After the announcement of the lockdown extension by the PM, a financial package of rupees 20
lakh crores was announced to inject in the economy so as to specifically help the MSME units.
The PM urged India to be "self-reliant" under this announcement.
The amount is estimated to be almost 10% of the GDP of the Indian economy. 15 relief
measures were announced by the finance minister, Nirmala Sitharaman out of which 6 of
them were aimed for the relief measures of MSME sectors.
Collateral free loans of up to rupees 3 lakh crores
MSME having 25 crores as outstanding credit and a turnover of rupees 100 crores will benefit
from this. They are eligible for taking loans having four-year tenure with a moratorium of 12
months on principal payment. It can be availed till 31st October 2020. These loans will be a
hundred percent credit guarantee that is there will be no guarantee fees and no collateral
The subordinated debt of up to rupees 20,000 crores
Under this, the finance minister announced that the government will facilitate rupees 20,000
crores as subordinate debt to the stressed MSMEs and NPA MSMEs who are eligible for equity
support. The government will further provide rupees 4000 crores to CGTMSE (CREDIT
GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES) for providing support
to the banks that are lending to MSMEs by offering partial credit guarantee.
Equity infusion of rupees 50,000 crores
A fund of funds worth rupees 50,000 crores will be infused as equity into the MSMEs. This
package is for those viable MSMEs who need hand-holding in this COVID-19 crisis. It will be
operated through a mother fund and a few daughter funds. A corpus of rupees 10,000 crores
will be set up to give equity-based funding to MSMEs which will help in the growth of these
sectors and will also urge them to list on stock exchanges.
The revised definition of MSME
Finance minister Nirmala Sitharaman had last week announced a changed definition of micro,
small and medium enterprises after unveiling the stimulus package. As per the new definition,
any firm or enterprise with an investment of up to rupees 1 crore and turnover under rupees 5
crores will be classified as "micro-enterprise". Similarly, a company with an investment of upto
to rupees 20 crores and a turnover under rupees 100 crores will be classified as "medium
Later Union Minister of MSMEs, Nitin Gadkari told the media that "We have taken a decision to
raise the investment criteria from rupees 20 crore to rupees 50 crores and turnover limit upto
rupees 200 crores. So we will issue an order for that". He further said that they are also
reviewing the fact that the limit can go upto rupees 250 crores for medium enterprises.
Global tenders disallowed
Under this the government mentioned that they will not allow global tenders of upto rupees 200
crores in government procurement tenders as MSMEs tend to lose in this unfair competition due
to differences in size and strength. This will help the MSMEs to innovate and address the needs
of the country.
Clearing MSME dues
In the final point Nirmala Sitharaman said that the government and Central public sector
enterprises will release all pending MSME payments in 45 days.
Union Minister of micro small and medium enterprises Nitin Gadkari spoke on the
economic package announced by PM Narendra Modi. He said that the MSME sectors will be
hugely benefited from this package. It will provide relief to over 11 crore workers and also it will
help the economy to come out of this crisis and the country will walk towards development. He
said that with the new package they are planning to raise India's export up to 60% from 48%
that will also boost the sector's growth and contribution to the GDP from 29 % to 50%. He also
said that they are planning to create 5 crore new jobs to raise Indian MSMEs to international
The owners of the business and enterprises registered under the MSME sector must not worry. The Indian government is trying its best to provide them relief packages during the pandemic. The business owners must cooperate with the Indian government's strategies to uplift their small and medium business and save the economy of the country.
If you are a new or existing business owner, looking for an MSME loan, or want to register under the Ministry of MSME. They must go through the MSME registration process for small businesses on our website.