BMS COLLEGE OF LAW, BANGALORE
1.1 WHAT ARE MSME’s?
Micro, Small, and Medium Enterprises (MSME) is an acronym for Micro, Small, and Medium Enterprises. MSME industries contribute massively for the economic flourishment of the country. Small-scale industries, or SSIs, are another name for these businesses.
The Ministry of MSME is a component of the Indian government headquartered in New Delhi, under the Aatmanirbhar Bharat Abhiyan (ABA).It is the apex organization for the design and administration of regulations and laws relevant to micro, small, and medium-sized firms in India.
It was created to help micro, small, and medium-sized businesses become more competitive by promoting, facilitating, and developing their competitiveness. Even if the company is in the manufacturing or service industries, the MSME legislation allows for registration in both of these categories.
1.2 THE STATS
The MSME sector employs 45 percent of India’s total industrial workforce, produces 50 percent of the country’s total exports, and employs 95 percent of the country’s total industrial units, producing over 6000 different goods (As per msme.gov.in). When these industries expand, the country’s economy as a whole expands and thrives. So far it has increased the GDP by 29% and provided over 11 crore job opportunities.
1.3 THE LAW
On October 2, 2006, the MSME became functioning through the MSMED Act,2006 (The Micro, Small and Medium Enterprises Development Act, 2006). This Act was recently amended in 2020. Although the Government has not made this registration essential, it is advantageous to have one’s business registered under it because it provides numerous benefits in terms of taxation, business setup, credit facilities, and financing.
The Micro, Small and Medium Enterprises Development Act, 2006 vs The Micro, Small and Medium Enterprises Development Act, 2006(AMENDED)
The Act has 32 sections spread over VI chapters which can be found easily on the official website provided by the government .
The only changes were when it came to the defining clauses of Micro, Small, and Medium Enterprises. Also, the distinction between the manufacturing and the services sectors under the MSME definition has been removed. The existing MSME Classifications refer to the 2006 Act where as the Revised MSME Classification refer to the Amended Act in 2020.
- BENEFITS OF MSME’s:
- A single time registration is valid for one company and all its branches even if they are in different states of India.
- Only manufacturing and service industries come under MSME’s. (Trading sector is excluded)
- Along with new startups and businesses, an already existing enterprise can also register as an MSME.
- Bank loans become cheaper as a result of MSME registration because the interest rate is relatively low, around 1 to 1.5 percent. Interest rates are far lower than those charged on traditional loans.
- It also permitted minimum alternative tax (MAT) credits to be carried forward for up to 15 years rather than the previous 10 years.
- Once registered, the cost of obtaining a patent or establishing an industry is reduced due to the numerous discounts and concessions available.
- Because the Udyam Registration Portal is integrated with the Government e-Marketplace and numerous other State Government websites, MSME registration makes it easier to get government tenders.
- REGISTRATION OF AN MSME
Registration as an MSME is pretty easy, it only requires an AADHAR card of the owner, if the owner is not an Indian or does not possess an Aadhar card, the partners Aadhar card can be given as well.
Registration can be categorized as follows
- For New Entrepreneurs who are not Registered yet as MSME
- Registration with PAN card
- Registration without PAN card
- Registration for entrepreneurs already having EMI-II or UAM
After visiting the official website(https://msme.gov.in/), the home page is user friendly and the owner can select one among the above options, as suits his enterprise best and finish the process by entering the details as asked. After filling in the details and clicking the “Submit and Get Final OTP” button, the MSME is registered and a notice of successful registration with a reference number appears. The Udyam Registration Certificate is issued after the registration is verified, which may take a few days.
- MSME SCHEMES LAUNCHED BY THE GOVERNMENT
As Finance Minister Nirmala Sitharaman made the official announcement of the changes under Atma-nirbhar Bharat Abhiyaan Economic Package especially keeping in mind the effects of the pandemic on small scale industries and businesses. Rs. 20 lakh crore was sanctioned towards this cause.
