FM declares 6 measures to boost 45 lakh MSMEs

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The Indian Finance Minister Nirmala Seetharaman announced 6 measures to bail out the MSME sector from the Covid19 lockdown crisis as part of Rs20 Lakh crore stimulus package announced by the Prime Minister Narendra Modi.

She along with her Cabinet colleague Anurag Thakur and other Secretaries revealed the details during a media meet in New Delhi a few minutes ago. She has announced a new MSME policy under which the six measures include collateral-free loans, additional debt and equity infusion in order to shield the Indian companies to save them from unfair competition from foreign companies.

Following are the 6 measures announced by the Minister:

  1. An emergency collateral-free loans up to Rs 3 lakh crore for businesses include MSMEs and Banks and NBFCs.
  • This will be provided as a Credit Line up to 20% of the outstanding credit up to February 29, 2020.
  • This can be repaid within 4 years with a moratorium up to 12 months on the principal payment.
  • This scheme is available up to October 31, 2020. There will be no guarantee free, fresh collateral required. Over 45 lakh units are likely to be benefitted from this.

2. Rs 20,000 crore subordinated debt for MSMEs under financial stress.

  • Under this scheme, MSMEs that are classified as stressed or NPAs will be eligible to provide with a subordinate debt of Rs 20,000 crore by banks which will be then infused as Promoter’s equity.

3. Rs 50,000 crore equity infusion for MSMEs through Fund of Funds

  • This Rs 50,000 crore fund will be provided from the Corpus Fund of Rs 10,000 crore to be operated through a Mother Fund and Daughter Fund.
  • This will also help MSMEs in getting listed with the stock exchanges.

4. New Definition of MSMEs

  • According to the new definition of SMEs, it has been classified based on the investment for both the manufacturing and service sector rather than turn over unlike in the past.
  • The company with an investment of Rs 1 Crore and having turn over up to 5 Crore over will be considered as a MACRO INDUSTRY
  • The company with an investment of Rs 10 crore and with a turn over up to Rs50 crore will be considered as SMALL INDUSTRY
  • The company with an investment of Rs 20 crore and with a turn over up to Rs100 crore will be considered as MEDIUM INDUSTRY.

5. Foreign Companies will not be allowed to participate in Global Tenders up to Rs 200 crore

  • This would facilitate MSMEs to compete and participate in tenders for government purchases up to Rs 200 crore. This would also eliminate unfair competition from foreign companies.

6. Other Interventions for MSMEs:

  • To provide e-market linkages across the globe to participate in trade fairs etc.
  • All the pending dues from the government or the government-owned companies will be cleared in the next 45 days.