The government has decided to extend the interest subvention scheme for micro, small and medium enterprises, union minister Nitin Gadkari said on Friday.
The "Interest Subvention Scheme for Incremental credit to MSMEs 2018", which offers 2 per cent interest subvention for all GST registered MSMEs on fresh or incremental loans, was in effect till March 31, 2020.
"We have decided to extend the interest subvention scheme for MSMEs," Gadkari said in response to a question, without divulging further details.
He also said the government was changing the definition of MSMEs and an order to this effect should be out shortly.
The Union Cabinet had in 2018 approved changes in the basis of classifying micro, small and medium enterprises from 'investment in plant & machinery/equipment' to 'annual turnover'.
Under the new definition, a micro enterprise was defined as a unit where the annual turnover does not exceed Rs 5 crore; a small enterprise would have turnover of more than Rs 5 crore but not exceeding Rs 75 crore; and a medium enterprise was defined as a unit where the annual turnover is more than Rs 75 crore but not exceeding Rs 250 crore.
Interacting with members of the Young Presidents' Organization via video conferencing, the minister for MSMEs and road transport said top economies like Japan and the US are moving their investments away from China, which is a "blessing in disguise" for India.
He called upon the industry to boost exports by lowering the cost of capital, power and logistics, and undertake bulk production without compromising on the quality.
Gadkari also exhorted manufacturers to adopt import substitution on a large scale while focusing on cost effectiveness, environment and indigenous alternatives.
The interest subvention scheme aims at encouraging both manufacturing and service enterprises to increase productivity and provides incentives to MSMEs for onboarding on GST platform which helps in formalization of economy, while reducing the cost of credit.
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