The following were announced with respect to MSME’s
- Rs 3 lakh crore collateral free automatic loans for MSMEs
- Rs 50,000 crore equity infusion through MSME Fund of Funds
- Rs 20 crore subordinate debt for MSMEs
- Extension of registration and completion date of real estate projects under RERA
- Immediate pending refunds issuance to all non-charitable trusts
- Extension of the due date for ITR for FY’19-20 to November 30, 2020
SCHEMES IMPLEMENTED BY M/O MSME & ITS ORGANISATIONS
1.PRIME MINISTER’S EMPLOYMENT GENERATION PROGRAMME (PMEGP)
• The scheme aims to provide financial assistance to set up self-employment ventures and generate sustainable employment opportunities in rural as well as urban areas. • To generate sustainable and continuous employment opportunities to rural and unemployed youth as well as prospective traditional artisans and thereby halt occupational migration.
2. 2ND LOAN FOR UP-GRADATION OF THE EXISTING PMEGP/MUDRA UNITS
• With an objective to assist exiting units for expansion and upgradation, the scheme provides financial assistance to successful/ well performing units.
• The scheme also caters to the need of the entrepreneurs for bringing new technology/ automation so as to modernize the existing unit.
3. CREDIT GUARANTEE SCHEME FOR MICRO & SMALL ENTERPRISES (CGTMSE)
- Credit guarantee for loans up to Rs. 2 crores, without collateral and third-party guarantee.
• Guarantee coverage ranges from 85% (Micro Enterprise up to Rs 5 lakh) to 75% (others).
• 50% coverage is for retail activity.
4. CREDIT LINKED CAPITAL SUBSIDY COMPONENT (CLCS & TU SCHEME)
Under this scheme, new technology is provided to the business owners to replace their old and obsolete technology. A capital subsidy is given to the business to upgrade and have better means to do their business. These small, micro and medium enterprises can directly approach the banks for these subsidies.
5. PROCUREMENT AND MARKETING SUPPORT (PMS) SCHEME
• To enhance the marketability of products and services in the MSME sector.
• To promote new market access initiatives, create awareness and educate the MSMEs about various marketing relevant topics
• To create more awareness about trade fairs, digital advertising, e-marketing, GST, GeM portal, public procurement policy and other related topics etc.
6. INTERNATIONAL COOPERATION (IC) SCHEME
To enhance the competency of MSMEs, capture new markets for their products, and explore new technologies for improving manufacturing capacity, etc.
• The scheme supports MSMEs by way of participation in international events for exploring export opportunities, access to international business networks, technology upgradation/modernization, improved competitiveness, awareness of better manufacturing practices etc.
7. MICRO & SMALL ENTERPRISES CLUSTER DEVELOPMENT PROGRAMME (MSE – CDP)
• To support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills & quality, market access, etc.
• To create/upgrade infrastructural facilities in the new / existing Industrial Areas / Clusters of MSEs.
• To set up Common Facility Centres (for testing, training, raw material depot, effluent treatment, complementing production processes, etc).
• Promotion of green & sustainable manufacturing technology for the clusters.
8. SCHEME OF FUND FOR REGENERATION OF TRADITIONAL INDUSTRIES (SFURTI)
Support traditional artisans to provide sustainable employment
• Government of India support up to Rs. 2.5 cr. up to 500 artisans and Rs. 5 cr. for more than 500 artisans
• Set up physical infrastructure with CFCs, latest machines, training, etc. in clusters.
9. A SCHEME FOR PROMOTION OF INNOVATION, RURAL INDUSTRIES AND ENTREPRENEURSHIP (ASPIRE)
• To set up a network of technology centres and incubation centres to accelerate entrepreneurship and promote innovation to further strengthen the competitiveness of MSME sector.
10. ZED CERTIFICATION SCHEME
- The objective of the scheme is to enable MSMEs for manufacturing of quality products. by inculcating Zero Defect & Zero Effect practices in manufacturing processes, ensure continuous improvement thereby supporting the Make in India initiative
- Promote adaptation of Quality tools/ systems and Energy Efficient manufacturing.
