A major fallout of India’s lockdown owing to the pandemic has been economic, among many others. The pandemic has affected all sectors but one that draws particular attention is the Medium, Small and Micro Enterprises (MSME sector). Media reports suggest that as per the Annual Report of the Department of MSMEs, the country is home to over 6.3 crore MSMEs, and half of them are in the rural parts. Overall, these enterprises provide employment to more than 11 crore Indians.
According to a study by the All India Manufacturers Organisation (AIMO), nearly a quarter of the MSMEs in India may shut shop because of the pandemic and the lockdown.
It is in the wake of such a mammoth impact that the Finance Minister of India, Nirmala Sitharaman, has announced a slew of measures as part of the Prime Minister’s Atmanirbhar Bharat Abhiyan package. This package is aimed at reviving growth and giving a thrust to the spirit of self-reliance.
So, what’s in it for the MSME sector? There are six major benefits in the package aimed at rejuvenating MSMEs. Read on for more:
One of the key announcements was that the definition of MSMEs would be altered. Accordingly, micro enterprises are those with an investment of up to Rs. 1 crore and a turnover of Rs. 5 crore or below. Small enterprises are redefined as those with investment of Rs. 10 crore or lower and a turnover of less than Rs. 50 crore, while medium enterprises would be companies whose investment could go up to Rs. 20 crore with a turnover of lower than Rs. 100 crore. The altered definition will combine service and manufacturing MSMEs to avail of the same benefits.
This recategorising ensures that MSMEs no longer have to be afraid that they may lose any benefits if they have outgrown the ceiling. The redefining ensures that MSMEs stay motivated to expand their size and profits. If you own an MSME, it’s time you looked at loans for msme to ensure that you are on a growth path.
Rs. 3 lakh crore earmarked for automatic and zero collateral loans
This move is aimed at benefiting 45 lakh MSMEs across the country. Borrowers who have up to Rs. 25 crore outstanding with up to Rs. 100 crore turnover are eligible for these loans. The tenure of the loans is four years with a moratorium of 12 months on the payment of principal. The loan needs to be availed before October 31, 2020.
Rs. 20,000-crore worth subordinate debt scheme
This scheme is aimed at ensuring that MSMEs that were already stressed or NPAs (non-performing assets) are provided unsecured loans/bonds by the banks. This facility will help nearly two lakh MSMEs that are struggling or stressed.
Fund of funds
A fund with a Rs. 50,000 crore corpus will be created so that equity can be channelized into some MSMEs. This is aimed at kickstarting growth and expansion. The government’s contribution to this fund is expected to be Rs. 10,000 crore. The remaining will be contributed by other sources. The government also hopes to ensure that MSMEs get themselves listed on the stock exchanges’ main boards.
Clearing of dues
The Finance Minister also announced that all pending payments due to MSMEs will be cleared in a month and a half. Also, to make up for the absence of exhibitions or trade fair events, e-market linkage will be put into place for the benefit of MSMEs.
Global tenders a no-no
As part of the Atmanirbhar Bharat Abhiyan package, the Finance Minister announced that global tenders for projects of up to Rs. 200 crore will not be allowed. This is to ensure that MSMEs are protected from competition from foreign firms in the government’s procurement process.
The MSME sector has been looking for a financial package from the time the lockdown has been in place, and as part of the Atmanirbhar Bharat Abhiyan package, they finally get it. Experts hope that the package, amounting to nearly 10 per cent of the country’s GDP, will bring in much needed liquidity in the MSME sector.
If you are an MSME/SME entrepreneur, take note of the announcement and consider how it will help you. Also, small business wonders can opt for MSME loan, available on Finserv MARKETS, in order to meet fresh capital needs, invest in new machinery or diversify into other products and services. By opting for one of the MSME loans, you can borrow up to Rs. 30 Lakhs to meet your needs. The other advantages are that these are collateral-free loans for small business, and can be availed online. The application and approval process is completed in under 24 hours. Minimal paperwork, flexible tenures ranging from anywhere between 12 and 60 months, and flexi-loan option wherein you can make multiple withdrawals are other benefits from loans for small business.
So, what are you waiting for? Pick one of the SME/MSME loans and ensure that your micro, small or medium enterprise grows in size and profits.
Read more about CIBIL MSME Rank
Read more on MSME Databank
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