Cabinet Approves Upward Revision of MSME Definition

In keeping with its aim of revitalising the MSME sector in India, the Cabinet Committee on Economic Affairs (CCEA) recently approved the revision of the definition of MSMEs. The move will help lay down the effective implementation of the remaining two packages for MSMEs under the Aatmanirbhar Bharat Abhiyan economic stimulus and bring additional units under its purview.

As per the announcement made on the 13th of May 2020, all units that will come under micro manufacturing and services are those with an investment of Rs.1 crore, and with a turnover of Rs.5 crore. For small units, the limit was increased to Rs.10 crore for investment and Rs.50 crore for turnover. The limit for medium enterprises was increased to Rs.20 crore for investment and Rs.100 crore for turnover. 

However, as per the latest cabinet meeting, it was decided further to increase the limits under the definition of medium enterprises. The recent press release states that medium enterprises will cover those entities which will now have an investment limit of Rs.50 crore and an Rs.250 crore limit for turnover. Any turnover in respect to exports made will not be a part of the limits calculated for turnover, under any category of MSME.

Also Read: Aatmanirbhar Bharat Abhiyan – Part 1 (Highlights)

The government hopes that the revision of this definition will boost the MSME segment, and facilitate much-needed economic growth. The move should also attract new investment in this sector, and help in the creation of job opportunities. The road map for the implementation of the remaining two packages under Aatmanirbhar Bharat Abhiyan was also discussed at the cabinet meeting.

Approval has been given for the provisioning of Rs.20,000 crore as subordinate debt to provide equity support to over two lakh stressed MSMEs. Permission has also been granted for the equity infusion of Rs.50,000 crore through Fund of Funds (FOF), which will help augment the capacity of MSMEs. The move will also make way for MSMEs to get listed in stock exchanges.

PM Narendra Modi has acknowledged the role of MSMEs in building the nation and assured them that they would be given priority in the implementation of the requisite measures. In addition to the above packages, specific other stimulus packages have also been announced previously. These include collateral-free automatic loans, disallowing global tenders to make way for domestic players in procurements up to Rs.200 crore, and clearing of MSME dues by the government and PSUs within 45 days.

For any clarifications/feedback on the topic, please contact the writer at athena.rebello@cleartax.in

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