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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.
More on News:
- 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
- Challenges with the Current Act: Delayed payments, outdated support mechanisms, lack of state government representation in the National Board for MSME.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.
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- 70% of the population falls below the poverty line, with 90-95% managing their lives with difficulty.
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- Six Pillars of Focus: The ministry will focus on six pillars going forward:
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- Formalisation and access to credit
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- Increased access to market and e-commerce adoption
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- Increased productivity through modern technology
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- Enhancing skill levels and digitalisation in the service sector
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- Support to khadi, rural, and coir industriesEmpowerment of women and artisans through enterprise creation.
Initiatives Announced by the Ministry:
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Other Key Government Initiatives for MSMEs:
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- Trade Enablement & Marketing (TEAM) Initiative: It aims to onboard 5 lakh MSEs onto the Open Network for Digital Commerce (ONDC).
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- Yashasvini Campaign: It aims to spread awareness for formalising women-owned, informal micro enterprises.
- Target Areas: Focus on tier-2 and tier-3 cities.
- Yashasvini Campaign: It aims to spread awareness for formalising women-owned, informal micro enterprises.
- 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.
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International MSME Day
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