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The central government announced six reforms on Wednesday to shore up Micro, Small and Medium Enterprises (MSMEs), considered the backbone of the Indian economy, affected by the economic crisis caused by the coronavirus outbreak. The finance minister, in announcing the reforms, said the changes were aimed at making the Indian economy self-sufficient. Here are the six reforms or measures announced by the finance minister.
1. Automatic unsecured loan for SMEs up to 3 lakh crore, which means that not a single unit of MSMEs needs to pay any guarantee or guarantee for the loans available in this scheme. Nor will they be required to repay any major component of the loan in the first year. The loan will be for 4 years. This will benefit 45 lakh units and resume commercial activities and safeguard jobs, the FM said.
2. Subordinate debt of Rs 20 billion for stressed MSMEs facing a capital problem. It will help operating MSMEs that are NPA (non-productive assets) or are economically stressed. Around Rs 2 lakh MSMEs qualify under this category. The government will provide partial credit guarantee support of Rs 4 billion to banks, and MSME promoters will receive debts from banks in the form of a capital infusion.
3. Fund fund for the infusion of Rs 50,000 crore as equity in MSMEs. This will benefit MSMEs with potential and viability by supporting them further in expanding capacity and in order to include them in the market. This will cover MSMEs that perform very well and can take the opportunity to expand.
4. The definition of MSMEs is being changed to encourage MSMEs to grow without losing the benefits of MSMEs. The investment limit that defined a MSMEs is being revised upwards along with the incorporation of rotation as criteria to classify MSMEs. In addition to these, the differentiation between manufacturing and service MSMEs is being removed.
For micro-enterprises in the manufacturing and services sectors, the investment limit is raised from Rs 25 lakh and Rs 10 lakh respectively to Rs 1crore with a maximum turnover of Rs 5 crore. Similarly, for small companies in both sectors, the investment limit is raised from Rs 5 million and Rs 2 million respectively, to Rs 10 million rupees with a maximum turnover of Rs 50 million rupees and finally For medium-sized companies in the manufacturing and services sector, the investment limit was raised from Rs 10 core and 5 crore respectively to Rs 20 crore with a maximum turnover of Rs 100 crore.
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5. Government procurement tenders of up to Rs 200 million will no longer be open to global tenders / players, allowing MSMEs the opportunity to compete. The government said it will make the necessary amendments to the General Financial Rules to allow this provision. Sitharaman said that this was an important step towards creating a self-sufficient India.
6. Post-Covid commercial rates will be difficult, so the electronic link market is provided to MSMEs. In addition to this, the government has promised to settle all accounts receivable from MSMEs in the next 45 days.
Also read: Nirmala Sitharaman Press Conference: Rs 9250 crore relief for provident fund contributor
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