AP bails out sick and stressed MSMEs with timely intervention
Issues revised policy to mitigate their suffering, offer support
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Amaravati: Andhra Pradesh Government has unveiled a new policy to come to the rescue of sick and stressed MSMEs to put them back on the right track.
After expiry of the old policy, a new one for 2026-31 has been issued to mitigate stress and revive stressed MSMEs. Keeping in view the objective of creating “ One Family One Entrepreneur” by 2030, the government has earmarked a corpus of Rs500 crore to promote entrepreneurship, strengthen the MSME ecosystem, and ensure optimal utilisation of funds during the policy period.
The Director of Industries has stated that pursuant to various representations from Industry associations in multiple instances where MSMEs within industrial estates become sick and requested government's intervention for stabilising these MSMEs and following extensive
deliberations and based on the suggestions of the government, the Department of Industries had submitted a draft AP Sick and Stressed MSME Revival Policy.
Industries and Commerce Secretary Dr N Yuvaraj said after careful examination of the proposal, the new policy was issued with the primary objective of instituting necessary measures and mechanism to reduce stress in the MSME sector and promote the development of a healthy MSME ecosystem, providing timely assistance and emergency attention to the units stressed/ in verge of becoming sick or have become sick, preventing loss of employment due to stressed MSMEs, loss of utility of investments already made in the sector.i e. loss of tax revenue/GSDP to the State.
MSMEs contribute up to 35 per cent of India’s GDP, 45 per cent of the industrial output and 40 per cent of exports.It generates more than 10 times the number of jobs created for every unit of investment by large and mega enterprises. Experience of AP in the past few years validates this trend. Given this potential, development of the MSME sector is paramount to reaping the demographic dividend and fostering socio-economic development of the State and country.The main objectives of the new policy are instituting necessary measures and mechanisms to reduce stress in the MSME sector and promote the development of a healthy MSME ecosystem, providing timely assistance and emergency attention to the units stressed/ on verge of closure. The policy envisages three main components of revival support under this policy: CA support for estimating drop in net worth, consultancy support for preparing revival plan as well as hand-holding the enterprise through the revival period and financial support linked to their previous business performance as well as pending incentives.
The MSME Policy 2024-29 had set a target to attract investments up to Rs50,000 crore and formalise 22 lakh units by 2029.
Given the significant role played by MSMEs in economic development,the government at the highest level felt that it was imperative it was time to address the stress in the sector as well as prevent any additional stress in the sector to the extent feasible.
The revised policy is aimed at not only supporting revival of sick enterprises but also reducing incipient stress among enterprises to the extent feasible. Accordingly, this policy identifies factors that can lead to sickness and provides for measures to address those issues.
Under the new policy, a stress severity framework is being formulated to categorize MSMEs as healthy, incipiently stressed, stressed and sick. The stress severity framework is a weighted average score derived by taking the following indicators in the current quarter, drop in power consumption from the unit, Special Mention Account (SMA) categorization of the unit by the ban, period overdue in filing GST returns by the unit/drop in GST paid value, drop in employer PF contribution from the uni, establishing MSME CARE (Centre for Advisory, Revival & Enablement) at the district level. These centres will have an empanelled list of experts, who work for both preventing the stress in MSMEs and the revival of the units under stress.
The units will have CAs and Consultants to support the revival of sick units.
According to the GO, the financial support is either provided directly in installments and will be released upon achieving performance milestones according to predetermined parameters or is provided indirectly by deferring the payment deadline to a future date.
