Twenty-four hours after  the Union Government decided to tweak the definition of Micro, Small and Medium Enterprises (MSME) units in the country, the cotton knitwear exporting units in Tamil Nadu’s Tirupur has come out with a demand for more liberalised loan from banks and financial institutions.

Raja M Shanmugham, president, Tiruppur Exporters’ Association (TEA), the powerful  body of the knitwear exporters based in Tiruppur, while congratulating the Centre for restructuring the MSME units, has demanded more liberal loan facilities for the units in the  region. The TEA units earn Rs 200 billion per year on an average through exports and employs 6,00,000 workers.

“With the upward revision of MSME definition on June 1, 2020, more number of knitwear garment exporting units will fit into the definition of MSMEs and now the concern is that due to stipulated conditions some of the MSME units whose credit exposure is more than Rs 25 crore are deprived of receiving  the Emergency Credit Line Fund, as their outstanding exceeds Rs 25 crores,” said Shanmugham.

As per a directive issued by the Centre on February 29, 2020, MSME units were eligible for Emergency Credit Line of up to 20 per cent of their entire outstanding credit from Banks and Non-Banking Financial Companies. This was applicable to borrowers with a turnover of Rs 100 crore and had unpaid loan amounting to Rs 25 crore.

As per the new norms announced by the Centre, units with investment of Rs one crore and turn over of Rs  5 crore have been categorised as Micro, while units with an investment of Rs 10 crore and annual turn over of Rs 50 crore are small units.

Companies which were having an investment of Rs 20 crore and turn over worth Rs 100 crore were hitherto classified as medium units. But the government announced on Monday that units with Rs 50 crore investment and which have annual turnover of Rs 250 crore would be considered as medium units.

“Now that the Government has redefined micro, small and medium enterprises by hiking the investment and turnover limits, many companies have become eligible to be included in these categories. They have outstanding loans exceeding Rs 25 crore and hence should be made eligible for the concession,” said Sakthivel secretary, TEA.

According to Shanmugham, it has become increasingly necessary to extend liquidity support to the non-included MSMEs also, having credit exposure of more than Rs 25 crore mainly to bring them back to operationalize their units to the normalcy level, do exports and continue provide employment.