New Delhi, Aug 6 (KNN)  The government is considering enhancing the limit for firms and businesses to qualify for being categorised as MSMEs, it was stated in Parliament.

"The issue of enhancement of investment limit for micro, small and medium manufacturing enterprises as well as of service enterprises is under consideration,” Union Minister of Micro, Small and Medium Enterprises, Kalraj Mishra said in the Rajya Sabha yesterday.

The present investment limit for MSMEs under MSMED Act, 2006 for manufacturing enterprises is - Micro enterprise: investment in plant and machinery upto Rs 25 lakh; Small enterprise: investment in plant and machinery from Rs 25 lakh to Rs 5 crore; Medium enterprise: investment in plant and machinery from Rs 5 crore to Rs 10 crore.
 
As far as service enterprises are concerned, for Micro enterprise: investment in equipment is upto Rs 10 lakh; Small enterprise: investment in equipment is from Rs 10 lakh to Rs 2 crore; and Medium enterprise: investment in equipment is from Rs 2 crore to Rs 5 crore.
 
Meanwhile, meeting long-pending demand from the industry, Finance Minister Arun Jaitley in his Budget Speech 2014-15 had agreed to review the definition of MSME and provide for higher capital ceiling.

“The definition of MSME will be reviewed to provide for a higher capital ceiling.  A programme to facilitate forward and backward linkages with multiple value chain of manufacturing and service delivery will also be put in place,” Jaitley had said.
 
Significantly, the MSME sector contributes nearly 8 per cent of the country’s GDP, 45 per cent of the manufacturing output and 40 per cent of exports.  It is the second largest employment provider after agriculture.
 
However, there are some inherent challenges faced by the sector such as availability of finance and institutional credit, outdated technology, lack of skill development and training, inadequate infrastructure, power shortage among others. 
 
To provide a boost to the sector, the government has to address these issues and revise the definition of MSME. 

Meanwhile, there are no schemes at present whereby the Ministry of Micro, Small and Medium Enterprises (MSME) provides financial loan to establish industries, MSME Minister Kalraj Mishra informed Parliament.

However, the Ministry of  MSME has been implementing a credit-linked subsidy programme named Prime Minister’s Employment Generation Programme (PMEGP) from 2008-09 through Banks with Khadi and Village Industries Commission (KVIC) as nodal agency at the national level for generating employment in the country by setting up of micro-enterprises in the non-farm sector in the country, he added.

Under PMEGP, general category beneficiaries can avail of margin money subsidy of 25 per cent of the project cost in rural areas and 15 per cent in urban areas. 

For beneficiaries belonging to special categories such as scheduled castes, scheduled tribes, OBCs, minorities, women, ex-servicemen, physically handicapped, beneficiaries belonging to North Eastern Region, hill and border areas, etc,  the margin money subsidy is 35 per cent in rural areas and 25 per cent in urban areas.
The maximum cost of project is Rs 25 lakh in the manufacturing sector and Rs 10 lakh in the service sector.

The margin money subsidy released under PMEGP during the year 2013-14 was Rs 988.36 crore; the margin money subsidy utilized was Rs 1075.55 crore; whereas the number of projects assisted was 50,460. This includes the un-utilized balance funds of previous year. (KNN/SD/ES)