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Revision of MSME Definition

Cabinet approves Upward revision of MSME definition and modalities/ road map for implementing remaining two Packages for MSMEs (a)Rs 20000 crore package for Distressed MSMEs and (b) Rs 50,000 crore equity infusion through Fund of Funds
Fully paved way for Energising the MSME Sector through entire gamut of ‘Atmanirbhar Bharat Package.
 Shri Narendra Modi, approved the upward revision of MSME definition and modalities/
 road map for laying down effective implementation mechanism for the remaining two announcements under the Atmanirbhar Bharat Package. These include:
 ● In the package announcement, the definition of micro manufacturing and services unit was increased to Rs. 1 crore of investment and Rs. 5 crore of turnover. The limit of small unit was increased to Rs. 10 crore of investment and Rs 50 crore of turnover. Similarly, the limit of a medium unit was increased to Rs 20 crore of investment and Rs. 100 crore of turnover. It may be noted that this revision was done after 14 years since the MSME Development Act came into existence in 2006.
After the package announcement on 13th May, 2020, there were several representations that the announced revision is still not in tune with market and pricing conditions and it should be further revised upwards.
Keeping in mind these representations, it was decided to further increase the limit for medium
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manufacturing and service units. Now it will be Rs. 50 crore of investment and Rs. 250 crore of turnover. It has also been decided that the turnover with respect to exports will not be counted in the limits of turnover for any category of MSME units whether micro, small or medium. This is yet another step towards ease of doing business. This will help in attracting investments and creating more jobs in the MSME sector.

● Approval for equity infusion of Rs. 50,000 crore for MSMEs through Fund of Funds (FoF). This will establish a framework to help MSMEs in capacity augmentation. This will also provide an opportunity to get listed in stock exchanges.

The most important ones also included:

 ● Rupees Three lakh crore collateral-free automatic loans for MSMEs to meet operational liabilities, buy raw material and restart businesses.
● Revision of MSME definition to render maximum benefits to the sector;
● Disallowing global tenders in procurements uptoRs. 200 crores- to create more opportunities for
domestic players,
● And clearing of MSME dues by the Government and Public Sector Units within 45 days.
● The scheme for Rs. Three lakh crore col lateral-free automatic loans was earlier approved by CCEA and has been formally launched.
● Modalities have been worked out for Upward revision of MSME Definition making it more inclusive broad-based providing greater avenues to MSMEs to harness their potentials.
● Similarly, amendments in General Financial Rules mandating no global tenders for procurement upto 200 crore have been carried out. The new rules have already been issued and effected. This will open up new business avenues for Indian MSMEs.
● To ensure that MSME payments are released within the timeframe of 45 days, directions have been issued at the level of Cabinet Secretary, Expenditure Secretary and Secretary, MSME.
● To further ease the burden on MSMEs, RBI has extended moratorium on repayment of loans for another three months.
 To manage all this, a robust ICT based system called CHAMPIONS has also been launched by the Ministry of MSME. The portal is not only helping and handholding MSMEs in the present situation, but is also providing guidance to grab the new business opportunities and in the long run, become national and international Champions.

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