On May 13, 2020, the Prime Minister, Narendra Modi announced Rs 20 lakh crore package to make India ‘Self-Reliant’ or ‘Aatmanirbhar’ to fight against the battle caused by Coronavirus outbreak.

20 Lakh Crore package announced by the government of India is for the power companies, small businesses, realtors and shadow banks that saw a major economic downfall. In the first tranche of relief package, there are several benefits provided to the MSMEs, which majorly covers Rs 3 Lakh Crore collateral-free loans, Rs 50,000 crores equity infusion, Rs 20,000 crore subordinate debt, the revised definition of MSME, e-linkage to the market, and global tender are disallowed up to Rs 200 crores.

Here’s how this 20 Lakh Crore package will benefit the MSME sector to mitigate the impact of this global pandemic that led to devastating effect throughout the world.

  1. Collateral Free Automatic Loans for Business/Factory Owners


It’s an emergency credit line MSME loan provided by banks and NBFCs. All the MSMEs who meet eligibility criteria are automatically liable to avail this MSME loan. However, there are some strict guidelines too, like, the borrower must have less outstanding less then Rs 25 Crore, and the company’s turnover must be less than Rs 100 Crore. The tenure of this MSME loan would be 4 years, and 12 months moratorium period on principal repayment. Moreover, MSMEs can avail this Emergency Credit Line until October 31, 2020.

  1. Subordinate Debt for MSMEs

The Government of India has also announced Rs 20, 000 Crores subordinate debt for stressed MSMEs. If an MSME is struggling with an equity problem, then assistance is provided to them as well. Basically, this scheme will benefit up to 2 lakh MSMEs, but it will only be offered to the borrowers once the previous secured credits are met.

  1. Equity Infusion for MSMEs

Another benefit offered to the MSME is Rs 50,000 equity infusion, which is done through funds of funds. In simple terms, it’s a strategy to invest in different other types of funds. Equity Infusion through funds of funds is beneficial for the MSMEs to expand their business and capacity to get listed in the stock exchange market. This scheme is beneficial for the MSME in different other ways like, they can boost their business, increase the chances of employment, the public interest will develop and help the Indian government in building the economy.

  1. Revised Definition of MSMEs

The major advantage to the MSMEs announced last month was a revised definition. From investments to turnover, the entire definition is now changed as per the Indian government. Moreover, even the difference between the manufacturing and service sector is now eliminated with a purpose that MSMEs grow and expand.

Micro Unit – Investment up to Rs 1 Crore and Turnover below Rs 5 Crore

Small Unit – Investment up to Rs 10 Crore and Turnover below Rs 50 Crore

Medium Unit – Investment up to Rs 20 Crore and Turnover below Rs 100 Crore


In 20 Lakh Crore package, there were several other benefits announced, apart from MSME collateral-free loan. For more information and details about the MSME, and MSME loans offered by the government, get in touch with the experienced professionals of Consult Avenue. Also, we are one of the top GST consultants in Delhi providing assistance to the customers to resolve their queries. Whether you are looking for guidance related to GST registration, MSME registration or direct tax consultancy, we provide comprehensive solutions to all our valuable customers.

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