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In a country as diversified as India, contribution of Micro, Small and Medium Enterprises (MSMEs) to domestic production is unique and priceless. MSMEs enjoy inbuilt operational flexibility, low investments with sufficient capacity to develop and manage indigenous technology.

Hence, MSMEs are the turbochargers which contribute approximately 30 per cent to India’s Gross Domestic Product (GDP), 45 per cent to manufacturing output and exports. With under 65 million units located across length and breadth, MSMEs generate employment to approximately 120 million, thus providing a livelihood for millions.

India is the third-largest economy in the world (in Purchasing Power Parities terms), second largest in Asia, accounting for a third of Asia’s potential workforce and one-fifth of GDP. The impact of COVID-19 on Indian industries has been as much as it has in the global arena. Hence, budget priorities, policies and strategic focus of India’s MSMEs would require a shift.

In May 2020, the Government of India reclassified MSMEs under the ‘Atmanirbhar Bharat Abhiyan’ and made provision for collateral-free automatic loans, now extended until Mar. 2021, to augment additional working capital.

The MSMEs were reclassified with effect from Jul. 1, 2020, based on plant, machinery investment and turnover. Micro enterprises with plant and machinery investment of less than Rs one crore (approx. $136,000 ) and Rs five crore (approx. $678,000 ) turnover; small capped at Rs five crore (approx. $678,000) and turnover up to Rs 50 crore (approx. $6.8 million) and medium at Rs 50 crore (approx. $6.8 million) with turnover at Rs 250 crore (approx. $34 million)


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Disclaimer: The views and opinions expressed by the author do not necessarily reflect the views of the Government of India and Defence Research and Studies