Press Release
The first tranche of the economic package to counter the coronavirus
pandemic, announced by the Finance Minister of India, reaffirms the country’s commitment to macro-
economic stability, prudent fiscal management and uplifting indigenous manufacturing.
The growth tonic for MSMEs such as a collateral-free automatic loan for up to Rs.3 lakh crores, covering
borrowers with up to Rs.25 crores outstanding and Rs. 100 crores turnover, will enable them to meet
operational expenses. The loans come with a 4 year tenor with a moratorium of 12 months on principal
repayment. The interest to be capped at 100% credit guarantee covers to banks and NBFCs on principal
and interest can be availed till October 31, 2020, and will enable 45 lakh units to resume business
activities and safeguard jobs.
It is also heartening to note that approximately 2 lakh MSMEs are likely to benefit from the Rs.20,000
crores subordinate debt for stressed MSMEs. Other measures such as Rs. 50,000 crore equity infusion for
MSMEs through Fund of Funds with a corpus of Rs.10,000 crores, revision of investment limit upwards,
elimination of the distinction between manufacturing and service sector, disallowing of global tenders up to
Rs. 200 crores will help MSMEs increase their business. Tax reductions by 25% of the existing rates for
tax deducted at source and tax collected at source will release liquidity of Rs.50,000 crores which is
expected to boost consumption.
Interestingly, the government will provide EPF support for business and workers for 3 more months
providing liquidity relief of Rs.2,500 crores to 3.67 lakh establishments and 72.22 lakh employees. The
statutory PF contribution of both employer and employee will be reduced to 10% from the existing 12% for
all establishments covered by EPFO for the next 3 months. Furthermore, to ease cash flows government
agencies will partially release bank guarantees to the extent contracts are completed.
Welcoming the announcements made by the finance minister, Indradev Babu, President-IMTMA said,
“These are vital steps to spur manufacturing growth and offer significant opportunities for the capital
goods sector and machine tool industry since a large number of MSMEs dot its manufacturing landscape.
The sops will take some time to trickle down to the end users resulting in demand for goods and services.
However, the momentum set by this economic package will help industries to pick themselves up from
the economic slowdown and coronavirus outbreak that they were battling with. The industry now needs to
intensify its R&D initiatives and manufacture products that can be sold globally.”
Agreeing with Indradev Babu’s thoughts, V. Anbu, Director General & CEO, IMTMA said, “Vibrant
manufacturing is vital for the country’s growth and the measures announced in the economic package will
provide much-needed liquidity for industries, promote local manufacturing, spur demand and help them
steer away from uncertainties”.
