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HomeAssociationsRevision in MSME definition will expand benefits to more units: FICCI

Revision in MSME definition will expand benefits to more units: FICCI

04 June 2020, New Delhi: MSMEs formed a very prominent part of the announcements made under the ‘Atmanirbhar Bharat Abhiyan’ which included the revision of the definition of MSMEs after 14 years since it was last announced.

FICCI has continuously been submitting the industry’s views to the government about the new MSME definition announced by the Finance Minister on May 13, 2020 as the limit for defining the medium enterprises was inadequate considering today’s scenario of MSMEs and requested Nitin Gadkari, Minister of MSME and Road Transport & Highways to consider revising the limit, during an interaction by FICCI members with the Minister.

FICCI welcomes the government’s decision to increase the investment limit up to Rs 50 crore and turnover limit up to Rs.250 crore for classification of medium enterprises under MSME definition. “Not only will this decision increase the purview of the MSME sector but will also prevent existing units from ousting due to crossing the limit. As a result, more enterprises can now take the benefit of Government’s schemes tailored for MSMEs,” Sanjay Bhatia, President, FICCI-CMSME said.

The new definition for defining MSMEs i.e. according to investment and turnover with a limit of investment up to Rs.1 crore, Rs.10 crore and Rs 50 crore, and turnover limit up to Rs.5 crore, Rs.50 crore and Rs.250 crore to define Micro, Small and Medium Enterprises respectively, will certainly go a long way in securing benefits for country’s MSMEs and will stimulate growth of MSMEs.

“FICCI also hails the decision to exclude the turnover from exports while calculating turnover of company for MSME classification. This will certainly encourage and boost exports from MSMEs. Units can now focus on exports without concerning about losing MSME status,” he said.
The Cabinet’s approval for provisioning of Rs 20,000 crore as subordinate debt to provide equity support to around 2 lakh stressed MSMEs would help them to come out from the bracket of NPA and become eligible for One-Time Restructuring scheme of the government which has already been extended till December 31, 2020. Support in the form of equity up to Rs.75 lakh or 15% of total investment (whichever is higher), will change the balance sheet of the stressed MSMEs and will improve the financial condition of the unit enabling them to start functioning again and generate employment in the country.

In another approval, the Cabinet has given nod for creation of Fund of Funds worth Rs 50,000 crore which shall be used for equity infusion in MSMEs who are already performing well. Government’s investment in the form of equity up to the limit of 15% will encourage the morale of investors to invest in MSMEs who will get an opportunity to be listed on stock exchange. It is also praiseworthy that since this equity infusion is a revolving fund, hence it will keep benefitting many MSMEs in future.

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