Talking to KNN, G.R Senthilvel, Secretary of Tirupur Exporters and Manufacturers Association (TEAMA) said that the government’s decision come at a good time and is surely to bring a relief for the sector.
Turnover based classification criteria
Senthilvel said that the existing units that earlier did not fall in the ambit of what an MSME will now be categorised as MSMEs, enabling the units to take benefit of the schemes laid out by the central as well as the state governments. Hinting at numbers, he informed that over 98 per cent of the manufacturing units will now benefit from the revised definition. According to the government’s new definition, businesses with revenue of as much as 5 crore will be called a micro enterprise, those with sales between 5 crore and 75 crore will be deemed as small and those with revenue between 75 crore and 250 crore will be classified as medium-sized enterprises.
Under the earlier definition, manufacturers with 25 lakh investment in plant and machinery were termed micro enterprises and those with investments between 25 lakh and 5 crore were regarded as small enterprises.
Firms with investments of up to 10 crore are classified as medium.
RBI’s 180 day extension
Commenting on the extension period announced by the Reserve Bank to declare a unit as NPA, Senthilvel said the move is to add to the growth in the sector. Earlier the units used to be worried with regard to to the deadline, there is a relaxed bracket for the MSMEs now, he added. “While the new NPA bracket surely comes as a relief for the MSMEs, at the same time we are worried as to what would happen if the unit is still not able to make the repayment, the government should come up with a relaxed framework for that as well”, he added.
Earlier, eyeing at facilitating relief to the Micro, Small and Medium Enterprises (MSMEs) impacted by the teething effects of Goods and Services Tax (GST), the Reserve Bank announced extension up to 180 days to clear the dues to banks, a move that is being welcomed by the sector