The government may soon clear a relief package of Rs 20,000 crore to help Micro Small and Medium Enterprises (MSMEs) as the sector braves the fallout of the due to coronavirus pandemic. As per sources. This fund will be divided into two separate funds — Distressed Asset Fund and Fund of Funds,
Industry insiders believe that such funds would help turnaround the fortunes of the MSME sector in the medium and long run. As production units are shut, MSMEs are struggling to pay their workforce.
The Expenditure Finance Committee ( EFC), headed by Finance Minister Nirmala Sitharaman has cleared and forwarded the two proposals. The proposals are likely to get the green signal in the next Cabinet meeting. After approval Both the funds will get Rs 10,000 crore.
A lot of MSMEs are struggling but are “economically viable” with a potential to scale up, a ministry official said. This fund will aim for such enterprises. The government will provide “turnaround capital” to MSMEs to restart their business efficiently once the lockdown comes to an end.
The proposal states that if 10 per cent of the fund is invested as seed money, then banks — that are currently unwilling to provide equity — can restructure the way forward. Export-oriented viable entities that have the potential to manufacture goods and are globally competitive could be assisted with this fund.
The second proposal advocates utilising a facility that is already available. The second fund is for entities that have a capacity to scale up production in terms of quality and quantity.
In this category, the identified beneficiaries would get assistance in the form of even foreign funding, managed by professionals who can take the business to the next level, and list them in the stock market.Industry insiders believe that such funds would help turnaround the fortunes of the MSME sector in the medium and long run. As production units are shut, MSMEs are struggling to pay their workforce.
Industry insiders believe that such funds would help turnaround the fortunes of the MSME sector in the medium and long run. As production units are shut, MSMEs are struggling to pay their workforce.
