Government changes definition of MSMEs; PM Modi says will 'empower entrepreneurs'

Finance minister Nirmala Sitharaman announced today that MSME definition has been changed to allow units with investment up to Rs 1 crore to be called micro-units in place of Rs 25 lakh now.

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Also, units with turnover of up to Rs 5 crore would be called "micro-units", she said, adding a turnover based criteria is being introduced to define small businesses.

The investment and turnover limits for small businesses has been raised to Rs 10 crore and Rs 50 crore respectively.

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The finance minister said units with an investment of up to Rs 20 crore and turnover of up to Rs 100 crore will qualify as medium-size enterprise.

"The steps announced will boost liquidity, empower the entrepreneurs and strengthen their competitive spirit," India's Prime Minister Modi said.

Sitharaman announced Rs 3 lakh crore collateral-free automatic loan for businesses, including MSMEs.

"It will benefit 45 lakh small businesses," the finance minister said.

"Today's announcements by FM Sitharaman will go a long way in addressing issues faced by businesses, especially MSMEs," PM Modi added.

Union Home Minister Amit Shah said the Narendra Modi government is committed to reviving the economy, help small businesses and boost employment.

"I thank PM @narendramodi and FM @nsitharaman for these unprecedented steps, targeted at assisting MSMEs, cope with challenges of COVID-19," India's home minister said, adding, "it reflects PM Modi's commitment to revive our economy, help small businesses and boost employment," he tweeted.

(With PTI inputs)