The MSMED Act, 2006, was enacted to provide a policy environment for the development and promotion of the MSME sector by way of defining MSMEs, putting in place a framework for developing and enhancing competitiveness of the MSME enterprises, ensuring flow of credit to the sector and paving the way for preference in ensuring flow of credit to the sector and paving the way for preference in Government procurement to products and services of the MSEs, address the issue of delayed payments, etc.
The objectives of the act include:
Defining MSMEs
Creating a framework to enhance the competitiveness of MSMEs
Ensuring credit flow to the sector
Giving MSMEs preference in government procurement
Addressing delayed payments
Providing marketing assistance and infrastructural facilities
The impact of the sector in the economy can be improved by addressing the challenges affecting growth of the sector. Some of the major ones are as follows.
a) Policy and institutional interventions
b) Accelerating growth and enabling formalization
c) Addressing infrastructural bottlenecks
d) Facilitating capacity building
e) Facilitating access to credit and risk capital
f) Technological interventions for improving underwriting standards and delivery
g) Enabling market linkage and tie-up with public procurement platforms
Some benefits of the MSMED Act include:
Easy access to MSME loans from banks without collateral
Preference in obtaining government tenders
Benefits from Stamp Duty
Reservation policies for manufacturing/production
Reimbursement of ISO Certification Expenses
The act also:
Frees small enterprises from multiple laws and regulations
Provides a proper legal framework for the small sector
Recognizes small enterprises as a composite sector
Facilitates the natural mobility of small enterprises to medium ones
Contains penal provisions relating to the delayed payment to these enterprises
The Government has taken various measures including ongoing schemes to ensure sufficient financial accessibility and seamless credit to Micro, Small, and Medium Enterprises (MSMEs). Contemplating the role of this sector in Employment generation, promotion of entrepreneurship, regional development, export promotion, innovation, reduction of income disparities, and support for large industries, the Government of India and the Reserve Bank of India launched the following initiatives.
- MSME Samadhaan,
- Atmanirbhar Bharat,
- Udyog Aadhaar,
- Mudra,
- ZED scheme,
- Make in India,
- Stand up India,
- Startup India,
- Udyam Assist Platform,
- RAMP scheme,
- Support and Outreach Program: This program includes initiatives such as increasing the interest rebate for exporters, requiring public sector companies to buy more from MSMEs, and setting up tool rooms.
- Entrepreneurship Awareness Programme (EAP): This one-day training program is for entrepreneurship and self-employment awareness.
- Entrepreneurship cum Skill Development Programme (E-SDP): This six-week training program is for entrepreneurship and skill training.
- Advanced E-SDP: This one-week program is conducted by IIMs, IITs, ICAR, CSIR, BARC, IISC, NIT, and the Agricultural University of Central and State government.
- Government Process Reengineering (GPR): This exercise reviews schemes, the role of line agencies, and organizational review.
- Surveys, Studies, and Policy Research: This scheme studies issues concerning MSMEs and other factors impacting the MSME sector.
17. National Board for MSME: This board is chaired by the Minister of MSME and deliberates on strengthening the MSME sector.
Related posts on the Role of MSME in the Indian Economy
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