11. LEAN MANUFACTURING COMPETITIVENESS FOR MSMES
To enhance the manufacturing competitiveness of MSMEs through the application of various Lean Manufacturing (LM) techniques by – Reducing waste; Increasing productivity; Introducing innovative practices for improving overall competitiveness; Inculcating good management systems; and imbibing a culture of continuous improvement
12. DESIGN CLINIC FOR DESIGN EXPERTISE TO MSMES
- To facilitate MSMEs to develop new Design strategies and or design related products through design interventions and consultancy. Financial assistance to the MSMEs for engagement of design consultants for design intervention (GoI contribution @ 75% for micro, 60% for SMEs for the project range up to Rs. 40 lakh).
- The Design Scheme shall support design work by reimbursing 75% of expenses incurred up to Rs. 1.5 lakh for final year student project done for MSMEs.
13. DIGITAL MSME
• The scheme is also aimed at creating awareness, supporting developments and e-platforms, creating literacy, training and promoting digital marketing in MSME sectors.
14. ENTREPRENEURIAL AND MANAGERIAL DEVELOPMENT OF SMES THROUGH INCUBATORS
To promote emerging technological and knowledge based innovative ventures that seek the nurturing of ideas from professionals beyond the traditional activities of Micro, Small & Medium Enterprises (MSMEs)
• Funding support up to Rs. 15 Lakh for development of innovative ideas into commercial products. • Seed funding support up to Rs. 100 Lakh for setting up new units for commercialization of successful innovative ideas.
15. AWARENESS ON INTELLECTUAL PROPERTY RIGHTS (IPR)
To enhance awareness among the MSMEs about Intellectual Property Rights, to take measures for protecting their ideas and business strategies thereby assisting them in in technology upgradation and enhancement of their competitiveness.
16. ENTREPRENEURSHIP SKILL DEVELOPMENT PROGRAMME (ESDP) SCHEME
- Management capacity building Training to Existing Entrepreneurs and their supervisory staff in Industrial MSME SCHEMES 35 Management, Human Resource Management, Marketing Management, Export Management/Documentation & Procedures, Materials Management, Financial/Working Capital Management, Information Technology, Digital Marketing, Quality Management/QMS/ISO 9000/EMS, WTO, IPR, Supply Chain Management, Retail Management, Logistics Management etc.
- Entrepreneurship & Skill Training in Agro Based Products, Hosiery, Food & Fruit Processing Industries, Carpet Weaving, Mechanical Engineering Workshop/ Machine Shop, Heat Treatment, Electroplating, Basic/Advance Welding/ Fabrication/Sheet metal work, Basic/ Advance Carpentry, Glass & Ceramics etc.
17. NATIONAL SC-ST HUB
- To provide professional support to Scheduled Caste and Scheduled Tribe Entrepreneurs to fulfil the obligations under the Central Government Public Procurement Policy for Micro and Small Enterprises Order 2012, adopt applicable business practices and leverage the Stand-Up India initiatives.
- The key action areas of NSSH include vendor development, participation in MSME SCHEMES 37 public procurement, building reliable database, mentoring and handholding support, policy advocacy with states, credit facilitation, capacity building, private affirmative action, technology upgradation, marketing support, and special subsidies under various schemes.
18. ASSISTANCE TO TRAINING INSTITUTIONS (ATI) SCHEME
• Assistance may be provided for creation or strengthening/ expansion of infrastructure, including opening of new branches/centres to training institutions of Ministry of MSME and for meeting revenue deficit, if any, of National Institute for Micro, Small and Medium Enterprises (NIMSME).
19. COIR INDUSTRY TECHNOLOGY UPGRADATION SCHEME
• To establish new state of the art coir processing units
• To provide modern infrastructure facilities to the production units
. • Upper ceiling of financial assistance will be Rs.2.50 crores.
