The government seemed to be so convinced about the need to unshackle small businesses quickly that it opted against waiting to amend the Micro, Small & Medium Enterprises Development Act. It will instead use provisions of the law to include turnover as a criteria and notify the new investment limits.
The new definition also does away with the distinction between manufacturing and service sector entities. “The definition needed to be changed, not just because of inflation but also due to technological change,” said S K Tuteja, a former MSME secretary.
“The policy bouquet unveiled by the government is wellstructured, suitably targeted, within reasonable fiscal limits but still having the maximum impact. The measures for MSME through guarantees, equity infusion and debt support will incentivise bank lending to MSMEs as well as providing crucial support to stressed entities in the current situation,” said Rajnish Kumar, chairman, SBI.
“We were expecting direct financial support and stimulus as even during the best of times, MSME units are short of capital… What we wanted was help in paying salaries and other dues. Only guarantee for loans will not help, especially when it can be accessed after banks will decide if loans will be given or not,” said Animesh Saxena, president of industry lobby group Federation of Indian MSMEs.
There were steps such as Rs 50,000-crore equity infusion for MSMEs that were short of capital and another Rs 20,000 crore for stressed units to make them viable.