Union Finance Minister Nirmala Sitharaman announced a ₹3 lakh crore collateral free loan scheme for businesses, especially micro, small and medium enterprises (MSMEs), as part of a ₹20-lakh-crore economic stimulus package to deal with the COVID-19 pandemic.
MSMEs will get the bulk of the funding. The ₹3 lakh crore emergency credit line will ensure that 45 lakh units will have access to working capital to resume business activity and safeguard jobs, Ms. Sitharaman said. For two lakh MSMEs which are stressed or considered non-performing assets, the Centre will facilitate provision of ₹20,000 crore as subordinate debt. A ₹50,000 crore equity infusion is also planned, through an MSME fund of funds with a corpus of ₹10,000 crore.
The definition of an MSME is being expanded to allow for higher investment limits and the introduction of turnover-based criteria. In a bid to fulfil the Prime Minister’s vision of a self-reliant or “atmanirbhar” India, global tenders will not be allowed for government procurement up to ₹200 crore.
Basis the economic stimulus package announced by the Finance Minister Nirmala Sitharaman to boost the MSME sector in the country and help build the Indian economy to pick up pace once. NCN would like to share quotes with you on behalf of India Inc. industry leaders on the reaction to this package by the government to lift the economy during this time of crisis.
Mr. Ashish P. Dhakan, MD & CEO, Prama Hikvision India Pvt. Ltd.
“ The mega stimulus package announced by the Finance Minister for India’s Micro, Small and Medium Enterprises (MSME) sector is a big boost from the government. The key focus of the announcements has been aimed at protecting employment, providing liquidity and ensuring business for the MSMEs, encouraging ‘Make In India’ by providing giant fund for expansion of business. MSME sector has a large role to play in the Indian economy. This decision expected to bolster the Indian security industry’s growth prospects in the long run.
The economic package is expected to give a much needed support to the MSME sector. The Rs. 3 Lakh crore working capital facility and Rs. 20,000 crore subordinate debt for stressed MSMEs are remedial steps for revival of the economy. The government support to MSME sector with Rs. 4,000 crore through Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
The distinction being removed between manufacturing and services sector MSMEs, covering of Turnover Criteria in MSME definition will support every small entrepreneur to expand in their length and breadth. This decision will give a huge boost to the MSMEs. The MSMEs will also get the benefits of other measures announced by the Finance Minister like receivables from Government agencies being released within 45 days as well as benefits of e-marketplace linkages will attract more local participants, which at the end will contribute to economy for growth. The Employees Provident Fund related measures will also help the MSMEs besides the relaxations in the immediate tax compliance burdens. The micro-entrepreneurs will also benefit from the immediate tax refunds announced for proprietorships and partnership firms.”
Mr. Sanjeev Sehgal – Managing Director- Sparsh (Samriddhi Automations Pvt. Ltd)
“Collateral free automatic loans with 100% credit guarantee to Standard MSMEs and 50k crore fund of fund hand-holding to high growth MSMEs is a welcome move of the government. The change in the definition of MSMEs is in the favour of these high growth firms too who will now benefit from the upward revision of turnover and investment criteria. A major change that will lead the evolution of the industry is the disallowance of global tenders, especially in government projects up to 200cr. MSMEs have often been denied the opportunity to participate in such tenders due to their limited scale and exposure. Under the banner of “Vocal for Local”, the government now seeks to promote indigenous production and manufacturing by eliminating the unfair balance of competition small firms faced from large global conglomerates. Due to the physical barriers of sourcing work from exhibitions and trade fairs, the government has provided the facility of E-market to MSMEs. To curb the problem of liquidity, the government will now seek to honour it’s commitment of paying all existing dues of trade receivables to MSMEs within the next 45 days. This will be a huge relief for all small firms awaiting payments from government projects.”
Mr. Ashok Rajpal, MD, Ambrane India
“We as an MSME appreciate and welcome the relief package announced by our finance minister. We look forward to the relaxations that were suggested today, and are quite hopeful that the relief will definitely help in abating the economic severity of the corona pandemic, and will act as a stimulus to revive the economy.”
Mr. Sriram. S, Chief Strategy Officer at iValue InfoSolutions
“MSMEs play a very important role in both employment and contributions to economic growth.
Around 30Mn MSMEs employ 70Mn people and contributes 45% of Manufacturing output and 40% of exports. They contribute 10% to GDP and form 90% of the business of India.
