The Narendra Modi government on Monday announced policy changes for the MSME sector as part of the Atmanirbhar Bharat package.
In the first Cabinet meeting in the second year of the Narendra Modi government, it approved changes to the definition of MSMEs.
According to the new definitions, MSMEs with an investment of Rs 1 cr and turnover of Rs 5 cr will be classified as micro-units. Units with an investment of Rs 10 cr and turnover of Rs 50 cr will be classified as small units while those with an investment of Rs 50 cr and turnover of Rs 250 cr will be classified as medium units. Moreover, exports will not be excluded from the turnover cap.
The Cabinet also approved a Rs 50,000 crore equity scheme for MSMEs. As per this scheme, MSMEs can now be listed.
In the press briefing, the Union Minister for Information and Broadcasting, Prakash Javadekar said that the government recognises the importance of MSMEs which are the backbone of India’s economy. The minister said that the government has formulated the roadmap for implementing the measures for the MSME sector, as announced in the Atmanirbhar Bharat package.
These measures will improve ease of doing business, attract investment, and create jobs, said the minister. Joining the press conference, Nitin Gadkari, minister for road transport, highways and MSMEs said that 60 million MSMEs contribute 29% to India’s GDP, 48% of total exports, and generate 110 million jobs and these decisions will help strengthen the Indian economy.
Giving details of the equity scheme, Gadkari elaborated that this was based on the recommendation of the U K Sinha Committee (on distressed fund and special fund of funds for MSMEs).
Rs 50,000-cr fund: The government will infuse equity in those MSMEs that export and have a good track record and can be listed on stock exchanges.
Distressed asset fund: Rs 4,000 crore. 200,000 distressed MSMEs stand to benefit with loans of up to Rs 75 lakhs.
The Cabinet also approved a provision for more loans of up to Rs 10,000 for street vendors which would benefit 5 million vendors.
The Cabinet also took decisions related to the farm sector and approved MSP for 14 Kharif crops. According to the latest announcements, farmers will get 50-83% more than the cost. The govt also announced the relaxation of norms for loans to farmers under the Kisan credit card scheme.
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