Subsidised loan cap for small units proposed

The Micro, Small and Medium Enterprises (MSME) Ministry will soon take its proposal to the Cabinet Committee on Economic Affairs for revising the cap on loans to small units.

The MSME ministry has proposed changes in the Credit Linked Capital Subsidy Scheme, including an increase in the subsidy from 12 per cent to 15 per cent and a revision in the ceiling on loan for the small units to Rs one crore from Rs 40 lakh at present. Under the Eleventh Plan, an outlay of Rs 730 crore has been provided under the scheme, an official said.

He said different ministries, including the finance ministry has agreed to the changes proposed by the MSME ministry.

Besides, the ministry has mooted a proposal to define the micro, small and medium enterprises as one broad category. Instead of fixing different thresholds for three different categories, the proposal is to treat any unit as 'small' if its investment in plant and machinery is below Rs 10 crore.

Presently, the investment range for defining a unit in different categories is between Rs 25 lakh and Rs 10 crore. An allocation of Rs 85 crore had been made for the capital subsidy scheme in the current fiscal. The National Council of Applied Economic Research had suggested to the finance ministry that the scheme should be continued.