Nirmala Sitharaman announces collateral-free loans for MSMEs worth Rs 3 lakh crore

This apart, the finance minister said that a Rs 20,000 crore subordinate debt will be provided for the stressed MSMEs. This she said would benefit around two lakh such businesses.

Read | From MSMEs to EPF to NBFCs: Here’s everything Nirmala Sitharaman announced

Sitharaman said that various businesses and MSMEs have badly been hit due to COVID-19 and they need additional funding to meet the operational liabilities built up, buy raw materials and restart businesses.

The minister also said that a fund of funds for the MSME sector is created, which will be infusing Rs 50,000 crore equity in those MSMEs having growth potentials.

Separately, Sitharaman said that the definition of MSMEs has been revised by the government to allow those units having investment up to Rs 1 crore to be termed as micro units in place of Rs 25 lakh now. Along with this, the minister added that the units having a turnover of up to Rs 5 crore will be called micro units.

She said that a turnover-based criteria is being introduced to define the small businesses, and added that there has been a long-pending demand for revisions.

(Source: Aatmanirbhar Bharat Part-1: Businesses including MSMEs)

The investment and turnover limits for small and medium businesses too have been raised to allow them to retain fiscal and other benefits, Sitharaman said.

The minister also said that global tenders will be banned for government procurement up to Rs 200 crore. This, she said would help the MSMEs to compete and supply in government tenders.