Startups which are registered as Micro Small and Medium Enterprises (MSME) eligible to avail relief measures announced for MSME. This was made it clear by the Finance Ministry.
While addressing press conference on Saturday, Finance Minister Nirmala Sitharaman had clarified that startups are too eligible for the measures announced for MSME, such as the collateral-free loan with credit guarantee, subordinate debt and equity infusion through the MSME fund of funds.
Sitharaman on Sunday also announced a slew of relaxation measures, including lower penalties for all defaults for small companies, one-person companies, producer companies and startups.
There is another relief for the startups as government has decided to decriminalise various sections of the Companies Act which will help local startups and entrepreneurs in raising funds.
The decriminalised violations include shortcomings in CSR reporting, inadequacies in board reports, filing defaults, and delay in holding of annual general meetings. Further, the government will drop seven compoundable offences and five offences will be dealt with under an alternative framework.
The government on Wednesday changed the definition of MSMEs to include business units with up to Rs 100 crore of turnover and Rs 20 crore of investment in machinery and equipment.
As per the revised MSME classification, any firms in both manufacturing and service sector will be defined as “Micro” if they have an investment up to Rs 1 crore and turnover up to Rs 5 crore.
Earlier firms could only be defined as Micro if they had an investment up to Rs 25 lakh and Rs 10 lakh in manufacturing and service sector respectively.
Both manufacturing and service firms can be classified as “Small” if they have investment up to Rs 10 crore and turnover up to Rs 50 crore respectively.
On the other hands, ”Medium” manufacturing and service firms will be allowed an investment up to Rs 20 crore and turnover up to Rs 100 crore.