Here we have explained the New Definition of MSME 2020 as per the Ministry of Micro Small Medium Enterprise, the Government of India.
From the changes that were made over the previous few months, the Union Cabinet of India has approved the revised definition of MSME in order to boost the growth of Micro, Small and Medium enterprises. COVID-19 has impacted business all over the world and immediate help is needed for such.
Especially the small companies spread across India that made their income on a day to day basis. Strict lockdown and rules all over the country forced these companies out of business. This also had a huge impact on the economy of the country. In order to combat this and bring an improvement in the economy, the Union Cabinet has approved the new definition of MSME. These companies have been redefined on the basis of investment and turnover.
In the first few months after the COVID-19 outbreak; along with imposition of strict lockdown, finance minister Nirmala Sitharaman announced certain economic measures under the Atma Nirbhar Bharat Abhiyan in order to revive India’s poor performing economy amid the pandemic.
Major focus has been driven towards improving the MSME sector and boosting business. The definition of an MSME has been changed. The investment and turnover limit have been drastically increased for an MSME to keep enjoying benefits. The differences between the manufacturing and service sector have also been abolished.
The new definition of MSME allows the following:
- Micro enterprises: Companies with an investment and turnover limit of Rs. 1 crore and 5 crores respectively.
- Small enterprises: Companies with an investment and turnover limit of Rs. 10 crores and 50 crores respectively.
- Medium enterprises: Companies with an investment and turnover limit of Rs. 50 crores and 250 crores respectively.
|Micro||Not more than 5 Cr.||Not more than 1 Cr.|
|Small||Not more than 50 Cr.||Not more than 10 Cr.|
|Medium||Not more than 250 Cr.||Not more than 50 Cr.|
Due to the poor performance of businesses during the ongoing COVID-19 pandemic, the government has also introduced the provision of collateral free loans worth Rs. 3 lakh crores for struggling MSMEs. Any MSME with up to Rs. 25 crore outstanding credit and Rs. 100 crore turnover is eligible for the loan from banks and NBFCs.
Furthermore, for additional support to MSMEs, the government will offer subordinate debt worth Rs. 20,000 crores. This shall allow around 40 lakh small businesses to start over. The government will also provide support of around Rs. 4000 crores to Credit Guarantee Fund Trust for Micro and Small enterprises (CGTMSE)
Some other initiatives that have been taken by the government to revive the MSME sector of India are as follows:
- E-market linkage which will act as a replacement for trade fairs and exhibitions.
- The government has also been continuously monitoring the settlement of dues to MSME vendors.
- To enhance transaction based lending generated by the e-marketplace, Fintech will be used.
From the 1st of June, 2020, all MSME enterprises will be known as Udyam and it is mandatory for all micro, small and medium companies to register themselves as an Udyam. In order to do so, the government has set up online Udyam Registration Portals.
The entire Udyam registration process is completely free of cost and no dues have to be paid to anyone, including the government of India.
After the registration is complete, the government will review your application and you will receive an e-certificate and an Udyam Registration Number.
This will allow you and your business to enjoy the numerous benefits provided by the Ministry of MSME.
Before the 31st of March 2021, all existing indian companies must register themselves as an Udyam. There are only a few documents that are required for the Udyam Registration process. Only PAN and GSTIN details are required.
The several benefits that are to be enjoyed are as follows:
- Interest rate subsidy on bank loans.
- Collateral free loans from banks.
- Obtaining registrations, licenses and approvals with ease.
- CLCSS (credit linked capital subsidy scheme) for all MSME registered companies.
- Electricity bills concession.
- Direct tax laws rules exemption.
- Patent registration subsidy.
- Barcode registration subsidy.
- ISO certification fees reimbursement.
As you understood the new New Definition of MSME. And how important for small business. There are about 34 great benefits provided by the Ministry of MSME. If you have any questions regarding MSMEs or the Udyam registration process, just fill any form on the websites our representatives will guide you.