To increase the share of small and medium industries in the economy, the government has taken measures to reduce the burden of compliance for MSME units. For the same audit, their turnover limit has been increased from Rs one crore to five crores. Along with this, a scheme for subordinate lending for MSME units has also been announced. In addition, successful mid-scale units on the domestic front can also be helped to reach overseas markets. The amendment in the Factor Regulation Act may be announced by Finance Minister Nirmala Sitharaman to improve the financial health of micro, small and medium scale industries (MSME sector), which are most affected by demonetization and GST. Along with this, medium-scale industries that have been successful in India will also be helped to gain a foothold in the overseas market. According to Nirmala Sitharaman, many reliefs have been provided in the last few years for the MSME sector.
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Some more reliefs are being given in the same direction. Apart from this, the most important is the amendment of the Factor Regulation Act in 2011. Sitharaman said that the amendment will pave the way for invoicing financing for MSMEs for Non-Banking Financial Companies (NBFCs). This will prevent small and medium-sized industries from facing working capital shortage. To overcome the shortage of working capital, a new scheme for ancillary loans has been proposed in the budget. This subsidiary loan given by banks to MSME industries can be considered as a share. Moreover, banks will not have any fear of sinking this loan, as the Credit Guarantee Trust for Medium and Small Enterprises (CGTMSE) will guarantee it. For this, the government will arrange funds for CGTMSE. Along with this, a budget has been prepared to make medium industries competitive in foreign markets.
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Sitharaman said that some mid-sized companies have been successful in establishing their presence within the country, but their presence in the foreign market is negligible. Special assistance will be given to such industries to gain a foothold in the foreign market. For this, he specifically mentioned pharmaceuticals and companies related to the auto sector. Apart from this, a scheme of Rs 1000 crore can be brought to help such companies in technical upgradation, research and development, business strategy. SIDBI will oversee this fund in association with Exim Bank. Both these banks will also contribute 50-50 crores to it, which will be used as share and technical support. At the same time, the remaining Rs 900 crore will be available to lend to such companies. Along with this, the facility of renewal of loans to MSME industries by RBI has been extended for one year. Apart from this, it was earlier till 31 March this year, but MSMEs can now avail it till 31 March 2021. So far, five lakh MSMEs in the country have taken advantage of this.
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