New Delhi: The Union Cabinet on Monday approved Rs 20,000 crore subordinate debt for stressed Micro, Small and Medium Enterprises, which will benefit two lakh such units, said Union Minister Prakash Javadekar.
The Cabinet also approved Rs 50,000 crore equity infusion for MSMEs to strengthen their growth potential.
Union Minister Prakash Javadekar said the decision on equity infusion will also enable micro, small and medium enterprises (MSMEs) to get listed on stock exchanges.
Addressing a press conference here along with Union Ministers Nitin Gadkari and Narendra Singh Tomar, Javadekar said: "Various key steps have been taken by the government to boost MSMEs. A decision has been taken to infuse Rs 20,000 crore into this sector."
Subordinate debt is a debt owed to an unsecured creditor that in the event of liquidation can only be paid after the claims of secured creditors have been met. "MSMEs play a crucial role in building an Atmanirbhar Bharat.
A fund of funds with cropus of Rs 10,000 will be set up. The fund of funds will be operated through mother fund and few daughter funds.
The fund structure will help leverage Rs 50,000 crore of funds at daughter funds level.
The subordinate debt for stressed MSMEs is likely to benefit 2 lakh stressed MSMEs.
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Meanwhile, the government further amended the definition of MSME. Turnover limit for medium enterprises has been revised upward to Rs 250 crore (from Rs 100 crore as announced earlier).
Also, the turnover criteria for MSME will not include revenue from exports further providing flexibility to the sector to expand their operations and push overseas sales, he said.
On May 13, Finance Minister Nirmala Sitharaman announced to increase of investment limits for MSMEs. Further, she had also said that an additional criteria of turnover has also been introduced for recognition of an MSME.
During that announcement, Sitharaman had raised medium enterprises definition to one with investment and machinery to the tune of Rs 20 crore and turnover of Rs 100 crore. This stands further enhanced now after the cabinet decision.
As per the new changes, businesses with investment of less than Rs 1 crore and turnover of Rs 5 crore would be classified as micro enterprises. Under the existing criteria, a company with investment of less than Rs 25 lakh in the manufacturing sector and less than Rs 10 lakh in the services sector were considered micro enterprises.
The Cabinet had changed this distinction as well and a unified criteria will be applied for micro enterprises.
The investment limit of small enterprises has been increased to Rs 10 crore, and the companies would have to have turnover of less than Rs 50 crore.
Further, the investment limit for medium enterprises has been increased to Rs 20 crore and the turnover limit has been kept at Rs 100 crore, which has now been extended to companies with investment of Rs 50 crore and turnover of up to Rs 250 crore.
Briefing media persons about the cabinet decision, MSME Minister Nitin Gadkari said that the changes would benefit 6 crore MSMEs that together employ 11 crore people.
(ANI and IANS Report)
