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MSMEs
Why is it in the news?
- Union Minister for Micro, Small and Medium Enterprises (MSME) told the Rajya Sabha that the government would come out with a new definition of MSMEs.
- Currently the MSMEs are defined on the basis of investment in plant and machinery.
More in the news
- The government had accepted 39 suggestions by the U.K. Sinha committee appointed by the Reserve Bank of India, including the setting up a “fund of funds” for the sector.
- Suggestions of the U.K. Sinha committee:
(1) 5,000 crore stressed asset fund for domestic MSMEs.
(2) The fund will assist units in a cluster where there is a change in the external environment such as plastic ban.
(3) The RBI should increase the limit for non-collateralised loans to ₹20 lakh. This would address a significant proportion of the sector needs.
(4) There should be revision in loan limit sanctioned under MUDRA by the Finance Ministry to ₹20 lakh from ₹10 lakh.
(5) Banks that wish to specialise in MSME lending, their sub-targets for farm loans under the priority sector lender could be waived off.
- Present MSME Classification:
(1) A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs.25 lakh
(2) A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore
(3) A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.
Source
The Hindu