FAQs MSMEs, Street Vendors And Farmers Announcements Of 1st June, 2020

• Published date: 16 June 2020
• Author: AMLEGALS &nbsp
• Subject Matter: Finance and Banking, Government, Public Sector, Financial Services, Commodities/Derivatives/Stock Exchanges, Government Contracts, Procurement & PPP
• Law Firm: AMLEGALS

Introduction

MSMEs ("Micro, Small and Medium Enterprises") have been working and generating a considerable percentage of employment for the India. They have come up with a healthy competitive market with young and innovative ideas of carrying out businesses.

The Modi 2.0 Government had pushed and encouraged the MSME Sector for the very initiation and have now, even during the difficult times of the pandemic announced a catena of relief measures to uplift the said Sector and help them with the cash flow problems faced by them because of the current economic crisis.

Focusing on MSMEs and Business Enterprises in light of COVID - 19 crisis, the Government through the Finance Minister announced the said relief measures for the said suffering Sectors on 13th May, 2020.

Union MSME, Road Transport and Highways Minister on 1st June, 2020 vide Press Release ID : 1628325 announced measures to offer a helping hand to the 6 Crore MSMEs of the country. Other Ministers also announced Schemes for the street vendors and relaxations for the farmers to help in operating to guide the economy of the country.

These announcements can bring remarkable change in the scenario for example, the revision of definition of Section 7 of the MSME Development Act, 2006 and also the revision of the thresholds for medium enterprises particularly.

The Government amongst many others believe that MSMEs shall drive us all towards a Self- Reliant India therefore, the Government has decided to give them priority while implementing the measures for revival of the economy.

We have covered some frequently asked questions hereunder to solve queries about the said announcements.

REVISION OF THE MSME DEFINITION

1. How has the Government decided to revise the definition of the enterprises governed by the MSME Development Act, 2006?

Answer: The Government has come to a conclusion to further uplift the definition of MSMEs compared to what was announced on 13th May, 2020. The following thresholds have been announced on 1st June, 2020:

Enterprises (Manufacturing & Services Unit)	Investment	Turnover
Micro Enterprises	Rs. 1 Crore	Rs. 5 Crores
Small Enterprises	Rs. 10 Crores	Rs. 50 Crores
Medium Enterprises	Rs. 20 Crores (whichwas announced on 13th May, 2020)	Rs. 100 Crores (whichwas announced on 13th May, 2020)

It is important to note that the export turnover is not to be included in the Turnover of the any of the enterprises.

2. What was the aim and purpose of the revision in definition of MSMEs?

Answer: The Government has revised the definition after 14 years i.e. for the first time after the MSME Development Act, 2006 came into picture. Important changes that are brought into picture are:

• Removed the bifurcation between manufacturing and services units; and
• Brought in the element of turnover limit in the definition.

The aim and purpose of such change is to bring about aggressive growth in the Sector and will help them to grow in size.

It will aid these enterprises to perform better and carry out businesses at a larger scale. They also aim to push medium enterprises to even enter the international market.

THRESHOLD OF MEDIUM ENTERPRISES

3. What changes have been brought into picture in the classification threshold of medium enterprises?

Answer: The Government through the Hon'ble Finance Minister announced the initial change in the definition of MSMEs wherein the threshold of the Medium Enterprises was revised to an Investment of Rs. 20 Crores and Turnover of Rs. 100 Crores.

However, the Government on 1st June, 2020 announced the further revised and upgraded threshold limits for Medium Enterprises i.e. Investment of Rs. 50 Crores and Turnover of Rs. 250 Crores.

OTHER PROPOSALS

4. What other proposals and benefits have been brought to light to benefit the MSMEs?

Answer: The announcements also mentioned two proposals to infuse liquidity in MSMEs catering their growth and helping the stressed MSMEs financially;

• Approval of the provision of Rs. 20,000 Crores as sub-ordinate debt to provide equity support to stressed MSMEs. The Government plans to support the MSMEs with Rs. 4,000 Crores to Credit Guarantee Trust for Micro and Small enterprises (CGTMSE). The Banks are expected to provide the subordinate-debt to promoters of MSMEs equal to 15% of his existing stake in the unit subject to a maximum of Rs 75 lakhs and

• Approval of provision of equity infusion of Rs. 50,000 Crores for MSMEs which are engaged in export operations and have a stabilized turnover shall be benefited vide the Fund of Funds Scheme. This aims to help those who are self-dependent and have potential which will enable the Government to buy a maximum of 15% equity in the enterprise. It also opens an opportunity to get listed on stock exchanges for MSMEs, which a step up on the ladder. It will help in strengthening the unit and encourage exports.

The other benefits announced for MSMEs include the following:

• Announcement of a technology platform vide Press Release ID : 1628317 dated 1st June, 2020 called CHAMPIONS - Creation and Harmonious Application of

Modern Processes for Increasing the Output and National Strength which shall provide facilities like;

1. Grievance Redressal
2. Capturing New Opportunities
3. Identify and Encourage Sparks (i.e. MSMEs having potential)

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