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Facts of MSME- Realization of recent FM announcements

Recent CII Data: Macro Small and Medium Enterprises is the backbone of India With around 6.34 Crores units throughout the geographical expanse of the country, MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities as well as 33.4% of India’s manufacturing output. They have been able to provide employment to around 120 million persons and contribute around 45% of the overall exports from India

KYE Suman Kumar Jha

Definition of MSME changed: now the eligibility is same for manufacturing and service sector.

a.         Micro: Limit revised upward Investment  upto 1 cr. or  Turnover upto 5 cr.

b.         Small: Limit revised upward Investment  upto 10 cr. or  Turnover upto 50 cr.

c.         Medium: Limit revised upward Investment  upto 20 cr. or  Turnover upto 100 cr.

d.         No difference in manufacturing and service sector for Micro Enterprises


KYE: Can you Review the Package that Government has announced  in Lay men Language ?

Yes Govt is declared 6 lakhs crores package but will talk about important one only. Out of total 3 Lakhs Crore Collateral Free Automatic Loan to MSME. No guarantee required. Period 4 Years. No principal repayment for 1 year. Who is eligible?

            a) 20% of entire outstanding loan as on Feb 29, 2020

            b) Borrowers with upto 25 Crore O/s and Rs. 100 Crore T/o

            c) 4 year tenure with moratorium of 12 months on principal repayment

            d) Interest to be capped

            e) 100% credit Guarantee cover to Bank and NBFCs on principal and Interest

            f) Scheme can be availed till October 2020

            g) No guarantee Fees and no fresh collateral

h) Rs 20,000 crores Subordinate Debt for Stressed MSMEs to avoid being NPA

i) Rs50,000 cr. Equity infusion for MSMEs through Fund of Funds

j) Global tenders to be disallowed upto Rs200 crores. Big boost for local firms.

k) e-market linkagefor MSMEs to be promoted to act as a replacement for trade fairs and exhibitions.

Additional : 10% of existing limit they can availed from Bank.

PF : Govt paying PF cont of both employee / employer for the specified category of  employer.

Employees can withdraw they PF contribution as well with some restriction.

Benefits : 45 Lakhs Units can resume business activity and safeguard jobs.

KYE: Which Sectors are relevant for the packages I am sure not every sector would get the benefit of this?

All eligible MSME business owners are going to benefits from this packages. Those who are specifically in manufacturing, production, processing and services.

KYE: New Business segment like sanitizer PPE and Raw Material and boom for this business but now as PM has given a mantra of Go local how the local vendors would get and avail this help?

– Take Benefit of Make in India Boost

– Unique concept with high quality of goods. Our competition is with china and we must use technology and skilled labour to achieve the same

– Govts new policy like restriction of tender upto 200. This will certainly help local MSME sector because Govt is one of largest consumer for many product and they procure through central procurement via. MSME can get your register on GeM (Govt e marketplace)

KYE: Supply Chain management Ideas should be focused on IT/automation to expand? That’s the major drawback which is been seen

Automation is key for success. So MSME must gear up ready for automation. How e-commerce company reached to remote of the country by using technology.

  • How small business can utilized benefits that government has given?

Business owners can reach to their banks with the business prospect, projection of business plan with strong convinction. If they have good banking track with existing bank will always help. May take help of consultant / expert in the field.

  • If Some body wants to start a new business what would be a good sector to get into?

I am pro make in India concept and that is message given by hon prime minister as well. We should not forget that we are 2nd largest populated country and that is the strong points. So basically anything related to FMCG (Fast Moving consumers Goods).

there is huge opportunities for all the sectors an reason being :

  • Rise in rural consumption drive to FMCG market. This contribute 36% to the overall FMCG spending
  • Policy Support – food security Bill ad direct cash Trf subsidy reach 40% of house hold.

Swatchh Bharat is one of the pet project of Modi JI – so anything in waste management, sanitization will be one of the driving factor. 

A free advise to Micro small and medium enterprises : if you interested in long term player then please maintain and keep proper books of account and compliances in place. This will help them to raise fund and attract investor and many more benefits

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Written by KYE

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