The New Definition of MSME 2020, as defined by the Ministry of Micro, Small, and Medium Enterprises of the Government of India, is presented below.
The Union Cabinet of India has approved a revised definition of MSME based on revisions made in the past few months in order to accelerate the growth of Micro, Small, and Medium Enterprises. COVID-19 has had a global impact on business, and quick assistance is required.
Also, Read- Udyam Registration
Especially the small businesses that operate on a day-to-day basis all over India. Strict lockdown and rules imposed around the country led some businesses to close their doors. This has a significant influence on the country’s economy. The new definition of MSME has been agreed upon by the Union Cabinet in order to tackle this and boost the economy. These businesses have been renamed based on their investment and revenue.
Finance Minister Nirmala Sitharaman launched specific economic initiatives under the Atma Nirbhar Bharat Abhiyan in the first few months of the COVID-19 breakout, in addition to the enforcement of stringent lockdown, to try to restore India’s poorly performing economy amid the epidemic.
The MSME sector has been given special attention, with the goal of expanding enterprise. The definition of a micro, small, and medium-sized enterprise (MSME) has been updated. For an MSME to continue to prosper, the investment and turnover limits have been further enhanced. There are no longer any distinctions between the manufacturing and service sectors.
The revised MSME definition allows for the following:
- Micro businesses are those with a maximum investment and turnover of Rs. 1 crore and Rs. 5 crores, respectively.
- Small businesses are those with a maximum investment and sales of Rs. 10 crores and Rs. 50 crores, respectively.
- Medium-sized businesses have a maximum investment and turnover of Rs. 50 crores and Rs. 250 crores, respectively.
The government has also announced the provision of collateral-free loans of Rs. 3 lakh crores for struggling MSMEs as a result of poor business performance during the existing COVID-19 pandemic. Any MSME with an outstanding credit of up to Rs. 25 crores and a turnover of up to Rs. 100 crore is eligible for a loan from banks and NBFCs.
In addition, the government will grant subordinate debt worth Rs. 20,000 crores to MSMEs as further help. Around 40 lakh small enterprises will be able to restart as a result of this. The government would also support the Credit Guarantee Fund Trust for Micro and Small Enterprises with roughly Rs. 4000 crores (CGTMSE)
The government has also made the following efforts in order to revitalize India’s MSME sector:
- Trade fairs and exhibitions will be replaced by an electronic market linkage.
- The government has also been keeping a close eye on the payment of dues to small business vendors.
- Fintech will be leveraged to improve transaction-based lending created by the e-marketplace.
All MSME enterprises will be known as Udyam beginning June 1, 2020, and registration as an Udyam will be essential for all micro, small, and medium businesses. The government has put up Udyam Registration Portals to help with this.
The entire Udyam registration process is free of charge, and no dues are owed to anyone, even the Indian government.
After you submit your application, the government will review it and issue you an e-certificate as well as an Udyam Registration Number.
This will help you and your company to take advantage of the Ministry of MSME’s numerous benefits.
All existing Indian corporations must register as Udyam by the 31st of December 2021. The Udyam Registration process just necessitates the submission of a few documents. Only your PAN and GSTIN are necessary.
The following are some of the numerous advantages to be had:
- Subsidy on bank loans’ interest rates.
- Banks offer no collateral loans.
- It’s simple to get registrations, licenses, and permissions.
- All MSME registered enterprises are eligible for the CLCSS (credit-linked capital subsidy scheme).
- Electricity bills are reduced.
- The exemption is governed by direct tax laws.
- Subsidy for patent registration.
- Subsidy for barcode registration.
- Reimbursement of ISO certification fees
As you are aware, the MSME has a new definition. And how important is it for a small business? The Ministry of MSME offers around 34 excellent perks. If you have any queries about MSMEs or the Udyam registration procedure, simply fill out the form on the udyam registration portal and one of our professionals will contact you.