Finance minister Nirmala Sitharaman has announced a collateral free loan of ₹3 crore for micro, small and medium enterprises (MSMEs). Sitharaman also announced five other measures for MSMEs, as part of the fiscal stimulus package of ₹20 lakh crore under Atmanirbhar Bharat (self-reliant India)

The collateral free automatic loans will have moratorium period of 12 months, and the loans can be repaid in a 4-year period. The loans will be available till October 31, 2020. This will benefit 45 lakh MSME units, the minister said addressing a press conference along with minister of state for finance Anurag Singh Thakur. For NPA/stressed MSMEs, the government has come up with a sub-ordinate debt provision, which is expected to benefit 4 lakh units. For MSMEs who have potential to perform better, a Fund of Funds is being created for ₹50,000 crore equity infusion into the MSMEs.

The Funds of Fund will work under mother fund-daughter fund framework. This measure will help MSMEs expand their capacities and eventually get listed in markets which they can choose. Fourthly, the minister said, the definition of MSMEs is being changed. The differentiation between manufacturing and service MSMEs is being removed, and an additional criterion of turnover is being added to the definition of MSMEs. As per the new definition, micro enterprises will be those that have investment up to ₹1 crore, up from ₹25 lakh earlier. Micro units would also be defined on the basis of turnover, which should be up to ₹5 crore. Likewise, small units would be those with investment of up to ₹10 crore and /or turnover up to ₹50 crore. Medium enterprises would be those with investment of up to ₹20 crore and / or turnover up to ₹100 crore. The fifth measure announced by the finance minister today is that for government procurement up to ₹200 crore, global tenders will be disallowed, thereby giving greater opportunity for MSMEs to participate in tender process. Lastly, the minister assured that the Government of India and also CPSEs, where there are receivables, all their receivables will be cleared in the next 45 days.