Here are 6 measures for MSMEs announced by FM Nirmala Sitharaman

May 13, 2020

Indian Finance Minister Nirmala Sitharaman today announced six measures for the MSME sector as part of the Modi government’s 20 lakh crore stimulus package. The six steps of Micro, Small and Medium Enterprises (MSME) include collateral-free loans, additional debt and equity infusion. The government has also announced a new policy.

Which will protect Indian MSME businesses from unfair competition from foreign companies? As per the MSME Development Act, 2006, enterprises which are in the manufacturing and service sectors. They qualify as MSMEs. Which are subject to investment and turnover limits.

The six measures announced by FM Nirmala Sitharaman for the MSME sector are as follows:

1. Collateral-free automatic loan of 3 lakh crores for businesses including MSMEs

An emergency credit line of ₹ 3 lakh crore for MSMEs from banks and NBFCs. By February 29, 2020, the credit line will be 20% of all outstanding loans. The scheme is available until October 31, 2020. There will be no guarantee. No new collateral will be required. The move expected to benefit 45 lakh units.

Tenure: 4 years, with 12 months moratorium on principal payment.

2. ₹20,000 crores subordinate debt for Stressed MSMEs

Stressed MSMEs will get ₹ 20,000 crores of subordinate debt. Under this scheme, promoters will be given loans by banks. Which would later used in MSMEs as promoter equity. MSMEs are stressed or classified as NPAs. They will be eligible for this.

3. 50,000 crores for MSMEs through Equity Fund of Funds

Through MSMEs Fund of Funds, you will be able to avail additional equity infusion up to s 50,000 crores. The fund will set up with a corpus of ₹ 10,000 crore. The fund will operated through the Mother Fund and the Daughter Fund.

The government says that this will help in expanding the activity along with the size of MSMEs. MSMEs will also be encouraged to be listed on the stock exchanges.

Read More : ‘Skip Intro’ Trends As Twitter Because audience Frustrated At Pm Modi Long Speech

4. New definition of MSME

The Government of India has also given a new definition of MSMEs, which increases the investment limit in these units. This step will help the MSME sector grow in size. It will allow them to expand their operations, reaping the benefits of the MSME classification.

5. Global tenders are up to 200 millions

Government of India will now terminate bids up to ₹ 200 crores from foreign companies. The government upheld the decision, saying that the move is aimed at protecting MSMEs from unfair competition from foreign entities.

The Finance Minister said, Smaller units can now participate in government procurement.

6. Other interventions for MSMEs

E-market linkages provided across the board in the form of trade fairs etc. will be rare in the world after COVID 19. All pending dues of the government or government-owned companies will clear in the next 45 days.

Read More : Google