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Finance Minister Communique W.R.T Micro, Small and Medium Enterprises Sector

By gkkedia Dt. May 14th, 2020

On 12th May 2020, Prime Minister Narendra Modi addressed the nation and to solace to the country, announced a whopping relief package of around Rs. 20 lacks crore amounting to nearly 10% of the nation’s GDP which compared to various developed nations is at par.

Following day, with the number of coronavirus cases soaring near the wistful and tormenting mark of 75,000, the Finance Minister of India, Smt Nirmala Sitharaman walked the stones laid by PM and announced details with respect to the erstwhile relief package of $266 Billion announced by PM Modi.

While addressing the press conference on 13th May 2020, Sitharaman shared the nuances of the package declared by the PM. This is the first of a series of press briefings by the Finance Minister in the coming days. “Beginning today, for the next few days, I will be coming here and present to you in detail, the package the PM announced yesterday. Our explanation will span over the next few days,” Nirmala Sitharaman said.

Quoting Prime Minister Narendra Modi from his Tuesday’s televised address to the nation, Nirmala Sitharaman said, “You heard the PM say that this is going to be rested on 5 important pillars – the economy, infrastructure, tech-driven systems, demography, and demand. The focus will be on what can be defined as factors of production in today’s language. Land, labour, capital, and enterprise.”

One of the major takeaways from FM’s Speech was the due diligence given to the Micro, Small, and Medium Enterprises niche of the country. Salient features of which are underlayeds:

  • Changed criteria of MSMEs:
Existing MSME Classification
Criteria: Investment in Plant and Machinery or Equipment
Classification Micro Small Medium
Manufacturing Enterprises Investment< Rs 25L Investment< Rs 5Cr Investment< Rs 10Cr
Service Enterprises Investment< Rs 10L Investment< Rs 2Cr Investment< Rs 5Cr
New MSME Classification
Criteria: Investment in Plant and Machinery or Equipment
Classification Micro Small Medium
Manufacturing and Service Enterprises Investment< Rs 1Cr & Turnover< Rs 5Cr Investment< Rs 10Cr & Turnover< Rs 50Cr Investment< Rs 20Cr & Turnover< Rs 100Cr


  • A collateral-free loan facility of Rs. 3 Lacks Crore having a tenure of 4 years with a 100% guarantee was also announced by the Finance Ministry. Such a loan facility will be available till 30th Oct 2020. MSMEs having loans outstanding up to Rs. 25 Cr or an annual turnover of Rs. 100 Cr can avail such facility.
  • “For stressed MSMEs, Rs. 20,000 crore liquidity through the subordinate debt-based scheme. Govt to provide Rs. 4,000 crore to CGTMSE for this”, the Minister said.
  • Also, aiming to uplift the MSME sector, global tenders will be disallowed for tenders for govt procurement up to Rs 200 Crores.
  • E-marketing linkage to be provided across the board to all MSMEs as trade fairs will be difficult in the COVID-19 scenario.
  • Every MSME receivable from Govt to be cleared within the next 45 days, assured the FM.

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