Government to Amend MSME Development Act, 2006

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Government to Amend MSME Development Act, 2006
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Government to Amend MSME Development Act, 2006

Context: Ministry of Micro, Small, and Medium Enterprises (MSME) to amend MSME Development Act, 2006.

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  • The aim is to improve mechanisms for managing disputes related to delayed payments and address evolving needs of the MSME sector.
  • The ministry is collaborating with the Ministry of Law and Justice, experts at National Law Universities (NLUs), and other relevant stakeholders.
  • The Ministry announced the Trade Enablement & Marketing (TEAM) initiative, Yashasvini Campaign. 
  • It is also looking to transform Samadhan portal into an online dispute resolution platform.

 

Definition of MSME: 

  • The Ministry of MSMEs revised the definition and criteria for MSMEs, effective from July 1, 2020, as part of the Atmanirbhar Bharat package announced on May 13, 2020.
  • New Definitions: The MSME is based on the Investment in Plant, Machinery or Equipment values (excluding land and building) and Annual Turnover.
  • Unified Criteria: No difference between manufacturing and service sectors.
  • Turnover Exclusion: Exports are excluded from turnover calculations to encourage more exports without losing MSME benefits.

 

MSMEs Role in Inclusive Growth in India

  • At present, there are more than 6 crore MSMEs functional in the country. 
  • It provides more than 11 crore jobs to the people, as the second-largest employer in India after agriculture.
  • The sector contributes approximately 30% to India’s GDP and has a share of approximately 50% of India’s exports.
  • MSMEs contribute significantly to India’s inclusive growth by:
    • Creating jobs and distributing industries across urban, rural, and state regions.
    • Encouraging entrepreneurship among Women and diverse socio-economic groups like Other Backward Class (OBC), Schedule Caste (SC), Schedule Tribe (ST), etc.

 

Government to Amend MSME Development Act, 2006

 

 

Government to Amend MSME Development Act, 2006

  • Challenges with the Current Act: Delayed payments, outdated support mechanisms, lack of state government representation in the National Board for MSME.
  • Need to Focus on Micro Enterprises: The importance of micro enterprises in rural areas to improve quality of life and reduce unemployment can not be neglected.
      • 70% of the population falls below the poverty line, with 90-95% managing their lives with difficulty.
  • Six Pillars of Focus: The ministry will focus on six pillars going forward: 
    • Formalisation and access to credit
    • Increased access to market and e-commerce adoption
    • Increased productivity through modern technology
    • Enhancing skill levels and digitalisation in the service sector
    • Support to khadi, rural, and coir industriesEmpowerment of women and artisans through enterprise creation.

 

Initiatives Announced by the Ministry: 

Other Key Government Initiatives for MSMEs:

  • Pradhan Mantri MUDRA Yojana
  • Credit Guarantee Schemes
  • Credit Guarantee Fund Trust for Micro and Small Enterprises
  • Government e-Marketplace (GeM)
  • Udyam Assist Platform
  • ASSEM Portal
  • The Champions portal: Created as a hub and spoke model, it serves as a unified platform for addressing grievances of MSMEs.
  • Trade Enablement & Marketing (TEAM) Initiative: It aims to onboard 5 lakh MSEs onto the Open Network for Digital Commerce (ONDC).
    • Yashasvini Campaign: It aims to spread awareness for formalising women-owned, informal micro enterprises.
      • Target Areas: Focus on tier-2 and tier-3 cities.
  • Upgrading the Samadhan Portal: Launched in 2017 to track outstanding dues to MSEs from buyers of goods and services.
  • It will be enhanced into a comprehensive online resolution platform with dispute resolution mechanisms to address high litigation costs and delays.

 

International MSME Day

  • Celebrated on June 27th. 
  • Theme for 2024: Leveraging the Power and Resilience MSMEs to Accelerate Sustainable Development and Eradicate Poverty in Times of Multiple Crises.
  • MSMEs are vital in achieving the Sustainable Development Goals (SDG). 
  • They are an important element in the implementation of SDG 8 (decent work and economic growth) and SDG 9 (industry, innovation and infrastructure.)
  • MSE Cluster Development Programme of Ministry of MSME aims to establish Common Facility Centres and enhance infrastructure, aligning with SDG 8 and 9.
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