Ease of Doing Business for MSMEs: The government doesn’t have data to gauge the insurance penetration in India’s vast MSME sector. Even as the steps have been announced to improve insurance coverage for risk management in the MSME sector, “The Insurance Regulatory and Development Authority of India (IRDAI) has informed that data on the number of businesses under the MSME sector that are covered by insurance is not maintained by it,” Minister of State for Finance Ministry Bhagwat Karad said in a written reply to a question in Rajya Sabha.

“With effect from April 1, 2021, IRDAI had introduced two standard insurance products suitable for the MSME sector (Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha), which cover fire and other perils including natural catastrophes, riots and strikes, and which have policyholder-friendly features and simple policy wordings,” the minister said. Moreover, a regulatory framework has been put in place to encourage new distribution channels for insurance, such as banks and other corporate agents, point-of-salespersons and common service centres to improve access to insurance, according to the information shared.

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IRDAI had revised the guidelines for trade credit insurance, which came into effect from November 1, 2021, to enable general insurance companies to offer insurance with customised covers to improve businesses for MSMEs, considering their evolving insurance risk needs. It covered commercial risks such as insolvency or protracted defaults of the buyer, bank responsible for payment in case of Letter of Credit transactions, and stock holding agent in case of consignment transactions. The cover also included coverage against rejection by the buyer after delivery (of goods) subject to conditions of contract, before shipment where the goods are manufactured or being manufactured exclusively as per the requirements of the buyer and cannot be sold elsewhere; and non-receipt of payment on account of collecting bank’s failure.

The government doesn’t maintain data on job losses as well in the MSME sector along with the information on the closure of MSME units during Covid. The data is not ‘maintained’ by the government “as MSMEs are present in both formal and informal sector,” MSME Minister Narayan Rane had said last month in Parliament in response to a question on job cuts among MSMEs due to the pandemic. The same reason was cited by the former MSME Minister Nitin Gadkari in the Budget session of Parliament this year for no data on shutdowns in the MSME sector due to Covid.