upward-revision-of-msme-definition

Context: In line with Government of India's top focus on energising MSMEs in the country, Cabinet Committee on Economic Affairs (CCEA) has approved the upward revision of MSME definition and other modalities.

More on the news: 

  • This is for laying down an effective implementation mechanism for the remaining two announcements under the Atmanirbhar Bharat Package. 

Background:

  • In the aftermath of COVID-19 pandemic, the government of India was quick to recognise the role of MSMEs in nation building
  • As such, MSMEs formed a very prominent part of the announcements made under the Atmanirbhar Bharat Abhiyaan. 
  • To provide immediate relief to the MSME sector, various announcements have been made under the Package. The most important ones also included:
    • Rupees Three lakh crore collateral-free automatic loans for MSMEs to meet operational liabilities, buy raw material and restart businesses.
    • Revision of MSME definition to render maximum benefits to the sector;
    • Disallowing global tenders in procurements upto Rs. 200 crores- to create more opportunities for domestic players,
    • And clearing of MSME dues by the Government and Public Sector Units within 45 days.

MSME Sector in India

  • Micro, small and Medium Enterprises (MSMEs) popularly called as MSMEs are the backbone of Indian economy. 
  • Silently operating in different areas across the country, more than 6 crore MSMEs have a crucial role to play in building a stronger and self-reliant India. 
  • These small economic engines have a huge impact on the country's GDP-making a contribution of 29 percent
  • They contribute to almost half of exports from the country. Additionally, more than 11 crore people are employed in the MSME sector.

Recent changes Announced:

  1. In Definition:

Category

Old Capital

Old Turnover

New Capital

New Turnover

Micro

25 lakh

10 lakh

1 cr

5 cr

Small

5 cr

2 cr

10 cr

50 cr

Medium

10 cr

5 cr

50 cr

250 cr

It may be noted that this revision was done after 14 years since the MSME Development Act came into existence in 2006. 

  1. Approval for provisioning of Rs 20,000 crore as subordinate debt to provide equity support to the stressed MSMEs. This will benefit 2 lakh stressed MSMEs.
  2. Approval for equity infusion of Rs. 50,000 crore for MSMEs through Fund of Funds (FoF). This will establish a framework to help MSMEs in capacity augmentation. This will also provide an opportunity to get listed in stock exchanges.

 With today's approval, implementation of Modalities and Road Map for entire components of the Atma Nirbhar Bharat Abhiyan package are in place. This will help in attracting investments and creating more jobs in the MSME sector.

CHAMPIONS: Technology Platform to empower MSMEs

To manage all this, a robust ICT based system called CHAMPIONS (Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength) has also been launched by the Ministry of MSME. The entire ICT architecture is created in house with the help of National Informatics Centre(NIC) at no cost. 

  • As the name suggests, the portal is basically for making the smaller units big by solving their grievances, encouraging, supporting, helping and handholding.
  • It is a real one-stop-shop solution of MSME Ministry.
  •  This ICT based system is set up to help the MSMEs in present difficult situations and also to handhold them to become national and international champions.
  • In addition to ICT tools including telephone, internet and video conference, the system is enabled by Artificial Intelligence, Data Analytics and Machine Learning. 
  • It is also fully integrated on a real time basis with Government of India’s main grievances portal CPGRAMS and MSME Ministry’s own other web based mechanisms.

Objectives of CHAMPIONS:

  1. Grievance Redressal: To resolve the problems of MSMEs including those of finance, raw materials, labor, regulatory permissions etc particularly in the Covid created difficult situation;
  2. To help them capture new opportunities:  Including manufacturing of medical equipments and accessories like PPEs, masks, etc and supply them in National and International markets;
  3. To identify and encourage the sparks:  That is the potential MSMEs who are able to withstand the current situation and can become national and international champions.