NEW DELHI: In a big boost for micro, small and medium enterprises (MSMEs), the Cabinet Committee on Economic Affairs on Monday approved Rs 20,000 crore fund infusion into the sector and further amended its definition since the announcement of the Atmanirbhar Bharat package.
Briefing the media on the decisions taken by the Cabinet, Union ministers Prakash Javadekar, Nitin Gadkari and Narendra Tomar said that the measures will improve ease of doing business, attract investments and create jobs for the MSME sector.
In a bid to strengthen their growth potential, the government approved Rs 50,000 crore equity infusion for MSMEs along with Rs 20,000 crore subordinate debt for stressed MSMEs.
“Cabinet has approved modalities and road map for implementing two packages for MSMEs — Rs 20,000 crore package for distressed MSMEs and Rs 50,000 crore equity infusion through fund of funds,” Nitin Gadkari said.
The decision on equity infusion will also enable micro, small and medium enterprises (MSMEs) to get listed on stock exchanges.
The government has further amended the definition of MSMEs since the announcement of the Rs 20 lakh crore Atmanirbhar Bharat package last month. As per the latest amendment, the turnover limit for medium enterprises has been revised upwards to Rs 250 crore from Rs 100 crore announced earlier. Further, the investment limit has been raised to Rs 50 crore.
It is notable that the new MSME definition has been brougt about 14 years after the implementation of the MSME Development Act, 2006, said information and broadcast minister Prakash Javadekar.
The decision was taken post suggestions that came in after the government announced the broadening of the scope of MSMEs to support and more businesses, he added.
Also, the turnover criteria for MSMEs will not include revenue from exports further providing flexibility to the sector to expand their operations and push overseas sales, he noted.
Finance minister Nirmala Sitharaman had last month announced amendment in the definition of MSME, according to which a firm with investment up to Rs 20 crore and turnover under Rs 100 crore was classified as ‘medium’ enterprise. However, with today’s decisions these limits stand further enhanced.
The government will also set up a fund of funds with a corpus of Rs 10,000 crore which will be operated through mother fund and few daughter funds. The fund structure will help leverage Rs 50,000 crore of funds at daughter funds level.
MSME minister Nitin Gadkari said that the changes would benefit 6 crore MSMEs that together employ 11 crore people.
(With agency inputs)