In a press conference on Wednesday afternoon, Finance Minister Nirmala Sitharaman unveiled the details of the special economic package worth Rs 20 lakh crore, under which, she said the additional criteria of turnover has also been introduced for recognition of an MSME. The government has also done away with the distinction of services and manufacturing MSME.
Explaining the new definition, Nirmala Sitharaman said businesses with investment of less than Rs 1 crore and turnover of Rs 5 crore would be classified as micro enterprises. Under the existing criteria, a company with investment of less than Rs 25 lakh in the manufacturing sector and less than Rs 10 lakh in the services sector were considered micro enterprises.
Nirmala Sitharaman, who was flanked by the MoS Anurag Thakur and the finance ministry officials, further announced that investment limit of small enterprises has been increased to Rs 10 crore, and the companies would have to have turnover of less than Rs 50 crore.
Moreover, the investment limit for medium enterprises has been increased to Rs 20 crore and the turnover limit has been kept at Rs 100 crore.
Sitharaman also mentioned that the necessary amendments to laws will be brought about to give effect to the changes.
Among other measures for MSMEs, Finance Minister announced Rs 3 lakh crores collateral-free automatic loans for businesses, including SMEs. Going by the details announced by the Minister, borrowers with up Rs 25 Crore outstanding and Rs 100 Crore turnover will be eligible. These have 4 year tenor, which will be valid up to October 31, 2020.
In addition to this, Centre said that global tenders will be disallowed in government procurement for tenders up to Rs 200 crore. This will address unfair competition being faced by MSMEs, and enable them to participate actively in government purchases.
(With inputs from IANS news agency)