Micro Small and Medium Enterprises

Knowledge is the only source of power, and updating your knowledge is similar to gaining a superpower. If you want to scale up your business, it is inevitable to have better knowledge about the changes in the rules and regulations. One such significant change has taken place in the MSME definition. There is a revision on the definition. The prime agenda for the MSME sector means expansion of the growth and development of businesses in 2021. 

The Indian economy relies mostly on the two prime areas: manufacturing and agriculture. Although agriculture has always been unorganised from the very first, manufacturing is also in a similar scenario. The MSME portion has gradually taken the limelight with the expansion of public authorities, along with other corporate bodies, banks, and government organisations. Changes based on strategies, globalisation, interests in certain areas, and the most potent monetary development of India has started some inactive openings. 

What does the MSME Sector Mean? 

MSME means the “micro small and medium enterprises.” According to the MSMED “Micro, Small, and Medium Enterprise Development Act” in 2006, only two major decisions were arranged for the ventures. 

1. Manufacturing Enterprises: These are mainly occupied with the creation or assembling of products from any specific industry type.

2. Service Enterprises: These mainly consisted of rendering or offering services 

What is the New MSME Modification?

In 2019 October, Nitin Gadkari - The Union Minister, spoke about the coming up of the revised definition of micro, small and medium enterprises. This new modification might grant a similar explanation for all the things associated with investment, taxation, and much more. 

The modified MSME Act was about to get implemented through amendment. This can further refine scenarios for Indian enterprises. Further approval was made by the Union Cabinet for the change of criteria to “annual turnover” from “investment in plant and machinery.” 

Later, in May 2020, the additional principal was included by the Finance Minister along with investment. 

What is the Prime Reason for Such a Change? 

While the Finance Minister announced the change, she also addressed the main reason for bringing such modification. This new change was made to offer multiple benefits which can offer the MSMEs to expand in their size. 

This was categorised under the “Atma-Nirbhar Bharat Abhiyaan Economic Package.” to ease the economic difficulty of India during the pandemic. Combining the other economic stimulus efforts made previously, the relief amount package has been made to a huge Rs 20 lakh crores. 

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What are the Associated Crucial Points of MSME? 

Collateral Free Loans: 

Collateral Free Loans have been made for the organizations, which comprises MSMEs or organizations, and the emergency credit line for the MSMEs from NBFCs and banks to 20 percent of the extraordinary credit. 

Rs 50,000 crores of Equity Imbuement for the MSMEs through Fund of Funds

Besides, the Government has also declared that the Fund of Funds has been assigned to set up a collection of Rs 10 000 crores. This will be working through the Mother fund along with some other Daughter Funds that are expected to utilise assets worth Rs. 50,000 crores. This will easily put the resources for MSMEs along with would like to list them on the Indian Stock Trades. 

Interest Subvention

The interest subvention will be offered to everyone for the brief payees. These are the payees who are into making ordinary instalments for one year. Likewise, there is a declaration under the Shishu Cover of Mudra Scheme where 2% of the interest will be permitted for the credits, which are up to Rs 50 000.

Postpone of the Completion and Registration Date for the Real Estate Projects Under 

The RERA

During the days of lockdown, the Finance Minister declared the Covid-19 Pandemic as the Majeure occasion.  This was categorized under RERA, which has extended the completion time of the project to half a year. 

The Subordinated Debt for the MSMEs is Rs 20 Crore

The Ministry of MSME has also declared a Credit Guarantee Scheme for the Subordinate Debt. For MSMEs, this is known as the “Distressed Assets Fund-Subordinate Debt.” 

1. The MSME promoters will be offered credit equal to 15% of the current stake or INR 75 lakhs

2. There will be a 7 years moratorium upon the principal payment, while the maximum tenure for the repayment can be 10 years. 

3. A subordinate debt of 90% coverage will be provided under this trust or plan, and from it, 10% will be coming from advertisers.

Timely Payment Direction has Been Provided to the Public Sectors Undertakings

The Expenditure Secretary, Cabinet Secretary, and Secretary have provided the bearings to the MSMEs to PSUs to strongly take into consideration of the MSMEs' obligations within 45 days of time. 

There will be an Extension for ITR FY’19-20 Due Date to 30 November 2020

As it has been directed by the public authority in the questions and answer session, there will be a stretch in the due date. All the income tax returns for the FY 2019-20 will be extended from 31 July 2020 and 31 October 2020 to 30 November 2020. Tax audits have also been stretched from 30 September 2020 to 31 October 2020. 

ECLG Scheme

This Scheme will be applicable for the authorised advance or will be made accessible to the MSMEs within 23 May 2020 and 31 October 2020. Besides, the Government has also kept a general cap of INR 3 Lakhs crores for the credits that have been dispensed with in the ECLG Scheme. 

Measures Associated with the Bankruptcy Code and Insolvency: 

This is another alternative that comes as a significant benefit for the MSMEs under the problem with capital. The financial emergency that has been opened by Covid-19 is a common scenario. On 24 March 2020, the Government stretched the default base edge from INR 1lakh to INR 1 Crore. This has been made with the only agenda to start the process of corporate insolvency that falls under the category of “Insolvency and Bankruptcy Code, 2016 (IBC).”

What was the Old MSME? 

In the Old MSME, it was mainly categorised under Manufacturing Sector and Service Sector. 

The Ministry of MSME is a crucial section of the Indian constitution with headquarters in New Delhi. This is a prime body entitled to formulate and administer the laws and rules associated with micro, small, and medium-sized enterprises. 

With the prime body creating almost 11 Crore opportunities for the people across the nation contributing to sharing a major 29% of the GDP rate, MSME is no wonder, the heart of the nations’ economy. This, therefore, makes it pretty much clear that such a modification will only contribute to the betterment of the businesses.