The government is working on launching a fund of funds for the micro, small and medium enterprises (MSME) sector. It will invite venture capital, private equity firms to invest in the sector. The government is all set to soon invite the private firms to this end, said MSME Secretary AK Sharma on Tuesday.
In his address at the CII Money Mobility week Sharma said that most formalities are over and in a very short while private equity firms and venture capital funds would be invited. Finance Minister Nirmala Sitharaman had announced a fund of funds for MSMEs to provide equity support of Rs 50,000 crore.
Sharma said that Rs 10,000 crore would come from the government and the rest -- Rs 40,000 crore -- would come from VC and PE firms.
In her announcement, Sitharaman had said that the fund would be operated through a mother fund and a few daughter funds. It will enable MSMEs to expand in size and capacity.
Sharma said that the government is also pursuing two additional agendas --credit rating and listing of MSMEs. "Because that makes the life of VC and PE firms easier, and even for financial institutions, for that matter. The second thing is, we want to take on very aggressively to see that most of the MSMEs go for listing. That opens up many new gates for the growth of MSMEs," he added.
The MSME secretary also said that he is pursuing central public sector units and state governments to clear dues of MSMEs.
He also spoke about the new MSME portal that was launched on July 1. Sharma said that over 3 lakh MSMEs have registered themselves on the portal. "It is a complete process reengineering so far as the registration as per the new definition is concerned," Sharma said.
The government had recently redefined MSMEs. A micro enterprise is where the investment in plant and machinery does not exceed Rs 1 crore and turnover does not exceed Rs 5 crore. A small enterprise is where investments do not exceed Rs 10 crore and turnover does not exceed Rs 50 crore. A medium enterprise is where investments do not exceed Rs 50 crore and turnover does not exceed Rs 250 crore.