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Priyanka Bajpayee
| Updated: 05 May, 2022 | Category: Latest News

ZED Certification Scheme: Explained

ZED certification scheme

India’s competitiveness in global markets is low due to a lack of innovation in industries like healthcare, construction, and finance. Ongoing industry resistance is also affecting the regeneration of the Indian industry ecosystem. Thus, institutionalizing “Make in India” efforts and the “National Quality Mission” are steps in the right direction. Shri Narendra Modi stood for the concept of Industry 4.0, or the ZED effect and the ZED planning culture in the ‘Make in India’ products and processes. India is expected to be the world leader in manufacturing based on the Zero Effect Zero Defect Scheme that helps manufacture high-quality products. The term ZED stands for Zero Defect zero effect. In this blog, we will discuss ZED Assessment Scheme.

Overview

The ZED scheme refers to the Zero Defect, Zero Impact Scheme, launched in 2016 by the Ministry of Micro, Small, and Medium Enterprises. It is a comprehensive, integrated approach to products, processes, and outcomes in MSMEs. It focuses on the Zero Defect and Zero effect culture or concepts of zero impact and zero defects in MSME industries. 

This scheme helps in removing processes that have defects or removing defective products. It also indicates quality, production, energy savings, manufacturing efficiency, pollution mitigation, improved human resource, and financial efficiency, and includes Intellectual property rights and the design of processes and products.

What is Zero Defect and Zero Effect Certification Scheme?

The Zero Defect and Zero Effect Certification Scheme is a scheme that anticipates the promotion of ZED (Zero Defect and Zero Effect) manufacturing amongst MSMEs and ZED Assessment for their certification, which helps in encouraging MSMEs. It Enables MSMEs to manufacture quality products using the latest technology tools. It also helps constantly upgrade their processes to achieve high productivity and high-quality products with the most negligible effect on the environment.

Recent Update- On 28th April 2022, The Ministry of Micro, Small, and Medium Enterprises launched a revamped Zero Defect Zero Effect (ZED) Certification Scheme to make Indian companies globally competitive and help them get easier access to capital. 

ZED Certification Scheme enables and facilitates MSMEs to adopt Zero Defect Zero Effect practices and motivates and incentivizes MSMEs for ZED certification. With the help of ZED Certification, MSMEs can reduce-

  • Wastage substantially, 
  • Increase productivity, 
  • Enhance environmental consciousness, 
  • Save energy, 
  • Optimally use natural resources, 
  • Expand their markets, among others.

In the revamped Scheme, the first phase will focus on manufacturing MSMEs; the second will focus on MSMEs in the services sector. Also, the government has proposed-

  • 80% subsidy on the certification cost for micro-enterprises, 
  • 60%for small enterprises, and 
  • 50%for medium enterprises. 
  • There would be an additional 10% subsidy for women or SC/ST entrepreneurs-owned units.

Objectives of the ZED Certification Scheme

Below mentioned are the objective of the ZED Certification Scheme

  1. MSMEs are motivated to make quality products using new technology and improve their technology to increase productivity and quality without harming the environment.
  2. Creating a zero-defect zero effect ecosystem enhances MSMEs’ competitiveness and export potential.
  3. To enhance the quality and recognize successful MSMEs’ efforts.
  4. Creating awareness to drive demand for Zero Defect Zero Effect products through ZED Rating.

Advantages of the ZED Certification Scheme

Promote the adoption of quality and recognize the efforts of successful MSMEs.Here are the advantages of the ZED Certification Scheme.

  1. New methods of Production and Management – The MSME sector gets to learn new production and management methods.
  2. Increase in Production Capacity-This scheme significantly increases the production capacity of the MSME sector.
  3. Improved Quality Production- The quality of production has improved. ZED Certification Scheme has improved the quality of the product, resulting in a reduction in product rejection.
  4. Protection of Environment– ZED Certification Scheme helps in protecting the environment. 
  5. Increase in the profit of the MSME Sector– The initiative has helped in increasing the profit of the MSME sector.

Subsidy for the MSME Sector in ZED Certification Scheme

There is also a provision of subsidy for the MSME sector[1] as an incentive under the ZED scheme under which the government gives subsidy on the expenses incurred for taking Zed certificate, which is as follows:

·         For Micro Industries: 80%

·         For Small Industries: 60%

·         For Medium Industries: 50%

Along with this, many training and awareness programs are also being run at the state and regional levels to increase the awareness of this Z rating scheme. As a result, this scheme is getting good support from all sectors. Many states have also included the Zed certification scheme in their industrial policies.

Rating System of Zed Certification Scheme

The Rating System of Zed Certification Scheme has 5 rating levels: Bronze, Silver, Gold, Diamond, and Platinum. The better the quality of the manufacturing, the better the rating.

  • Bronze: Rating of 2.2 to 2.5.
  • Silver: Rating of 2.5 to 3.5.
  • Gold: Rating of 3.0 to 3.5.
  • Diamond: Rating of 3.5 to 4.0.
  • Platinum: Ratings from 4.0 to 5.0.

Assessment Criteria for ZED Certification Scheme

The MSMEs will be assessed and rated based on 50 parameters where-

  1. The MSME applicant must follow the 20 vital parameters and at least ten additional parameters (as per the MSMEs domain competence, i.e., industry type and business sector). Therefore, MSMEs will be assessed with at least 30 parameters. 
  2. MSMEs might apply for ZED ratings on greater than thirty parameters based on the systems and processes in the MSME.
  3. Each parameter comes with five maturity levels. Each level represents the present state of the systems and processes within the manufacturing unit being evaluated. The levels vary from struggler, which corresponds to the LEVEL 1, Beginner, organized, and achiever, corresponding to levels 2, 3, and 4, respectively. The highest level is called world-class at level five. The rating is dependent on a weighted average level. The company is encouraged, handheld, trained, and able to reach a higher standard in each of the parameters and thus elevate itself in the maturity Model.

The ratings by the maturity model include in the following order: 

  • Bronze: Rating of 2.2 to 2.5.
  • Silver: Rating of 2.5 to 3.5.
  • Gold: Rating of 3.0 to 3.5.
  • Diamond: Rating of 3.5 to 4.0.
  • Platinum: Ratings from 4.0 to 5.0.

ZED Maturity Assessment Model will evaluate an MSME’s manufacturing facility using process-based enablers and outcomes based on performance at an operational level. It helps the enabler-

  • To improve process quality.
  • To manage emission, effluent, and activities to dispose of waste Enablers for resource management.
  • For outsourced activities
  • Facilitates creativity and protection
  • Performance outcomes for quality
  • Helps in Process Performance
  • Environmental performance and Overall performance of the company.

Conclusion

In a nutshell, we can say that ZED Certification Scheme helps in Ease of Doing Business and encouraging the manufacturing of goods for Micro, Small & Medium Enterprises without any defects in the goods and effects on the environment. ZED will try to improve the performance and productivity of MSMEs and change their mindset and make them more conscious of the environment.

Read our Article:IREDA NCEF Refinance Scheme (Revised Version)

Priyanka Bajpayee

A Company Secretary together with PG in international Business, she has gained significant experience as legal content writer. She has keen interest in doing research and writing on legal and financial subject matters. She also holds work experience in legal compliances.

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