Union Cabinet approves changes in definition of MSMEs

2 min read

News: Union Cabinet has announced policy changes for the MSME sector as part of the Atmanirbhar Bharat package.

Facts:

  • Upward revision of MSME Definition: This will help in attracting investments and creating more jobs in the MSME sector:

Note: The turnover limits for micro, small or medium enterprises will not include the profits made from exports.

  • Distressed Asset Fund: A distress fund of Rs 20,000 crores has been set up.Under this, an MSME can avail a loan of maximum Rs 75 lakh or 15% of their total investment.
    • The Centre will provide a guarantee coverage of up to 85% for loans up to Rs 5 lakh and 75% for those above Rs 5 lakh to enable MSMEs to raise funds from financial institutions.
  • Fund of Funds for MSMEs: A Fund of Funds worth Rs 50,000 crore for MSMEs has been set up in which the central government will be an anchor investor to encourage private sector investments in the sector.