The new definition of MSME

The New Definition of MSME

Indian economy fundamentally relies upon two areas, agriculture and manufacturing. While the first has generally stayed unorganized since the start, the last also has not been so till now. The MSME area has gradually come into the spotlight, with expanded concentration from the public authority and other government organizations, corporate bodies and banks.

Strategy based changes; interests in the area; globalization and India’s powerful monetary development have started up a few inactive business openings for this area.

MSME represents Micro, Small, and Medium Enterprises. As per the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006, the ventures are arranged into two divisions.

    1. Manufacturing enterprises occupied with the assembling or creation of products in any industry
    2. Service enterprises providing or rendering services

In the modified definition, both the manufacturing and the service sector are grouped together. 


Manufacturing and Service Industries – Investment ought to be under 1 Crore and Turnover ought to be under 5 Crore.


Manufacturing and Service Industries – Investment ought to be more than 1 Crore and under 10 Crore. Though, Turnover ought to be more than 5 Crore and under 50 Crore.


Manufacturing and Service Industries – Investment ought to be more prominent than 10 Crore and under 20 Crore. Though, Turnover ought to be more than 50 Crore and under 100 Crore.

Some Important Points of MSME

1. Collateral Free Loans

Collateral free loans for organizations has been arranged including MSMEs and emergency credit line to organizations/MSMEs from banks and NBFCs up to 20 per cent of whole extraordinary credit.

2. Equity imbuement of Rs. 50,000 crores for MSMEs via a Fund of Funds

The Government has additionally declared the proposed foundation of a Fund of Funds is proposed to be set up with a corpus of Rs. 10,000 crores and will be worked through a ‘Mother Fund’ and a couple of daughter funds, through which it expects to use Rs. 50,000 crores of assets. That will straightforwardly put resources into MSMEs and urge them to list on the Indian stock trades.

3. Interest subvention

An interest subvention will be reached out to every one of those brief payees who are making normal installments for a year. Has likewise been declared under Mudra Scheme’s Shishu Cover whereby a 2 per cent interest to aid will be permitted on credits up to INR 50,000.

4. Postponement of registration and completion date of real estate projects under RERA

During the underlying days of the lockdown, the Ministry of Finance had assigned the COVID-19 pandemic as a power Majeure occasion under RERA and consequently extended the project completion cutoff times by a time of a half-year.

5. Rs 20 crore subordinated debt for MSMEs

 MSMEs ministry has introduced the Credit Guarantee Scheme for Subordinate Debt (CGSSD) which is called ‘Distressed Assets Fund–Subordinate Debt for MSMEs’

  (i) Promoters of MSMEs will be given credit equivalent to 15% of their stake (e+d) or Rs. 75 lakhs, whichever is lower.

  (ii) A moratorium of 7 years on principal payment while maximum extreme tenure for repayment will be 10 years.

  (iii) 90% assurance cover for this subordinate debt will be given under the plan/trust and 10% would come from the concerned advertisers.

6. Directions to Public Sector Undertakings to make timely payments

Bearings have been given by the Cabinet Secretary, Expenditure Secretary and Secretary, MSME to all PSUs to take care of remarkable obligations to MSMEs within the time span of 45 days.

7. Extension of the due date for ITR for FY’19-20 to November 30, 2020

As declared by the public authority in a question and answer session, the due date for all income tax returns (ITR) for FY 2019-20 has been stretched out from July 31, 2020, and October 31, 2020, to November 30, 2020, and for the  tax audit from September 30, 2020, to October 31 2020

8. ECLG scheme

The ECLG Scheme would apply to all advances authorized or made accessible to MSMEs between 23 May 2020 and 31 October 2020 and the Government has as of now put a general cap of Rs. 3 lakh crores for all credits dispensed under the ECLG Scheme.

9. Measures identifying with the Insolvency and Bankruptcy Code

This alteration will probably profit MSMEs that are under monetary misery because of the financial emergency brought about by COVID-19. The Government on 24 March 2020 expanded the base edge for default from Rs.1 lakh to Rs.1 crore to start the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (IBC).

10. Import protection

In a line towards confident India or backing make in India and will likewise assist MSMEs with extending their business. For this, worldwide tenders have been refused in Government acquirement tenders up to INR 200 crore because Indian MSMEs and different organizations have regularly confronted unjustifiable rivalry from foreign organizations.

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