Rs 3 lakh crore package for MSMEs: DETAILED ANALYSIS by market guru Anil Singhvi

Union Finance Minister Nirmala Sitharaman's announcement on Wednesday has catered to the requirements of small and micro businesses instead of taking a sector-wise approach, Zee Business Managing Editor Anil Singhvi said. He said that the big decision has been taken for the MSME sector because the small businesses have a huge impact on the lives of the common man. The finance minister came out with the first set of announcements on 13 May, with more announcements likely to happen in next few days.

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The requirements of big businesses and smaller ones are completely different. At this point-in-time, the finance minister has stressed on the needs of small businesses. The MSME sector is more connected at the ground level, Singhvi said.

Singhvi said that the decision to change the definition across categories of MSME is a welcome move

As per the new definition of a Small unit, FM Sitharaman raised its investment limit from Rs 5 crore to Rs 10 crore with a turnover of less than 50 crores. The Minister also declared that there will be no more distinction between Manufacturing and Service MSMEs. Singhvi said that this will now give more opportunities to the owners to grow as the limits of investment has increased.

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Another important announcement was that the government said there will be no global tenders up to Rs 200 cr and only domestic players will be allowed, Singhvi said. Among other measures, the government announced collateral-free loans worth Rs 3 lakh cr for MSMEs. This will induce more liquidity into the system.