The Cabinet Committee on Economic Affairs on Monday approved ₹50,000 crore equity infusion for micro, small, and medium enterprises (MSMEs) with an aim to help them enhance capacity, while also encouraging them to get listed.
Besides, approval was given for a subordinate debt of ₹20,000 crore to provide equity support to stressed MSMEs. This is likely to benefit two lakh MSMEs.
Union Minister of MSME Nitin Gadkari said ‘big industry people buy and sell stocks in the share market’, but the facility was not available for MSMEs. “We have created an initial fund of ₹10,000 crore, after adding more funds it will become a ₹50,000 crore fund. The MSMEs, which export, whose turnover and GST record is good... some MSMEs export worth thousands of crores, they don’t need to depend on the bank.”
“We will buy equity in them to fund them... maximum 15%... they will get strength because of this equity. When they go to the stock exchange... Their share prices will go up... when it reaches a particular level, we will sell our shares and then invest in others.”
This revolving fund can grow up to be ₹2 lakh crore in the next 2-3 years.
The CCEA, headed by Prime Minister Narendra Modi, also approved the new definition of MSMEs increasing the investment limit to ₹50 crore and turnover to ₹250 crore for medium enterprises. Likewise, for micro enterprises, the investment limit will be ₹1 crore and turnover ₹5 crore, while for small enterprises, the investment limit will be ₹10 crore and the turnover ₹50 crore.
“It has also been decided that the turnover with respect to exports will not be counted in the limits of turnover for any category of MSME units, be it micro, small or medium,” an official release said. “This is yet another step towards ease of doing business. This will help in attracting investments and creating more jobs in the MSME sector,” it added.