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The document provides an overview of Micro, Small and Medium Enterprises (MSMEs) in India and the MSMED Act of 2006. It defines MSMEs as small businesses with certain investment ceilings. The MSMED Act aims to promote MSME development, facilitate entrepreneurship, generate employment, and enhance MSME competitiveness. Key benefits of the Act include preference in government tenders, protection against delayed payments from buyers through interest charges, and mechanisms for timely dispute resolution.

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Vansh Vajani
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21 views3 pages

Eco Assign

The document provides an overview of Micro, Small and Medium Enterprises (MSMEs) in India and the MSMED Act of 2006. It defines MSMEs as small businesses with certain investment ceilings. The MSMED Act aims to promote MSME development, facilitate entrepreneurship, generate employment, and enhance MSME competitiveness. Key benefits of the Act include preference in government tenders, protection against delayed payments from buyers through interest charges, and mechanisms for timely dispute resolution.

Uploaded by

Vansh Vajani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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NAME: Vansh Mayur Vajani ROLL NO: 063

COURSE: FYBFM
SUBJECT: BE
GROUP NO: 13
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Introduction:
The Micro, Small and Medium Enterprises Development (MSMED) Act was notified in 2006
to address policy issues affecting the micro small and medium enterprises (MSMEs) as well
as the coverage and investment ceiling of the sector. The Act seeks to facilitate the
development of these enterprises and enhance their competitiveness. The micro small and
medium enterprises (MSMEs) play a crucial role by acting as a pillar of the Indian economy
and by promoting employment, industrialization etc as well as helping in the reduction of
poverty and improving the overall infrastructure of the economy and quality of life of
individuals the MSMED Act contains 32 sections which are divided into six sections
respectively
Chapter I (Sec 1 – 2) It is the Preliminary part of the act and it contains the Short Title,
Commencement & Definitions

Chapter II National Board for micro, small and medium enterprises (Sections 3-6)

Chapter III Classification of Enterprises, Advisory Committee and Memorandum of Micro,


Small and Medium Enterprises (Sections 7-8)

Chapter IV Measures for Promotion, Development and enhancement of competitiveness (Sec


9-13)

Chapter V Delayed payments to Micro and Small enterprises

Chapter VI Miscellaneous , respectively

What is MSMEs:
Micro, Small and Medium Enterprises are better known by the acronym MSME. MSMEs are
the backbone of the Indian economy. Silently operating in different areas across the country,
more than 6 crore MSMEs have a crucial role to play in building a stronger and self-reliant
India. These small economic engines have a huge impact on the country’s GDP. The MSMEs
consists majorly of three different enterprises namely micro, small and medium enterprises
1) Micro enterprise - micro enterprises refer to enterprises that have investment in
plant and machinery unto 1crore and not exceeding 5 crores
2) Small enterprise - small enterprises refer to enterprises that have investment in
plant and machinery between 1crore and 5 crores along with an annual turnover
between 5 to 50 crores

3) Medium enterprises – medium enterprises refer to enterprises that have investment


in plant and machinery between 10crore and 50 crores along with an annual
turnover between 50 to 250 crores

Objectives of MSMED Act, 2006:

The main objective of the MSMED Act 2006 is to promote and facilitate the development of
MSMEs in India. It also seeks to provide a legal framework for the registration and regulation
of MSMEs, and to provide incentives to promote their growth and development.

The main objectives of the MSMED act as summarized as follows

1) to facilitate the promotion and development of MSMEs thought the nation by providing
various incentives

2) to promote entrepreneurship thought the nation and create India as an entrepreneurial hub

3) to create employment opportunities in both urban and rural areas

4) to eradicate poverty by the formation of ample employment opportunities

5)to enhance the competitiveness of MSMEs in both domestic and international markets

Benefits under MSMED Act, 2006:


The Government of India through its various subsidies, schemes, and incentives promote
MSMEs through the MSMED Act. To avail these benefits, Registration under the MSMED
Act is required. The act provides the following benefits/incentives to the MSME’s:

 Preference in procuring Government tenders: The Government of India, through


its Public Procurement Policy for Micro and Small Enterprises Order, 2012
(“Public Procurement Policy”) provides that all Central Government Ministries,
Departments, and Public Sector Undertakings shall collect a minimum of 20
percent of their total annual value of goods or services from Micro and Small
Enterprises , Micro and Small Enterprises having registration with District
Industries Centre or Khadi and Village Industries Commission or Khadi Village
and Industries Board or Coir Board or National Small Industries Commission or
Directorate of Handicrafts and Handlooms or any other body specified by Ministry
of MSME are provided certain benefits under the Public Procurement Policy.
 Protection against the delay in payment from Buyers: The MSMED Act
provides protection to Micro and Small Enterprises from delayed payments. It
specifically provides that where a Micro and Small Enterprise supplies any goods
or renders any services to a buyer, the buyer is required to make the payment on or
before the date agreed upon by them and in no case, the period can exceed 45 days
from the date of acceptance

 Right of interest on delayed payment: In the case where the buyer fails to make
the payments, he shall be liable to pay compound interest with monthly rests to the
supplier on that amount from the date falling after the due date, at three times of
the bank rate notified by the Reserve Bank of India.
 Time-bound resolution of disputes with Buyers through conciliation &
arbitration: MSMED Act provides that in case of any dispute arising out of non-
payment of dues, Micro and Small Enterprises may refer the dispute to the Micro
and Small Enterprises Facilitation Council, which shall conduct conciliation in the
matter and where such conciliation does not give fruitful results and is terminated
without any settlement thereof, the Council may itself take up the dispute for
arbitration or refer it to any institution or centre providing alternate dispute resolution
services.

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