Revised limits of MSME capital and turnover – Upward revision of definition

Revised limits of MSME capital and turnover – Upward revision of MSME definition

Cabinet today approved upward revision of MSME definition and modalities/ road map for implementing remaining two Packages for MSMEs.

Recently, the Govt. had increased the investment limit for MSME and removed  the distinction between manufacturing and service MSME. 

A special meeting of Cabinet Committee on Economic Affairs (CCEA) today approved a further upward revision of MSME definition and modalities/ road map for laying down effective implementation mechanism for the remaining two announcements under the Atmanirbhar Bharat Package. These include:

The definition of micro manufacturing and services unit was increased to Rs. 1 crore of investment and Rs. 5 crore of turnover. The limit of small unit was increased to Rs. 10 crore of investment and Rs 50 crore of turnover. Similarly, the limit of a medium unit was increased to Rs 20 crore of investment and Rs. 100 crore of turnover.

It was decided to further increase the limit for medium manufacturing and service units. Now it will be Rs. 50 crore of investment and Rs. 250 crore of turnover. It has also been decided that the turnover with respect to exports will not be counted in the limits of turnover for any category of MSME units whether micro, small or medium.

The table of revised MSME limits of capital and turnover is as under:

Approval granted for provisioning of Rs 20,000 crore as subordinate debt to provide equity support to the stressed MSMEs. 

Approval given for equity infusion of Rs. 50,000 crore for MSMEs through Fund of Funds (FoF). This will establish a framework to help MSMEs in capacity augmentation. 

Decisions already taken by the Government are as under:

• Rupees Three lakh crore collateral-free automatic loans for MSMEs to meet operational liabilities, buy raw material and restart businesses.

• Revision of MSME definition to render maximum benefits to the sector;

• Disallowing global tenders in procurements uptoRs. 200 crores- to create more opportunities for domestic players,

• And clearing of MSME dues by the Government and Public Sector Units within 45 days.

Various policy decisions already taken are as under:

• The scheme for Rs. Three lakh crore col lateral-free automatic loans was earlier approved by CCEA and has been formally launched.

• Modalities have been worked out for Upward revision of MSME Definition making it more inclusive broad-based providing greater avenues to MSMEs to harness their potentials.

• Similarly, amendments in General Financial Rules mandating no global tenders for procurement upto 200 crore have been carried out. The new rules have already been issued and effected. This will open up new business avenues for Indian MSMEs.

• To ensure that MSME payments are released within the timeframe of 45 days, directions have been issued at the level of Cabinet Secretary, Expenditure Secretary and Secretary, MSME.

• To further ease the burden on MSMEs, RBI has extended moratorium on repayment of loans for another three months.

A ICT based system called CHAMPIONS has also been launched by the Ministry of MSME. 

The Govt has also issued the notification for revised MSMEs limits of capital and turnover as under:

Notification

MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

NOTIFICATION

New Delhi, the 1st June, 2020

S.O. 1702(E).—In exercise of the powers conferred by sub-section (1) read with sub-section(9) of section 7 of the ‘Micro,Small and Medium Enterprises Development Act, 2006 (27 of 2006) and in supersession of the notification of the Government of India, Ministry of Small Scale Industries, dated the 29th September, 2006, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section(ii), vide S.O. 1642(E), dated the 30th September 2006 except as respects things done or omitted to be done before such supersession, the Central Government, hereby notifies the following criteria for classification of micro, small and medium enterprises, namely:—

(i) a micro enterprise, where the investment in Plant and Machinery or Equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;

(ii) a small enterprise, where the investment in Plant and Machinery or Equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees;

(iii) a medium enterprise, where the investment in Plant and Machinery or Equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.

This notification shall come into effect from 01.07.2020.

[F. No. 2/1(5)/2019-P&G/Policy (Pt.-IV)]

A. K. SHARMA, Secy.

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