What is the NEW booster to MSME?

a) Why MSME is most important for Indian Economy?

a) Around 63.4 million MSME units in India

b) Contributes around 6.11% of manufacturing GDP

c) Contributes around 24.63% of services GDP

d) Contributes around Country’s GDP-making of 29%

e) Contributes around 33.4% of India’s manufacturing output.

f) Provides more than 11 crore job

g) They contribute to almost half of exports from the country

b) What is the booster?

I. The Union Cabinet meeting on June 1, has approved changes to the definition of micro, small and medium Enterprises (MSMEs) for giving the booster to the Economy due to Covid-19 economy crisis.

Covid-19 economy crisis

II. Now our Government hopes to broaden the scope of MSMEs so that larger number of business organisations to take advantage of the measures it has recently announced for the sectors

III. The cabinet has also approved – Rs 20,000 crore distressed asset fund to aid stressed MSMEs.

a) In this scheme the Government will provide guarantee coverage of

a. Up to 85% for loans up to Rs 5 lakhs and

b. 75% for loans beyond Rs 5 lakhs from financial institutions

b)  Rs 50,000 crore equity infusion via a fund of fund has been announced for MSMEs. The proposed fund of funds aims to encourage private sector investments in the MSME sector by leveraging Rs 50,000 crore. Under the scheme, a Mother Fund would be setup where the Centre will be the anchor investor.

c) 20th May, 2020 Relief Measure: The Union Cabinet had also approved additional funding of up to Rs 3 lakh crore at a concessional rate of 25% through the Emergency Credit Line Guarantee Scheme (ECLGS)

C) Now who is this Champion?

a) To manage all this, a robust ICT based system called CHAMPIONS has also been launched by the Ministry of MSME.

b) The portal is not only helping and handholding MSMEs in the present situation, but is also providing guidance to grab the new business opportunities in the long run, become national and international Champions.

D) Other Announcements:

To provide immediate relief to MSME sector, various announcements have been made under the Package. The most important ones also included:

1. Rupees 3 Lakh Crore collateral-free automatic loans for MSMEs to meet:

a. Operational liabilities,

b. Buy raw material &

c. Restart businesses.

2. Disallowing global tenders in procurements upto 200 crores– to create more opportunities for domestic players,

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

4. To further ease the burden on MSMEs, RBI has extended moratorium on repayment of loans for another 3 months.


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Qualification: CA in Practice
Company: VDA & Associates
Location: Pune, Maharashtra, IN
Member Since: 29 Aug 2018 | Total Posts: 4
CA in practice at Pune with specialization in Bank Audit, Project Financing & Government Audit Section. Excel Enthusiast | View Full Profile

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April 2021