About Micro, Small and Medium Enterprises (MSME)

The Ministry of Micro, Small and Medium Enterprises, a branch of the Government of India, is the apex executive body for the formulation and administration of rules, regulations and laws relating to micro, small and medium enterprises in India. The Minister of Micro, Small and Medium Enterprises is Nitin Gadkari and the Minister of State is Pratap Chandra Sarangi since 31 May 2019.

The statistics provided by the annual reports of Ministry of Small and Medium Enterprises (MSME) shows a rise in the plan amount spent on the khadi sector from ₹1942.7 million to ₹14540 million, and non-plan amounts from ₹437 million to ₹2291 million, in the period from 1994–95 to 2014–2015. The interest subsidies to khadi institutions increased from ₹96.3 million to ₹314.5 million in this period.

The Ministry of Small Scale Industries and Agro and Rural Industries was created in October 1999. In September 2001, the ministry was split into the Ministry of Small Scale Industries and the Ministry of Agro and Rural Industries. The President of India amended the Government of India (Allocation of Business) Rules, 1961, under the notification dated 9 May 2007. Pursuant to this amendment, they were merged into a single ministry.

The ministry was tasked with the promotion of micro and small enterprises. The Small Industries Development Organisation was under the control of the ministry, as was the National Small Industries Corporation Limited public sector undertaking).

The Small Industries Development Organisation was established in 1954 on the basis of the recommendations of the Ford Foundation. It has over 60 offices and 21 autonomous bodies under its management. These autonomous bodies include Tool Rooms, Training Institutions and Project-cum-Process Development Centres.

New definition of MSMEs

• Low threshold in MSME definition have created a fear among MSMEs of graduating out of the benefits and hence killing the urge to grow.

• There has been a long-pending demand for revisions.

Announcement:

• Definition of MSMEs will be revised

• Investment limit will be revised upwards

• Additional criteria of turnover also being introduced.

• Distinction between manufacturing and service sector to be eliminated.

• Necessary amendments to law will be brought about.

Rs 3 lakh crores Collateral-free Automatic Loans for Businesses, including MSMEs

• Businesses/MSMEs have been badly hit due to COVID19 need additional funding to meet operational liabilities built up, buy raw material and restart business

• Decision: Emergency Credit Line to Businesses/MSMEs from Banks and NBFCs up to 20% of entire outstanding credit as on 29.2.2020

• Borrowers with up to Rs. 25 crore outstanding and Rs. 100 crore turnover eligible

• Loans to have 4 year tenor with moratorium of 12 months on Principal repayment

• Interest to be capped

• 100% credit guarantee cover to Banks and NBFCs on principal and interest

• Scheme can be availed till 31st Oct 2020

• No guarantee fee, no fresh collateral

• 45 lakh units can resume business activity and safeguard jobs.

Rs 20,000 crores Subordinate Debt for Stressed MSMEs

• Stressed MSMEs need equity support

• GoI will facilitate provision of Rs. 20,000 cr as subordinate debt

• Two lakh MSMEs are likely to benefit

• Functioning MSMEs which are NPA or are stressed will be eligible

• Govt. will provide a support of Rs. 4,000 Cr. to CGTMSE

• CGTMSE will provide partial Credit Guarantee support to Banks

• Promoters of the MSME will be given debt by banks, which will then be infused by promoter as equity in the Unit.

Rs 50,000 cr. Equity infusion for MSMEs through Fund of Funds

• MSMEs face severe shortage of Equity.

• Fund of Funds with Corpus of Rs 10,000 crores will be set up.

• Will provide equity funding for MSMEs with growth potential and viability.

• FoF will be operated through a Mother Fund and few daughter funds

• Fund structure will help leverage Rs 50,000 cr of funds at daughter funds level

• Will help to expand MSME size as well as capacity.

• Will encourage MSMEs to get listed on main board of Stock Exchanges.

Global tenders to be disallowed upto Rs 200 crores

• Indian MSMEs and other companies have often faced unfair competition from foreign companies.

• Therefore, Global tenders will be disallowed in Government procurement tenders upto Rs 200 crores

• Necessary amendments of General Financial Rules will be effected.

• This will be a step towards Self-Reliant India and support Make in India

• This will also help MSMEs to increase their business.

Other interventions for MSMEs

• MSMEs currently face problems of marketing and liquidity due to COVID.

• e-market linkage for MSMEs to be promoted to act as a replacement for trade fairs and exhibitions.

• Fintech will be used to enhance transaction based lending using the data generated by the e-marketplace.

• Government has been continuously monitoring settlement of dues to MSME vendors from Government and Central Public Sector Undertakings.

• MSME receivables from Gov and CPSEs to be released in 45 days