MSME POLICY IN INDIA

Micro, Small and Medium Enterprises (MSME) contribute nearly 8% of the country’s GDP, 45% of the manufacturing output and 40% of the exports. They provide the largest share of employment after agriculture. They are the nurseries for entrepreneurship and innovation. They are widely dispersed across the country and produce a diverse range of products and services to meet the needs of the local markets, the global market and the national and international value chains.

The Ministry has a number of programmers to help and assist entrepreneurs and small businesses. If anyone is planning to set up business, one may contact National Institute for Entrepreneurship and Small Business Development (NIESBUD), National Institute for Micro, Small and Medium Enterprises (NI- MSME), Indian Institute of Entrepreneurship (IIE) or the Development Commissioner (DCMSME) for details about their programs. If one is an existing entrepreneur and would like to improve one’s competitiveness, one may contact DC, MSME who can be of assistance in various ways. If one is willing to set up a village industry or want to know more about Khadi or Coir Products, one may contact KVIC or Coir Board.

Ministry of MSME encourages and honors innovation and enterprise. It work in close coordination with the State Governments, Industry Associations, Banks and other stakeholders through its numerous field offices and technical institutions to help the ‘engines of growth’ throughout the country.

Micro, Small and Medium Enterprises Development (MSME) Act was enacted in 2006. It provides the first-ever legal framework for recognition of the concept of “enterprises” (comprising both manufacturing and services) and integrating the three tiers of these enterprises, viz., and micro, small and medium.

It also provided for a statutory consultative mechanism at the national level with wide representation of all sections of stakeholders, particularly the three classes of enterprises. Under the Micro, Small and Medium Enterprises Development Act 2006, the definition and coverage of the MSE sector consisting of micro and small enterprises were broadened significantly. Further, the Act also defined the medium enterprises for the first time. Medium enterprises are those which have investment in plant and machinery exceeding Rs 5 crore.

 

 Salient Features of the MSME Development Act, 2006 :

·      The MSME Act provides the first legal framework for recognition of the concept of “enterprise” and integrating the three tiers of these enterprises, viz., micro, small and medium.

·       Under the Act, enterprises have been categorized broadly into those engaged in :

->   Manufacturing

->    Rendering of Services

Both categories have been further classified into micro, small and medium enterprise based on their investment in plant and machinery or in equipments as under:

·       Manufacturing Enterprises: Micro Enterprises investment upto Rs 25 lakhs, small enterprises investment above Rs 25 lakhs and upto Rs 5 crore.  Medium Enterprises investment above Rs 5 crore and upto Rs 10 crore.

 

·     Service Enterprises: Micro Enterprises investment upto Rs 10 lakhs, small enterprises investment above Rs 10 lakhs and upto Rs 2 crore. Medium Enterprises investment above Rs 2 crore and upto Rs 5 crore.

 

·      The Act provides for a statutory consultative mechanism at the national level with wide representation of all sections of stakeholders, particularly the three classes of enterprises, and with a wide range of advisory functions and an Advisory Committee to assist the Board and the Center/State Government.

The other features include:

· Establishment of specific funds for the promotion, development and enhancement of competitiveness of these enterprises.

· Notification of schemes/programs for the purpose.

· Progressive credit policies and practices.

· Preference in Government procurement to products and services of the micro and small enterprises.

· More effective mechanism doe mitigating the problems of delayed payments to micro and small enterprises.

· Simplification of the process of closure of business by all the three categories of enterprises.

Published by The Kirti Gupta

An ordinary person with extra-ordinary dreams...

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