Highlights

  • FinMin announces Rs. 3 lakh crores collateral-free loans for MSMEs
  • Rs. 50,000 crore equity infusion

Hyderabad: Union finance minister Nirmala Sitharaman, on 13 May, announced the beneficiaries for MSME under the Athmanirbhar Bharat Abhiyan, a day after Prime Minister Narendra Modi announced a Rs. 20 lakh crore economic package to help the COVID-hit economy recover.

Ms Sitharaman announced Rs. 3 lakh crores collateral-free automatic loans for businesses, including MSMEs. Borrowers with up to Rs. 25 crore outstanding and Rs. 100 crore turnover are eligible for the loan. The loan can be availed till 31 October 2020. The government has provided four-year tenor with a moratorium of 12 months on principal repayment. The finance minister said that these will benefit almost 45 lakh units as they can restart their business activities and safeguard jobs.

She also announced Rs. 20,000 crore sub-ordinate debt for stressed MSMEs, those running under pressure. Through this around two lakh MSME will benefit, she said, adding the government will provide Rs. 4,000 crore to Credit Guarantee Fund Trust for Micro and Small Enterprise (CGFTMSE).

The minister also announced Rs. 50,000 crore equity infusion through MSME Fund of Funds and said MSMEs which have growth potential and viability will be provided equity funding of Rs. 10,000 crores. Well-performing MSMEs can develop their equity and think of expanding during the COVID-19 pandemic through these funds, Ms Sitharaman said.

In order to avoid unfair competition face by MSMEs from foreign companies, the government will not allow global tenders in government procurement tenders up to Rs. 200 crores. Necessary amendments will be made to the financial rules to implement this change, she said.

The government will also introduce e-market linkage for MSMEs. Many MSMEs lost market because of the pandemic hence they will now be linked to e-market which will replace trade fairs and exhibitions.

The government has also redefined the term MSME and increased their investment limit. The minister said, “Many MSMEs don’t grow, thinking that they will lose out on benefits. In order to avoid that, a new definition has been set for MSME.”

MSME

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