Cabinet approves ₹50,000 crore equity infusion for MSMEs through Fund of Funds1 min read . Updated: 01 Jun 2020, 05:31 PM IST
- The government will set up ₹10,000 crore fund, which, with leverage, will be able to finance equity infusion of about ₹50,000 crores in small businesses
- The move is expected to expand size as well as capacity of MSMEs and will encourage them to get listed on main board of domestic bourses
NEW DELHI: The Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi, on Monday approved ₹50,000 crore equity infusion for micro small and medium enterprises (MSMEs) through Fund of Funds, and another ₹20,000 crore fund for the distressed sector.
The government will set up ₹10,000 crore fund, which, with leverage, will be able to finance equity infusion of about ₹50,000 crores in small businesses. The move is expected to expand size as well as capacity of MSMEs and will encourage them to get listed on main board of domestic bourses, MSME minister Nitin Gadkari said.
The Cabinet also approved the new definition of MSMEs that will include higher investment limit and an additional norm based on turnover. It will replace the current one based on self-declared investment on plant and machinery, Gadkari said.
For instance, in case of micro manufacturing and service enterprises, the investment limit will be increased to up to ₹1 crore and turnover limit to up to ₹5 crore. Till now, for micro manufacturing enterprises, the investment limit was ₹25 lakh and ₹10 lakh for the service sector. The turnover limit for medium industries will be increased to ₹250 crore, with investment limit of ₹50 crore.
The new definition will not distinguish between manufacturing and service sector, Gadkari said, adding that an ordinance regarding the same has been approved and a notification will be released on Tuesday.
These announcements were a part of the ₹20,000 crore financial package that was announced to help businesses, poor, farmers to tide through covid-19 crisis.