The Cabinet Committee on Economic Affairs (CCEA) meeting under the Chairmanship of Prime Minister Narendra Modi approved the upward revision of Micro, Small and Medium Enterprises (MSMEs) definition and modalities/road map for laying down effective implementation mechanism for the remaining two announcements under the Atmanirbhar Bharat Package.
In the package announcement, the definition of micro manufacturing and services unit was increased to Rs one crore of investment and Rs five crore of turnover. The limit of small unit was increased to Rs 10 crore of investment and Rs 50 crore of turnover.
Similarly, the limit of a medium unit was increased to Rs 20 crore of investment and Rs 100 crore of turnover. The revision was done after 14 years since the MSME Development Act came into existence in 2006.
After the package announcement on 13 May, 2020, there were several representations that the announced revision is still not in tune with market and pricing conditions and it should be further revised upwards. Keeping in mind these representations, it was decided to further increase the limit for medium manufacturing and service units. Now it will be Rs 50 crore of investment and Rs 250 crore of turnover.
It has also been decided that the turnover with respect to exports will not be counted in the limits of turnover for any category of MSME units whether micro, small or medium. This is another step towards ease of doing business.
This will help in attracting investments and creating more jobs in the MSME sector. The Cabinet also approved for provisioning of Rs 20,000 crore as subordinate debt to provide equity support to the stressed MSMEs. This will benefit two lakh stressed MSMEs.
An approval was also accorded for equity infusion of Rs 50,000 crore for MSMEs through Fund of Funds (FoF). This will establish a framework to help MSMEs in capacity augmentation. The move will also provide an opportunity to get listed in stock exchanges.
To provide immediate relief to the MSME sector, various announcements have been made under the Atmanirbhar Bharat Package.
An amount of Rs three lakh crore collateral-free automatic loans for MSMEs was announced to meet operational liabilities, buy raw material and restart businesses. A revision of MSME definition to render maximum benefits to the sector; disallowing global tenders in procurements up to Rs 200 crore to create more opportunities for domestic players and clearing of MSME dues by the government and Public Sector Units within 45 days were also announced. To further ease the burden on MSMEs, RBI has extended moratorium on repayment of loans for another three months.