20. SKILL UPGRADATION AND MAHILA COIR YOJANA
• Training to personnel in the cadres of supervisors/ instructors/ artisans in coir industry.
• EDPs/Workshops/Seminars on development of coir industry.
21. INTEREST SUBSIDY ELIGIBILITY CERTIFICATE (ISEC)
To provide funding for khadi programme undertaken by khadi institutions by mobilizing funds from banking institutions for filling the gap between the actual fund requirements and availability of funds from budgetary sources.
22. WORK-SHED SCHEME FOR KHADI ARTISANS
• To provide better ambience by providing a better workplace to artisans to enable them to carry out their spinning and weaving work efficiently.
• To provide more storing and working space for housing slivers, raw material, implements etc.
• To help in improving the efficiency and thereby the production, productivity of spinners, weavers and also to increase their earnings.
23. ROJGAR YUKT GAON
- To transform socio-economically distressed villages into sustainable and self-reliant Khadi based enterprises.
- To give further motivation to Khadi Sector it is proposed to introduce RYG scheme with enterprise-led business model for strengthening Khadi Institutions (KIs).
24. MAHATMA GANDHI INSTITUTE FOR RURAL INDUSTRIALIZATION (MGIRI)
To support, upgrade and accelerate the process of Rural Industrialization in the country to move towards the Gandhian vision of sustainable village economy self-sufficient in employment and amenities
- POTTERY ACTIVITY UNDER GRAMODYOG VIKAS YOJANA (GVY) SCHEME
- To increase the production, technical knowhow of pottery artisans and to reduce cost of production
- To enhance the income of pottery artisans by providing skill development training and modern and automated equipment
- To provide skill-development training to SHGs of pottery artisans on focused products like garden pots, khullad, decorator products etc.
- To encourage the successful potter to set up his own unit under PMEGP scheme
- To develop necessary market linkages by tying up with exports and large buying houses.
- To innovate various new products and raw materials to make international scale pottery
2. BEEKEEPING ACTIVITY UNDER GRAMODYOG VIKAS YOJANA(GVY) SCHEME
- To adopt scientific bee management practices
- To utilize available natural resources in beekeeping
- To create sustainable employments for the beekeepers / farmers
- To provide supplementary income for the beekeepers / farmers
- To create awareness about Honey and other Hive Products and benefits of beekeeping in cross pollination
3. AGARBATTI MAKING PROJECT UNDER “GRAMODYOG VIKAS YOJANA(GVY) SCHEME
- This scheme was made to revive Agarbatti industry in the country and increase indigenous production of Agarbatti and reduce imports
- To impart training to the artisans working in the Agarbatti sector and assist them with Agarbatti manufacturing machines, raw material for manufacturing Agarbatti. etc.
- To create sustainable employment for the traditional Artisans and increase their wages
- To develop backward and forward linkages and hand holding support to the artisans, SHGs etc
4. TOOL ROOMS AND TECHNICAL INSTITUTIONS – A COMPONENT OF INFRASTRUCTURE DEVELOPMENT & CAPACITY BUILDING SCHEME
18 Tool Room & Technical Institutions (TRs &TIs) under O/o DC (MSME), Ministry of MSME is concentrating on an integrated development of the related segments of industries by way of providing quality tools, trained personnel and consultancy in tooling and related areas, specific product groups like Foundry & Forging, Electronics, Electrical, Electronics, Fragrance & Flavour, Glass, Sport Goods, and footwear etc.
MSME ACT by the government sure has helped people in building their small businesses. But it is not fool proof. It does not talk about the construction sector much nor other daily vendors and labourers. The sectors it covers are also limited and so is its scope.
Moreover, coming up with so many schemes just makes it confusing to people to understand. Rather, I would suggest a more uniform law purely based on annual turnover.
Even though the MSME scheme has helped many people, it still has scope to reach out to a greater number of people and thus public education must also be a part of the scheme.