Big players under MSMEs to pose threat to small units

Coimbatore: The micro and small industrialists in the city on Tuesday said the reclassification of medium enterprises would affect them very badly as they were already facing a big crisis.
For the second time in as many months, the Centre had altered the definition of medium enterprises on Monday. While the investment limit for medium enterprises was increased to Rs 50 crore from Rs 20 crore, the turnover limit was increased to Rs 250 crore from Rs 100 crore.
Representatives of micro and small industries said this would create unfair competition among the micro, small and medium enterprises (MSMEs) and undermine the benefits and identity of micro and small units. ‘It would also affect their growth.”
S Surulivel, president, Railway Suppliers’ Association, said the move would bring in several enterprises that were until recently considered ‘big’ into the MSMEs arena and create unfair competition. “This means that the big industries, which would enter the MSME category, would eat into the 25% procurement reserved for the latter by public sector undertakings. This would be unfair, as micro and small units won’t be able to compete with big units that have extensive infrastructure and production capacity and could afford to charge less.”
To help them tide over the crisis, the representatives said, the Centre should address micro units separately in matters related to relief packages and loans. J James, district president, Tamil Nadu Association of Cottage and Tiny Enterprises, said, “There should be separate fund allocations and benefits for micro units. The Centre should identify micro units separately in its policy decisions, so that there would be fair play.”
On May 13, Union finance minister Nirmala Sitharaman had redefined MSMEs, while announcing Rs 3-lakh crore Covid-19 lockdown relief package for them.
Until then, MSMEs were classified based on investment alone. A micro enterprise was the one with an investment up to Rs 25 lakh, while it required only up to Rs 5 crore investment to be classified as a small enterprise and up to Rs 10 crore to come under the medium enterprise category.
Sitharaman reclassified them based on both the investment and turnover. According to the first reclassification, a micro unit was the one with an investment up to Rs 1 crore and a turnover up to Rs 5 crore and the small unit was the one with up to Rs 10 crore investment and up to Rs 50 crore turnover. It required an investment of up to Rs 20 crore and turnover up to Rs 100 crore to be classified as medium enterprises.
On Monday, MSMEs minister Nitin Gadkari redefined the criteria for medium enterprises and enhanced the investment limit up to Rs 50 crore and turnover limit up to Rs 250 crore.