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01/06/2020 05:40pm

Cabinet approves upward revision of MSME definition; FISME hails the move

image Cabinet approves upward revision of MSME definition; FISME hails the move

New Delhi, June 1 (KNN) The Cabinet today approved upward revision of MSME definition.

Accordingly a business will now be classified as ‘micro’ units if they have investments upto Rs 1 crore and turnover of less than Rs 5 crore.

For an MSME to be defined as a ‘small’ unit, its investment limit has been raised from Rs 5 crore to Rs 10 crore with a turnover of less than Rs 50 crore. Whereas enterprises with investments up to Rs 50 crore with a turnover of less than Rs 250 crore will now be defined as ‘medium’ units. All differences between manufacturing and services in terms of definition has been eliminated.

The Federation of Indian Micro and Small & Medium Enterprises (FISME) has welcomed the upward revision in definition of Medium Enterprises as MSME.

“We had originally proposed Rs 250 crore which Government has now finally come about to. It would help sectors such Gems & jewelry, Cables & conductors etc where turnover is largely made of cost of raw material,” FISME said.

The existing definition of MSMEs as per the MSMED Act 2006 is done on the basis of investments put in, but the revised definitions now also include turnover of the company.

The Cabinet has also given the go ahead to setting up the Rs 20,000 crore subordinate debt for stressed MSMEs and equity infusion of Rs 50,000 crore through a fund of funds.

“Approval for provisioning of Rs 20,000 crore as subordinate debt to provide equity support to the stressed MSMEs. This will benefit 2 lakh stressed MSMEs,” CCEA said in a release..

“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,” it added.

The cabinet has also approved the provision that was made of Rs. 20,000 crore subordinate debt for two lakh MSMEs, which are NPA or are stressed. Government will support MSMEs with Rs. 4,000 crore to Credit Guarantee Trust for Micro and Small enterprises (CGTMSE). Banks are expected to provide the subordinate-debt to promoters of MSMEs equal to 15% of his existing stake in the unit subject to a maximum of Rs 75 lakhs. (KNN Bureau)


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