and controlling stake should be held by either SC/ST and/or Women Entrepreneur.

- Borrower should not be in default to any Bank/Financial Institution.

- Loans under the scheme are available only for Green Field Projects, signifying the first-time venture in manufacturing, services, agri-allied activities, or trading.

How to Apply for the Stand Up India Scheme?

If you're all in for the Stand Up India Scheme, applying is a breeze! Just hit up any Scheduled Commercial Bank (SCB) or Regional Rural Bank (RRB). You can also throw your hat in the ring on government web pals like udyamimitra.com and standupmitra.com. The application part? Piece of cake. Just fill out the form, toss in your business plan and any other docs they need. Easy-peasy, right? 

Here's what you need for the application:

  • Proof of Identity and Proof of Residence 
  • Proof of Business Address 
  • Memorandum and articles of association of the Company/Partnership Deed of partners, etc. 
  • Assets and liabilities statement of promoters and guarantors along with latest income tax returns.
  • Small Scale Industries/ Micro, Small and Medium Enterprises registration if applicable. 
  • Projected balance sheets for the next two years in case of working capital limits and for the period of the loan in case of term loan 
  • Certificate of incorporation from Registrar of Companies to establish whether majority stake holding in the company is in the hands of a person who belongs to SC/ST/ Women category.

Moving on to the…

Also read about the Top Government Schemes for Startups and MSMEs in India.

Benefits and Incentives for Entrepreneurs under the Scheme

The scheme offers several benefits and incentives to entrepreneurs, including loans of up to ₹1 crore at a concessional interest rate, and if they are looking for a collateral-free deal, they're covered up to ₹50 lakh. Plus, they get VIP treatment with priority processing and support from the banks- the government has got your back every step of the way. 

But wait, there's more! If you're from a marginalised community, it's like the scheme has a special bonus for you. Think relaxed rules on collateral, top priority lending status, and even a guarantee cover from the Credit Guarantee Corporation of India (CGCI). Oh, and did I mention subsidies on interest, plus training and support programs? Yep, it's the whole package! 

Now, let's bring it home- imagine a woman entrepreneur from a Scheduled Tribe. With Stand Up India, she could swing ₹50 lakh collateral-free loan. And guess what? She might even catch a break with a subsidy on the interest she pays and some top-notch training to level up her business game. 

With these perks, starting and growing a business becomes a walk in the park. It's not just about loans; it's about setting up shop, creating jobs, and fueling economic growth.

Challenges and Limitations of the Stand Up India Scheme 

The scheme faces significant challenges, with one major hurdle being the lack of awareness among potential borrowers, especially those from marginalised communities. Many people are unaware of the scheme's benefits, highlighting the need for increased outreach and communication efforts. Additionally, the loan application process is often time-consuming and disheartening for potential borrowers, as banks may hesitate to lend to entrepreneurs from marginalised backgrounds due to perceived risks. Although the scheme offers collateral-free loans up to ₹50 lakh, securing collateral for amounts exceeding this limit poses a challenge for entrepreneurs without access to such assets.

Entrepreneurs who secure loans under the scheme may also require access to training and support services to kickstart and expand their businesses. Unfortunately, these services are often limited or unavailable. Moreover, the scheme has faced criticism for its low disbursement rate, with only 13.4% of sanctioned loans actually being distributed.

Recognising these challenges, the government has initiated steps to address them. Awareness campaigns have been launched to educate potential borrowers, and efforts have been made to simplify the loan application process. Collateral requirements for loans under the scheme have also been relaxed. Despite these measures, there is still a pressing need for further action to enhance the scheme's effectiveness. 

Future Prospects and Expansion Plans of the Stand Up India Scheme 

Looking ahead, the Stand Up India Scheme is gearing up for some cool upgrades! The government is thinking of getting more banks on board, broadening the types of businesses you can dive into, and easing up on the collateral needed for loans. Plus, they're planning to throw in some interest rate perks for entrepreneurs from marginalised communities – talk about a sweet deal!

But wait, there's more! They're all about boosting the support for entrepreneurs with extra training programs and eyeing a move into new sectors, like agriculture. The goal? To make this scheme not just effective but super inclusive, creating more opportunities for self-employment and giving our economy a good boost. It's like Stand Up India 2.0 – bigger, better, and ready to rock! 

You can also give this article a read to get an idea about the various Pradhan Mantri Yojanas.

The Bottom Line

The Stand Up India Scheme could totally shake up self-employment in India. If the government, banks, and entrepreneurs team up to iron out the kinks, we're looking at a turbocharged program that's not just effective but super inclusive. Picture more folks making a living on their terms, and bam, you've got economic growth in the bag! 

Read latest and premium articles on stock market, personal finance, business and entrepreneurship with trending market news on Insider by Finology.

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Sakshi Dhakre

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Sakshi is an adventurous spirit who enjoys both the intellectual stimulation of Finance and the sensory experiences of good food and nature’s beauty. She has a passion for delving into complex financial topics and distilling them down into easy-to-understand insights. When she's not poring over financial reports, you might find her exploring a new corner of the city, trying out new restaurants and cuisines or admiring the beauty of the night sky.

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