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The
Micro, Small & Medium Enterprises Development Act,
2006
List of Rules and
Notifications
To provide for facilitating the promotion and
development and enhancing the competitiveness of micro, small and medium
enterprises
I. Need for A New Law
. SSIs so far dealt with in only two sections of I
(D&R) Act, 1951
. Other matter concerning SSIs dealt with under
multiple laws
. Need for single legislation pointed out by
various committees and repeatedly voiced by
Industry associations
. Absence of statutory consultative and
recommendatory body
. Most policies (purchase preference, registration,
etc.) without statutory basis
. Need to define the MSME concept
. Need to simplify registration process
. Need to promote services sector
. Need to strengthen existing law on delayed payments
. Need to facilitate closure
II.
Salient Provisions of MSMED Act,
2006
1.
Classification of Enterprises; Section
7(1)
Concept of ‘Enterprises’ as against
‘Industries’ Enterprises classified broadly into:
(i)
Enterprises engaged in the manufacture / production of goods pertaining to
any
industry; &
(ii) Enterprises engaged in providing / rendering services
Manufacturing enterprises
defined in terms of Investment in plant and machinery and
further classified into:
q
Micro Enterprises – investment up to Rs. 25 lakh
q
Small Enterprises – investment above Rs.25 lakh & up to
Rs. 5 crore
q
Medium Enterprises – investment above Rs. 5 crore
& up to Rs.10 crore
Service enterprises defined
in terms of investment in equipment and further classified
into:
q
Micro Enterprises – investment up to Rs.10
lakh
q
Small Enterprises – investment above Rs. 10
lakh & up to Rs. 2 crore
q
Medium Enterprises – investment above Rs.2
crore & up to Rs. 5 crore
2.
Filing of Memoranda by MSMEs
q
Process of two –stage registration of Micro
& Small Enterprises dispensed with & replaced by filing
memoranda 8
q
Filing of memoranda optional for all Micro & Small
Enterprises
q
Filling of memoranda optional for service sector Medium
Enterprises
q
Filing of memoranda mandatory for manufacturing sector Medium
Enterprises
3.Apex Consultative Body with Wide
Representation of Stakeholders
National
Board for Micro , Small and Medium Enterprises (MSME) headed by the Central Minister i/c of MSMEs and consisting
of 47 members from among 3
q
Members of parliament
q
Representatives of Central Ministries
q
Representatives of State Government
q
Representatives of UT administration
q
Representatives of RBI, SIDBI, NABARD,
q
Representatives of Association of MSMEs, Including women
q
Persons of eminence
q
Central Trade Union Organizations
q
National Board to
be statutory, as against non statutory SSI Board
q
Quarterly meetings of National Board made mandatory
q
Functions of the National Board
q
Examine the factors affecting the promotion and development of
MSMEs and review the policles
and protrammes of the Central Government in the regard 3
q
Make recommendation on matters
referred to as above or any other matter referred to it by the Central
Government
q
Advise the Central Government on the use of Fund/ Funds
constituted under section 12
4. Advisory Committee headed by
central Government Secretary i/c
of MSMEs & Including :7(2)
q
Not more than five officers of the Central Government;
q
Not more than three representatives of State Governments;&
q
One representative each of micro, small and medium enterprises
Function of the Advisory Committee:
q
To examine matters referred to it by the National Board;
q
To advise Central Government on matters specified in the rules
clause 32
5. Promotional & Enabling
provisions
q
Central Government to notify programes, guidelines
or instructions for facilitating the promotion and development and
enhancing the competitiveness of MSMEs 9
q
Central Government to constitute, by notification, one or more
Funds for the above-mentioned purposes 12
q
Central Government
to credit to the Fund of Funds such sums as the Government may parliaments
by law in this behalf 13
q
Central Governments to administer the Fund or Funds for
purposes mentioned section 9 & coordinate and ensure timely utilization
and release of sums with such criteria, as may be prescribed 14
6. Credit The policies and practices in
respect of credit to the MSMEs shall e progressive and such as may be
specified in the guidelines or Instructions issued by the Reserve Bank of
India, with the aims of: 10
q
Ensuring smooth credit flow to the MSMEs,
q
Minimizing sickness among them; and
q
Ensuring enhancement of their competitiveness.
7. Procurement preference policies
q
Central Government of a State Government to notify
preference policies In respect of procurement o goods and services,
produced and provided by MSMEs , by its Ministries , Departments or aided
institutions and public sector enterprises (non-statutory till now)
11
8. Provisions to Check Delayed payments
q
Provisions related to delayed payment to
14 to 24 micro & small enterprises (MSEs) strengthened 14 to24
q
Period of payment to MSEs by the buyers reduced to forty five
days
q
Rate of interest on
outstanding amount Increased to three times the prevailing bank rate of RBI,
compounded on monthly basis
q
Constitution of MSE Facilitation Council (s) mandatory for
State Government. Section 14to 24
q
Provision for Inclusion of one more representative of MSE
Association in the Facilitation council
q
Jurisdiction of the Council in a State to cover buyers,
wherever they may be located
q
MSE Facilitation
Council may utilise the services of any Institution or Center for
conciliation and alternate dispute resolution Services
q
Reference made to the Council to be decided within ninety days
from the date of reference
q
Disclosure of payments outstanding to MSE supplies mandatory
for buyers in their annual accounts
q
Interest (paid of payable to supplier) disallowed to buyer for
deduction for Income tax purposes section
14 to 24
q
No appeal against order of Facilitation Council to be
entertained by any Court without deposit of 75% of the decreed amount
payable by buyer
q
Appellate Court may order payment of a part of the deposit to
the supplier MSE
9. Facilitating Closure of Business
q
Central Government may (within one year of the commencement of
the Act ) notify scheme for facilitating closure of business by a micro,
small or medium enterprise
CHECK LIST OF TASKS WITH RESPECT TO THE
MSMED ACT, 2006
1. Principal Notification to be issued
2.Rules for National Board For Micro,
Small and Medium Enterprises (NBMSME)
3.Constitution of NBMSME
4. Notification for regions the country
5. Notification for classification of
enterprises
6.Notification for exclusion of certain
items while calculating the cost of plant and machinery
under the Explanation 1 of section 7(1)
7.Notification for the constitution of’
Advisory Committee
8.Notification of the form of the
memorandum the procedure of its filing and other matters Incidental thereto
9.Notification of the authority with which
the memorandum shall be filed by manufacturing
medium enterprises
10.Notification of schemes and programes
under section 9
11.policies and practices in respect of
credit under section 10
12.procurement preference policy
13.Model Rules for the constitution and
function of MSEFCs.
14.Scheme for facilitating closure of
business of enterprises, when required
15.Requirement to specify delayed payment
with interest in the annual statement
of accounts
16.DIPP to notify that medium enterprises
do not need to file IEM with then
17.Authority for filing memorandum by micro and small
enterprises to be notified by States / Uts. |
