The government had revised the definition of MSME, which means that it has increased the turnover limit up to Rs 100 crore and investment limit up to Rs 20 crore for medium-size units and likewise for small-size and micro-size ones.
The Indian textile industry, which consists of more than 80% as micro, small and medium enterprises (MSMEs), would gain immensely with the announcement of a major reforms package to the MSME sector as it has been well-timed to scale up in a big way. By announcing Rs 3-lakh-crore collateral-free automatic loan for businesses, including MSMEs, this package will benefit 45 lakh small businesses, the industry felt.
Being the second-largest employment generator in India after agriculture, the textile industry sees the package announced by the prime minister and in detail by the finance minister, particularly for the MSME sector, will definitely bring the morale boost sought by the industry for long, said the Confederation of Indian Textile Industry (CITI), the apex body of textile sector in India.
The government had revised the definition of MSME, which means that it has increased the turnover limit up to Rs 100 crore and investment limit up to Rs 20 crore for medium-size units and likewise for small-size and micro-size ones. The fresh reforms package will greatly benefit over 80% of the textile units in India across the value chain, especially the garment and made-up units, said T Rajkumar, chairman, CITI. The package to MSMEs will bring cheers to millions of people working with the industry, he added.
According to Ashwin Chandran, chairman, Southern India Mills’ Association (SIMA), since the textiles & clothing industry is predominantly MSME in nature, this will greatly benefit over 80% of the textile units, especially the garment and made-ups units.
Allocation of Rs 3 lakh crore to extend collateral free loans for businesses including MSMEs, provision of four-year tenure with moratorium of 12 months on principal repayment and further allocating Rs 20,000 crore for stressed MSMEs and Rs 50,000 crore for potentially viable MSME units will definitely give the industry a necessary push.
SIMA chairman also said the marginal reduction of 2% in the employers and employees contribution in the EPF and 25% reduction in the tax deducted at source and tax collected at source would help to improve the liquidity to a certain extent.
The revision of MSME definition which had been the long-pending demand of the industry has finally seen the light of day. The government has finally changed the definition of MSME by allowing units with investment up to Rs 1 crore in place of Rs 25 lakh and units with turnover up to Rs 5 crore to be called micro units. The investment and turnover limits for small and medium businesses have also been raised to allow them to retain fiscal and other benefits. Now, small weaving mills will come under new MSME norms and because of this, many garment manufacturers will be benefited, Rajkumar added.
Raja M Shanmugam, president, Tirupur Exporters’ Association (TEA), said the reforms package would lay out a comprehensive vision to spur growth and become self-reliant India.
While appreciating collateral free automatic loan for standard MSMEs, subordinate debt for stressed MSMEs, equity infusion for MSMEs through Fund of Funds, Raja M Shanmugham said the reduction of employer as well as employee EPF contribution for business and workers for three months from 12% to 10% is another major support received under Pradhan Mantri Garib Kalyan Package. He also appreciated other direct tax measures and extension of income tax return filing. Other major decision has been the banning of global tenders for government procurement up to Rs 200 crore.