MSME Act 2006 relating to micro Enterprises 040509

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MSME Act 2006 relating to micro Enterprises 040509

  1. 1. Understanding Micro Small and Medium Enterprises Development Act 2006 relating to micro Enterprises Jitesh Panda Vrutti Livelihoods Resource Centre 4th May 09
  2. 2. Focus of MSME Act 2006 • To facilitate promotion and development of micro Enterprises • To enhance competitiveness of micro Enterprises
  3. 3. Defining micro Enterprise • In case of the enterprises engaged in the manufacture or production of goods – An Enterprise is defined as micro Enterprise where the investment in plant and machinery does not exceed twenty five lakh rupees; • In case of the enterprises engaged in providing or rendering of services – An Enterprise is defined as micro Enterprise where the investment in equipment does not exceed ten lakh rupees
  4. 4. National Board for Micro, Small, Medium Enterprises Functions include • Examining the factors affecting the promotion and development of micro Enterprises • Reviewing the policies and programmes of the Central Government in regard to – Facilitating the promotion and development – Enhancing the competitiveness of such enterprises and the – Impact on such enterprises; • Recommend Government of India (GoI)– on above matters • Advise GoI on Use of Funds Not less than Three Persons representing associations of micro Enterprises to be Members of Board
  5. 5. Advisory Committee Functions include: • Examining matters referred by Board • Recommend GoI on – Level of employment in a class or classes of enterprises; – Level of investments in plant and machinery or equipment, in a class or classes of enterprises; – Need of higher investment in plant and machinery or equipment for • Technological upgradation • Employment generation and • Enhanced competitiveness of the class or classes of enterprises; – Possibility of promoting and diffusing entrepreneurship • Class of Enterprises includes micro Enterprises One Representative of the Associations of Micro Enterprises to be Ex officio Member
  6. 6. Indicative activities to promote micro Enterprises • Developing skill of employees, management and entrepreneurs • Provisioning for technological upgradation • Providing marketing assistance • Providing infrastructure facilities • Cluster development of enterprises • Strengthening backward and forward linkages Focus on micro and Small Enterprises
  7. 7. Indicative activities to promote micro Enterprises • Credit services to be guided by guidelines or instructions issued by the Reserve Bank to focus on – Timely and smooth flow of credit – Minimising the incidence of sickness – Enhancing the competitiveness of such enterprises • Preferential policies of Government in respect of procurement of goods and services, produced and provided by micro Enterprises Focus on micro and Small Enterprises
  8. 8. Micro and Small Enterprises Facilitation Council • To be constituted by State Government (s) • Can be more than One Council – linking to Place (s) or Area (s) • One or more office-bearers or Representatives of Associations of micro Enterprises to be part of Council
  9. 9. Key Points • Focus on micro Enterprises • Focus on Representation of micro Enterprises in different policy related bodies Would be good to know Impact of the MSME Act relating to micro Enterprises
  10. 10. Key Challenges • Presence of Association of micro Enterprises • Linkages with Poverty Alleviation Schemes – NREGA, SGSY, Watershed, etc • Interface between Rural/Urban Development and promotion of Industries • Inadequate linkages between micro, small, medium and large enterprises • Inadequate focus on numerous (small) micro Enterprises – where investment is in range of few Thousands • Limited focus on facilitation Business Development Services (BDS) for micro Enterprises – required for promotion of micro Enterprises
  11. 11. Thank you

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