India has the largest population of young people across the world. It is critical to ensure youth in the country are engaged productively. The failure on this front can lead to socio-economic crimes and other undesirable problems for society. Hence higher and faster GDP growth is a prime need for India to ensure 98% of the young population is employed. Being small and at various stages of establishment, most of the businesses in this sector are vulnerable to events such as COVID related lockdown lasting for months. Monthly activity is key to ensure cashflow for taking care of statutory payments, salaries, and bank dues. A couple of week’s shutdown will have a deep impact on the cash flow cycle which will impact business and its viability. Close to 50 days of lockdown had put the majority of MSMEs in serious trouble. Any amount of support to help MSMEs tide over this challenge is most welcome as they are key to India’s growth and stability. They currently face multiple challenges on the demand side, supplier payment side, employee salary payment front, availability of labour and raw material issue as supply chain and manufacturing has been on a standstill from last week of March till the 1st week of May. With most of the top 10 cities still in RED Zone, the availability of raw material is still a challenge even if allowed to function for the next 2-3 months. Measures taken by the Government to support MSMEs are welcome and critical. The government needs to ensure that there are no bureaucratic and procedural delays in Promoters of MSMEs getting these benefits as it is already very late. We also need to keep in mind that most of the measures are towards supporting cash flow and nothing to date has been done to revive the demand which is critical for MSMEs to bounce back from this once a lifetime challenge,”
Mr. Prashanth G J CEO at TechnoBind
“Well, the first installment of the stimulus package is out – looks good at the outset. But we would have liked it have had more depth in terms of steps to boost consumption. While efforts to ease liquidity is always welcome, it is eventually demands that will kick start the economy and hence drive growth. Well, the next phases are still there we will look forward to some demand boosting initiatives!” said Mr. Prashanth G J CEO at TechnoBind.
Mr. Satish Kumar V, CEO at EverestIMS Technologies
The country has been facing inclement times due to the COVID 19 lockdown and subsequent economic fallout – especially the MSME sector. The Government has recognized these issues and risen to the occasion by announcing this broad-based stimulus package. The various measures will add up to a significant boost for the sector which is much needed as they often form the bulwark of the local economy by providing employment and contributing to the GDP as a whole. Things like the collateral-free automatic loans will definitely help the cash flow and payment situation. What this does is it boosts transactions and business which will ultimately lead to the wheels of the economy chugging back to life and (we hope) to full speed in the long run. Regarding software companies such as ours, we are awaiting further specific details after which we will be able to gain insight into how it affects us and the IT industry as a whole.”
Mr. Kishan Jain, Director at Goldmedal Electricals
“We welcome the move by the Government of India on providing much needed relief to industry through the INR 20 lakh crore economic package announced. Finance Minister’s plan of providing INR 3 lakh crore collateral-free automatic loans for MSMEs will provide much needed line of credit to the sector that is currently under strain due to the COVID-19 lockdown. Additionally, the INR 20K crore subordinate debt for stressed MSMEs will provide a much needed shot in the arm and will help these companies get back on their feet. By changing the way MSMEs and SMEs are defined through the increase in the investment and turnover limits, it will enable them to gain the benefits that the Government provides. All of these measures will definitely ease the financial burden of this sector and boost growth and expansion. It will also invigorate MSMEs by investing in building innovative products and services that will give further boost to Aatma Nirbhar Bharat Yojana announced by PM Modi yesterday and give a much needed fillip to India’s economy post the lockdown.”
Dr. Vishwakumara Kayargadde, Founder and COO, Saankhya Labs
“The measures announced by the Government of India come as a much needed relief to the MSME sector that has been going through a difficult time since the onslaught of the COVID-19 outbreak. Today’s announcement by the Finance Minister of providing Rs. 3 lakh crore collateral-free automatic loans for MSMEs, will help companies tide over the uncertainty that has arisen due to the extended lockdown. Also, stressed MSMEs can take advantage of the Rs. 20K crore subordinate debt announced today as this will help sustain their business and boost growth. While the government has given a thrust to manufacturing through its flagship ‘Make in India’ programme, the new steps announced will promote local companies to manufacture their products within the country. This will also help ramp up investments in the MSME sector and incentivize companies to build a local ecosystem. That said, the measures announced today will go a long way in providing a much needed fillip to the economy and allow Indian companies such as Saankhya Labs to develop innovative and technology-driven solutions locally which can be exported globally.”
Mr. Kunal Lakhara – VP of Finance and Operations – Pocket Aces
“During the current COVID-19 lockdown, we applaud the timely and strategic announcements made by the Government of India in the form of the INR 20 lakh crore economic package. With MSMEs being at the center of the storm, the INR 3 lakh crore collateral-free automatic loans announced by the Finance Minister will provide a timely line of credit to these companies, helping them tide over the crisis sooner. Additionally by redefining what constitutes an MSME through the increase in their investment and turnover limits, we will see a lot more organisations benefiting from the Government’s schemes. What is even more inspiring is the INR 20K crore subordinate debt for stressed MSMEs, which will provide these companies with adequate time to stabilize themselves in midst of a challenging economic situation. We believe that all of these measures together will not only ease the financial burden of these enterprises but also pave a way for business growth, expansion and innovation. This in turn will help India get back onto its feet and continue its high growth trajectory in the years to come.”
