Businesses/MSMEs have been badly hit due to COVID19 need additional funding to meet operational liabilities built up, buy raw material and restart business.

Decision: Emergency Credit Line to Businesses/MSMEs from Banksand NBFCs up to 20% of entire outstanding credit as on 29.2.2020

• Borrowers with up to Rs.25 crore outstanding and Rs.100 crore turnover eligible
• Loans to have 4 year tenor with moratorium of 12 months on Principal repayment
• Interest to be capped
• 100% credit guarantee cover to Banks and NBFCs on principal and interest
• Scheme can be availed till 31st Oct 2020
• No guarantee fee, no fresh collateral

45 lakh units can resume business activity and safeguard jobs.

• Stressed MSMEs need equity support
• GoI will facilitate provision of Rs. 20,000 cr as subordinate debt
• Two lakh MSMEs are likely to benefit
• Functioning MSMEs which are NPA or are stressed will be eligible
• Govt. will provide a support of Rs. 4,000 Cr. to CGTMSE
• CGTMSE will provide partial Credit Guarantee support to Banks
• Promoters of the MSME will be given debt by banks, which will then be infused by promoter as equity in the Unit.

• MSMEs face severe shortage of Equity.
• Fund of Funds with Corpus of Rs 10,000 crores will be set up.
• Will provide equity funding for MSMEs with growth potential and viability.
• FoF will be operated through a Mother Fund and few daughter funds.
• Fund structure will help leverage Rs 50,000 cr of funds at daughter funds level.
• Will help to expand MSME size as well as capacity.
• Will encourage MSMEs to get listed on main board of Stock Exchanges.

• Low threshold in MSME definition have created a fear among MSMEs of graduating out of the benefits and hence killing the urge to grow.
• There has been a long-pending demand for revisions.

Announcement

• Definition of MSMEs will be revised.
• Investment limit will be revised upwards.
• Additional criteria of turnover also being introduced.
• Distinction between manufacturing and service sector to be eliminated.
• Necessary amendments to law will be brought about.

Existing MSME Classification
Criteria:Investment in Plant & Machinery or Equipment
Classification	Micro	Small	Medium
Mfg. Enterprises	Investment < Rs. 25 lac	Investment < Rs. 5 cr.	Investment < Rs. 10 cr.
Services Enterprise	Investment < Rs. 10 lac	Investment < Rs. 2 cr.	Investment < Rs. 5 cr.

Revised MSME Classification
Criteria:Investment in Plant & Machinery or Equipment
Classification	Micro	Small	Medium
Manufacturing & Services	Investment < Rs. 1 cr. and Turnover < Rs.5 cr.	Investment < Rs. 10 cr. and Turnover < Rs.50 cr.	Investment < Rs. 20 cr. and Turnover < Rs.100 cr.

• Indian MSMEs and other companies have often faced unfair competition from foreign companies.
• Therefore, Global tenders will be disallowed in Government procurement tenders upto Rs 200 crores
• Necessary amendments of General Financial Rules will be effected.
• This will be a step towards Self-Reliant India (आत्मनिर्भर भारत) and support Make in India
• This will also help MSMEs to increase their business.

• MSMEs currently face problems of marketing and liquidity due to COVID.
• e-market linkage for MSMEs to be promoted to act as a replacement for trade fairs and exhibitions.
• Fintech will be used to enhance transaction based lending using the data generated by the e-marketplace.
• Government has been continuously monitoring settlement of dues to MSME vendors from Government and Central Public Sector Undertakings.
• MSME receivables from Govt. and CPSEs to be released in 45 days

• Businesses continue to face financial stress as they get back to work.
• Under Pradhan Mantri Garib Kalyan Package (PMGKP), payment of 12% of employer and 12% employee contributions was made into EPF accounts of eligible establishments.
• This was provided earlier for salary months of March, April and May 2020
• This support will be extended by another 3 months to salary months of June, July and August 2020
• This will provide liquidity relief of Rs 2500 cr to 3.67 lakh establishments and for 72.22 lakh employees.

