Currently COVID-19 pandemic has disturbed the whole economic –structures globally. Everywhere the economics-institutions are declaring economic recession. During the COVID-19 break out in India, the Indian Government has been announcing the relief statements for the Business, industries and Start-ups throughout the pandemic period. Recently, 20 lakh Carore package (equal to 10% of the total GDP of India) has been announced by the Prime Minister of India; which was to be used for the economical relief to all the Indian Citizens.
On the very first day of the Economical announcement; Finance Minister Smt Nirmala Sitharaman announced a big amount for bringing new life to the MSMEs functioning in India. Significantly, the definition of MSMEs has also been redefined. The packages announced by the Government would certainly bring liquidity, competitiveness and strength to the Small and medium businesses in the country.
These announcements would boost the start-ups, rural entrepreneurship and production companies to take advantage of government schemes and policies which were never as advantageous as of now. If you are also an entrepreneurial mind or operating any business then you must know the MSMEs packages announced by the Government of India.
- Defining New MSMEs – The greatest fears of MSMEs have been addressed during the first installment allocation of the 20 lakh crore by Smt Sitharaman. The announcement stressed the need for redefining the MSMEs’ definition by the statement of the government saying “50% of the total export units come via MSMEs operating in India.” It is the demand of the hour to liberate the Investment and turnover limits for these companies to grow further.
Mostly the MSMEs companies don’t wish to step out of the threshold of MSME to avail the several governmental aids and schemes. Now the Government has revised such limits on Micro, small and medium intersperses for them to grow and contribute more & more into the total GDP of the country. Also, the investment amount and return had to be within the threshold of the government underlined digits for the service sector and production sector but now things been changed a lot.
A. Now manufacturing companies and services sectors both investments less than 1 crore and return less than 5 crores would be regarded as Micro Units.
B. Business Units having less than 10 crore investment and turnover less than 50 crores would be listed under small businesses.
C. Firms having an investment of less than 20 crores and turnover less than 100 crores would be regarded as Medium Enterprises.
- Credit/loans to MSMEs- This is another revolutionary announcement have been done by the government during the COVID-19 outbreak. Now the MSMEs can avail loans from banks and NBFCs. Banks can give an amount of 20% of the total outstanding of the firms as of 29 Feb. 2020 to the MSMEs for business-growth. The firms having totaled outstanding of less than 25 crores as of 29 Feb 2020 and having 100 crores of the turnover can avail these offers from banks / NBFC units. The scheme would be effective till 31st October 2020 for the categorized business units. Significantly; these loans would be offered to the business units without any Collateral submission. The lenders would have four years tenor including 12 month moratorium period to pay off the principal amount.
- Subordinate debt and Equity Infusion – To boost up the stressed MSMEs the government also announced that 20 thousand crore subordinated debts. Along with it, equity infusion amounting of 50 thousand crores into MSMEs will bring a new life to the newly defined micro, small, and medium enterprises operating in the country.
- Relief in the Income-tax return – The government had earlier extended the income tax filing ate till July 2020, but with the announcements of the relief package the date for filing come tax return has been extended till 30 November 2020 without any other charges or fine. The TDS rates have also been revised and reduced. This would also help the professionals and other entities in terms of economical gains.
- Global Tenders disallowance to strengthen the MSMEs- This is another revolutionary announcement that has been made by the Smt Niralama Sitharaman to disallow the foreign business units to participate in the Government tenders up to 200 crores. Having said that the MSMEs do not get their standing place in the competition with global market leaders in government tender procurement that’s why the government took this step to help out the MSMEs to make their place in the government projects.
There are several other measurements have been taken so far by the government to help and boost up the MSMEs. EPFO, clearance of the MSMEs dues by the government are also very helpful steps taken by the government. These announcements seem very vital and life-giving to the MSMEs, an important economic unit of the government of India.