MSMEs allocated Rs. 10,000-crore VC fund

New Delhi: Referring to Medium, Small and Micro Enterprises (MSME) as the ‘backbone’ of the economy, Finance Minister Arun Jaitley said his Government proposes to set up a Rs. 10,000-crore venture capital fund intended to be a catalyst to attract private capital. The fund will “provide equity, quasi-equity, soft loans and other risk capital for start-up companies,” he said.
Heeding the long-standing demand of the sector, Jaitley also announced that the definition of MSME would be reviewed to provide for a higher capital ceiling. At present, the ceiling for manufacturing is Rs. 25 lakh for micro enterprises, Rs. 5 crore for small units and Rs. 10 crore for medium enterprises. He said a committee which would include members of the Finance Ministry, the MSME Ministry and the Reserve Bank would be set up to examine the sector’s financial difficulties and will submit its report in three months.
“The revision of the MSME definition for high capital ceiling will enable them to get greater credit from the market, in turn helping them grow and expand,” said R Narayan, Founder and CEO, Power2SME, a B2B buying platform for such enterprises.
The Budget also proposed to offer easier exit norms. “An entrepreneur-friendly legal bankruptcy framework will also be developed for SMES to enable easy exit,” he said. A Rs. 200-crore fund was also announced to promote innovation, entrepreneurship and the agro industry, and also a country-wide district-level Incubation Accelerator Programme to support new entrepreneurial ideas. The Budget also proposed to allocate Rs. 200 crore for setting up six more mega textile clusters in Bareilly, Lucknow (Uttar Pradesh), Surat, Kutch (Gujarat), Bhagalpur (Bihar), Mysore (Karnataka) and one in Tamil Nadu.
Further, Rs. 50 crore has been provided for a Trade Facilitation Centre and a Crafts Museum in Varanasi (Uttar Pradesh) to promote handloom products. The city is known for its handwoven Banarasi silk sarees, mostly made by Muslimweavers who are now struggling to survive after the entry of cheap Chinese imitations.