The International Micro, Small and Medium Enterprises (MSME) Day is observed every year across the world on 27th June, to observe the contribution of MSME businesses in growth and development of any economy.
Since 2017, Micro, small and Medium-sized businesses celebrate their day in recognition of their work in local and global economies. These enterprises, which generally employ fewer than 250 persons, are the backbone of most economies worldwide and play a key role in developing countries.
According to the data provided by the International Council for Small Business (ICSB), formal and informal Micro, Small and Medium-sized Enterprises (MSMEs) make up over 90% of all firms and account on average for 60-70% of total employment and 50% of GDP.
The General Assembly, United Nations, having recognized the importance of these enterprises, decided to declare 27th June as the Micro, Small and Medium Enterprises Day to raise public awareness of their contribution to sustainable development.
MSME day is not only dedicated to raising awareness of the need for greater investment into small and mid-sized businesses in developing countries. It is also a celebration of the gigantic contribution, away from the spotlight, smaller companies make to the global economy.
Smaller businesses can be agile in response to a changing world, but their size also makes them vulnerable. Access to finance is a primary obstacle. Identifying international market opportunities and navigating trade-related procedures can be harder for small businesses than for their larger competitors.
With the goal of overcoming these challenges, the International Trade Center, United Nations’ entity, works in the internationalization of micro and SMEs. It is precisely this center of the UN that launches on this day its flagship report: “The SME Competitiveness Outlook 2019: Big money for small businesses.
India is essentially a knowledge-based, entrepreneurship driven economy. India is the world’s third – largest start-up base but its entrepreneurial spirit is not limited to the Start-up world; they represent only one aspect of it. India’s Micro, Small and Medium Enterprises (MSMEs) are those silent performers who are carrying India’s 5 trillion-dollar economy goal on their shoulders.
MSMEs constitute around 95% of the total industries in India and their contributions to national income are immense, yet this sector has never demanded any kind of security (financial, social, medical or pension) from the government. They have built a strong community culture based on trust, cooperation and relationship which is today difficult to replicate even in some global MNCs.
We are listing some of the measures introduced by the Government of India for MSME sector recently:
1. As on 2nd June 2020, the Government of India has:
i. approved provisioning of Rs 20,000 crore as subordinate debt to provide equity support to the stressed MSMEs.
ii. Approved for equity infusion of Rs. 50,000 crore for MSMEs through Fund of Funds (FoF) has also been granted. This will establish a framework to help MSMEs in capacity augmentation.
iii. Under the Atmanirbhar package, the MSME sector has not only been given substantial allocation but has also been accorded priority in implementation of the measures to revive the economy.
2. As of 14th May 2020, the Government has introduced SOP specific to MSMEs that need to be followed at workplace to be followed in view of COVID-19.
3. As of 14th May 2020, the Government of India has provided the following reliefs to MSME sector:
i. Reduced Cash Reserve Ratio of all banks by 100 basis points to 3% of net demand and time liabilities.
ii. Provided a moratorium of 3 months of all instalments of term loans falling due between March 1 and May 31, 2020.
iii. RBI has decided to conduct targeted long-term repo operations for an aggregate amount of Rs. 50,000 crore with at least 50 percent of total amount availed going to small sized NBFCs and MFIs.
iv. Refinancing facilities for all India financial institutions.
4. On 11th February 2020, the Reserve Bank of India (“RBI”) has informed its decision to extend the one-time restructuring of Micro Small Medium Enterprises (“MSME”) advances permitted in terms of its circular dated 1st January, 2020. Accordingly, subject to certain conditions, a one-time restructuring of existing loans to MSMEs classified as ‘standard’ without a downgrade in the asset classification was permitted:
5. On 2nd November 2018, the Ministry of Micro Small and Medium Enterprises, made it mandatory for companies procuring goods or services from micro and small enterprises and making payments exceeding 45 days from the date of acceptance or the date of deemed acceptance of the goods or services to file/submit a half-yearly return to the Ministry of Corporate Affairs (MCA) regarding the same.
6. Recently the Government of India has revised the definition of MSME. The following table puts to light the old and the revised definitions:
|EXISTING MSME CLASSIFICATION|
|Criteria: Investment in Plant & Machinery or Equipment|
|CLASSIFICATION of ENTERPRISE||MICRO||SMALL||MEDIUM|
|Enterprises engaged in Manufacturing and Production of Goods||Investment does not exceed 25 Lac||Investment is more than 25 Lac but does not exceed 5 Cr.||Investment is more than 5 Cr. but does not exceed 10 crores|
|Enterprises engaged in providing or rendering services||Investment in equipment does not exceed 10 Lac||Investment is more than 10 Lac but does not exceed 2 Cr.||Investment is more than 2 Crore but does not exceed 5 Cr.|
|REVISED MSME CLASSIFICATION|
|Criteria: Investment and Turnover in Plant & Machinery & Equipment|
|CLASSIFICATION of ENTERPRISE||MICRO||SMALL||MEDIUM|
|Plant Machinery & Equipment||Investment does not exceed 1 Cr. and the turnover doesn’t exceed 5 Cr.||Investment does not exceed 10 Cr. and the turnover doesn’t exceed 50 Cr.||Investment does not exceed 50 Cr. and the turnover doesn’t exceed 250 Cr.|