Bikky Khosla | 08 Jun, 2020
In a notification
issued last week, the Micro, Small and Medium Enterprises (MSMEs) ministry
revealed that the new definition of MSMEs will come into effect from July 1,
2020. So, the long wait is over now. After 14 years since enactment of the MSME
Development Act, a revision in MSME definition was announced last month. While this
announcement is remarkable in itself, several other add-ons have also been offered,
which should immensely benefit the sector.
was a long-standing demand that we should move away from the previous investment-based definition to a more realistic turnover-based definition.
The government last month took into account both the investment and turnover
aspects, and increased the previous investment limits for all three
segments: micro (Rs. 1 crore), small (Rs. 10 crore) and medium enterprises (Rs.
100 crore). On the other hand, the turnover limits were set at Rs. 5 crore, Rs.
10 crore and Rs. 20 crore, respectively.
it was a welcome decision, but criticism followed, particularly as far as limits
set for the medium enterprises were concerned. Industry observers viewed that
the Rs. 20 crore/100 crore limits were not enough, considering the current market
and price conditions, and in a pleasant surprise the Centre further increased these
limits (to Rs. 50 crore/250 crore) in a prompt decision on June 1. Again, this
is a progressive measure, and now more businesses will be able to remain in the
priority sector lending list of banks.
major decision, the Centre accepted the demand of the export sector for excluding revenue collected through exports from the turnover
limits fixed for MSME. With this new norm, a large number of exporters can now be classified as MSMEs and avail the benefits offered
exclusively to MSMEs. In addition, the move will help in
internationalisation of MSMEs, which can now jump into the export bandwagon
without worrying about losing the benefits given to MSMEs.
invite your opinions.