Scope And Sweep Of MSMEs Just Got Bigger

The Morning Standard|June 2, 2020

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Scope And Sweep Of MSMEs Just Got Bigger
₹50,000 crore equity infusion for small businesses; stressed companies to get ₹20,000 crore support for unsecured loans; definition of micro, small and medium enterprises expanded to increase its ambit; export revenue to be excluded while calculating the turnover
Anurada Shukla

Extending a lifeline to India’s struggling micro, small and medium enterprises (MSMEs), which are badly hit by the nationwide lockdown due to the Covid-19 pandemic, the Union Cabinet on Monday approved tweaking the definition of MSMEs in such a way that more companies can claim the benefits available for small businesses.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, also approved provisioning of ₹20,000 crore as subordinated debt (unsecured loan) to provide equity support to stressed MSMEs.

In other decisions, the Cabinetal so cleared equity infusion of ₹50,000 crore for small scale units through a Fund of Funds, which will help MSMEs to be listed and be able to raise funds from the market.

According to the new definitions, MSMEs with an investment of ₹1 crore and turnover of ₹5 crore will be classified as microunits, units with an investment of ₹10 crore and turnover of ₹50 crore as small units and those with investment of ₹50 crore and turnover of up to ₹250 crore as medium units.

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June 2, 2020