• Businesses need support to ramp up production over the next quarter.
• It is necessary to provide more take home salary to employees and also to give relief to employers in payment of Provident Fund dues.
• Therefore, statutory PF contribution of both employer and employee will be reduced to 10% each from existing 12% each for all establishments covered by EPFO for next 3 months.
• CPSEs and State PSUs will however continue to contribute 12% as employer contribution.
• This scheme will be applicable for workers who are not eligible for 24% EPF support under PM Garib Kalyan Package and its extension.
• This will provide relief to about 6.5 lakh establishments covered under EPFO and about 4.3 crore such employees.
• This will provide liquidity of Rs 6750 Crore to employers and employees over 3 months.

• NBFCs/HFCs/MFIs are finding it difficult to raise money in debt markets.
• Government will launch a Rs 30,000 crore Special Liquidity Scheme
• Under this scheme investment will be made in both primary and secondary market transactions in investment grade debt paper of NBFCs/HFCs/MFIs
• Will supplement RBI/Government measures to augment liquidity
• Securities will be fully guaranteed by GoI
• This will provide liquidity support for NBFCs/HFC/MFIs and mutual funds and create confidence in the market.

• NBFCs, HFCs and MFIs with low credit rating require liquidity to do fresh lending to MSMEs and individuals.
• Existing PCGS scheme to be extended to cover borrowings such as primary issuance of Bonds/ CPs (liability side of balance sheets) of such entities.
• First 20% of loss will be borne by the Guarantor ie., Government of India.
• AA paper and below including unrated paper eligible for investment (esp. relevant for many MFIs)
• This scheme will result in liquidity of Rs 45,000 crores

• Revenues of Power Distribution Companies (DISCOMs) have plummeted.
• Unprecedented cash flow problem accentuated by demand reduction.
• DISCOM payables to Power Generation and Transmission Companies is currently ~ Rs 94,000 cr.
• PFC/REC to infuse liquidity of Rs 90,000 cr to DISCOMs against receivables.
• Loans to be given against State guarantees for exclusive purpose of discharging liabilities of Discoms to Gencos.
• Linkage to specific activities/reforms: Digital payments facility by Discoms for consumers, liquidation of outstanding dues of State Governments, Plan to reduce financial and operational losses.
• Central Public Sector Generation Companies shall give rebate to Discoms which shall be passed on to the final consumers (industries)

• Extension of up to 6 months (without costs to contractor) to be provided by all Central Agencies (like Railways, Ministry of Road Transport & Highways, Central Public Works Dept, etc)
• Covers construction/ works and goods and services contracts
• Covers obligations like completion of work, intermediate milestones etc. and extension of Concession period in PPP contracts
• Government agencies to partially release bank guarantees, to the extent contracts are partially completed, to ease cash flows

• Adverse impact due to COVID and projects stand the risk of defaulting on RERA timelines. Time lines need to be extended.
• Ministry of Housing and Urban Affairs will advise States/UTs and their Regulatory Authorities to the following effect:
• Treat COVID-19 as an event of ‘Force Majeure’ under RERA.
• Extend the registration and completion date suo-moto by 6 months for all registered projects expiring on or after 25th March, 2020 without individual applications.
• Regulatory Authorities may extend this for another period of upto 3 months, if needed.
• Issue fresh ‘Project Registration Certificates’ automatically with revised timelines.
• Extend timelines for various statuary compliances under RERA concurrently.
• These measures will de-stress real estate developers and ensure completion of projects so that homebuyers are able to get delivery of their booked houses with new timelines.

• In order to provide more funds at the disposal of the taxpayers, the rates of Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts shall be reduced by 25% of the existing rates.
• Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc. shall be eligible for this reduced rate of TDS.
• This reduction shall be applicable for the remaining part of the FY 2020-21 i.e. from tomorrow to 31st March, 2021.
• This measure will release Liquidity of Rs. 50,000 crore.

• All pending refunds to charitable trusts and non- corporate businesses & professions including proprietorship, partnership, LLP and Co-operatives shall be issued immediately.
• Due date of all income-tax return for FY 2019-20 will be extended from 31st July, 2020 & 31st October, 2020 to 30th November, 2020 and Tax audit from 30th September, 2020 to 31st October,2020.
• Date of assessments getting barred on 30th September,2020 extended to 31st December,2020 and those getting barred on 31st March,2021 will be extended to 30th September,2021.
• Period of Vivad se Vishwas Scheme for making payment without additional amount will be extended to 31st December,2020.