Here are 6 measures for MSMEs announced by FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman, on May 13, announced a tranche of six measures for the MSME sector.

According to the finance minister, the first of the six measures deals with standard MSMEs.

"In a major initiative, we announce Rs 3 lakh crores collateral-free automatic loans for businesses, including SMEs. Borrowers with up Rs 25 crore outstanding and Rs 100 crore turnover are eligible," Sitharaman said, adding that these have four year tenor, valid up to October 31..

"This will enable 45 lakh MSME units to resume business activity and also safeguard jobs," Sitharaman said.

Announcing measures for stressed MSMEs, the finance minister said, "Government will provide stressed MSMEs with equity support. We will facilitate the provision of Rs. 20,000 crores as subordinate debt."

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"A fund of funds being created for infusing about Rs 50,000 cr as equity into MSMEs. This will benefit those MSMEs who have the potential and are viable. The corpus of the fund will be of Rs 10,000 crore," the finance minister said.

Sitharaman said that there will also be a change in the definition of MSMEs.

Source: PIB India

Source: PIB India

"Definition is being changed for MSMEs for their benefit. So that they can grow in size and get benefits. Investment limit which defined MSMEs revised upwards. Additional criteria being brought in is turnover size - earlier differentiation between manufacturing and service MSMEs will be categorised similarly," Sitharaman said.

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Announcing the fifth measure, Sitharaman said that for government procurement, tenders up to 200 crores will no longer be on global tender routes.

"This will make self-reliant India, will also then be able to serve 'Make in India," the finance minister said.

The sixth measure that the government has taken, Sitharaman announced, would deal with e-market linkage across the board for MSMEs.

"Post-COVID, trade fairs and exhibitions will be difficult so e-market linkage will be provided for MSMEs so that they will be able to find their market. Also, the government and CPSEs will honour every MSME receivables within the next 45 days," Sitharaman said.

During his address to the nation on May 12, Prime Minister Narendra Modi had announced a stimulus package totaling Rs 20 lakh crore to rescue the economy reeling under the impact of coronavirus. This amounts to nearly 10 percent of India's GDP.

He said that this economic package would focus on areas like land, labour, liquidity and law.

The Rs 20 lakh crore stimulus includes packages worth nearly Rs 7-8 lakh crore already announced by the Finance Ministry and the Reserve Bank of India (RBI).

Sitharaman had announced a Rs 1.7 lakh crore package while RBI Governor Shaktikanta Das had announced liquidity support in two tranches in March and April respectively amounting to over Rs 5 lakh crore.

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