With uncertainty of the duration of the COVID-19 pandemic, Government has been working with various regulators and local statutory bodies to come together and work towards repurposing business plans, restart the operation activities, protect employees and workers, boost small and medium-scale businesses. Government has issues relief measures for MSMEs to help them survive this difficult time.

Due to the COVID-19 crisis forcing lockdown all over the nation, smaller businesses have been largely affected as their work tend to depend on regular cash flow and have limited cash reserves to survive prolonged suspension of work. Most MSMEs are struggling to pay salaries and run their daily basic operations, while some ran out of their funds and looking for strategic plans to overcome the COVID-19 crisis.

The need for prioritizing the survival of MSME sector needs a concerned effort from the government to take supportive measures for their survival and to revive post the COVID-19 pandemic.

On May 13, 2020 Finance Minister has announced relief measures and credit support for MSMEs to support Indian Economy’s fight against COVID-19. Some of them are as below:

– The Reserve Bank of India recently introduced Long Term Repo Operations (LTRO) worth Rs. 100,000 crores to help banks increase lending at cheaper interest rates.

PSBs disburse Rs. 12,201 crores loan to MSMEs under emergency credit line scheme

– A new A new Pradhan Mantri SVANidhi scheme for issuing micro loans of up to Rs 10,000 to street vendors – included in the Atmanirbhar Bharat Abhiyan announced last month – was approved

– The Cabinet Committee on Economic Affairs (CCEA) will set up a Fund of funds scheme of Rs. 50,000 crores which will provide equity funding support for MSMEs.

– Emergency Working capital facility of Rs. 3 lakh crores for businesses, including MSMEs

a) Loans of up to 20% of the outstanding credit of businesses as on February 29, 2020.

b) Amounts will be 100% guaranteed by Government of India.

c) Businesses with up to Rs. 25 crores outstanding and turnover up to Rs. 100 crores will be eligible.

d) Loans will be of a 4-year term with moratorium of 12 months on principal repayment, and interest to be capped.

– Subordinate Debt of Rs. 20,000 crores for Stressed MSMEs

Government will support stressed MSMEs with Rs. 4,000 crores to Credit Guarantee Trust for Micro and Small enterprises (CGTMSE). Banks are expected to provide subordinate debt to promoters of such MSMEs equal to 15% of his existing stake in the unit subject to a maximum of Rs. 75 lakhs.

– New Definition of MSME 

The investment and turnover limits for MSMEs has been revised.

Classification Micro Small Medium
Manufacturing and Services
Investment < Rs. 1 crore < Rs. 10 crores < Rs. 20 crores
Turnover < Rs. 5 crores < Rs. 50 crores < Rs. 100 crores

Exports will not be counted toward these limits, freeing micro, small and medium enterprises (MSMEs) to freely sell overseas without losing any benefits.

– Other measures for MSMEs

E-market linkage for MSMEs will be promoted to act as a replacement for trade fairs and exhibitions. MSME receivables from Government and CPSEs will be released in 45 days.

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