An introduction to MSME act

1. MSMED ACT,2006
MICRO, SMALL AND MEDIUM
ENTERPRISES DEVELOPMENT
ACT, 2006
PRESENTED BY :-
•ARUN KUMAR-1368
Ramanujan College (University of Delhi)

2. 1. INTRODUCTIONTO THE ACT
2. DELAYED PAYMENTS TO MICRO
ANDSMALL ENTERPRISES
3. MICRO AND SMALL ENTERPRISES
FACILITATIONCOUNCIL
4. CLOSURE OF BUSINESS OF MICRO,
SMALL AND MEDIUMENTERPRISES
5. PENALTY FOR CONTRAVENTION

3. MSMED ACT WAS PASSED IN JUNE 2006 FOR THE GROWTH OF
MICRO, SMALL AND MEDIUM ENTERPRISES. THESE ENTERPRISES
SECTOR COMPRISES 50% OF INDIA’S TOTAL MANUFACTURED
EXPORTS, 45% OF INDUSTRIAL EMPLOYMENT, AND 95% OF ALL
INDUSTRIAL UNITS.
THE MSMED ACT WAS A PRODUCT OF A CONSULTATIVE PROCESS
INVOLVING OVER 300 INDUSTRIES ASSOCIATIONS,GOVT. BODIES
AND MULTIPLE STAKEHOLDERS ACROSS INDIA. THE MAIN PROBLEMS
FACES BY THESE ENTERPRISES ARE OF FIANANCE, LACK OF
MANAGEMENT SKILLS, CHEAP FOREIGN IMPORTS ETC.

4. DELAYED PAYMENT
TO
MICRO AND SMALL
ENTERPRISES

5. THIS TOPIC COVER FOR MAJOR OPTION, ARE:-
1. LIABILITY OF BUYER TO MAKE
PAYMENTS, SECTION 15.
2. PAYMENT OF INTREST, SECTION 16.
3. REFERENCE TO MICRO AND SMALL
ENTERPRISES FACILITATION
COUNCIL, SECTION 18.
4. APPLICATION FOR SETTING ASIDE
DECREE, AWARD OR ORDER, SECTION 19.
NOTE:- SUB-SECTIONS OF THESE ACT ALSO INCLUDED IN
THESE TOPICS.

6. MICRO AND SMALL
ENTERPRISES
FACILITATION
COUNCIL
SECTION 21 EMPOWERS THE STATE GOVT. TO ESTABLISH BY
NOFIFICATION ONE OR MORE MICRO AND SMALL ENTERPRISES
FACILITATION COUNCILS, AT SUCH PLACES, EXERCISING SUCH
JURISDICTION AND FOR SUCH AREAS AS MAY BE SPECIFIED IN
THE NOTIFICATION.

7. COMPOSITION OF
FACILITATION COUNCIL
SECTION 21 STIPULATES THAT THE COUNCIL SHALL CONSISTS OF
NOT LESS THAN THREE BUT NOT MORE THAN FIVE MEMBERS TO
BE APPOINTED FROM THE FOLLOWING CATEGORIES :-
1. DIRECTORS OF INDUSTRIES OR CHAIRPERSON.
2. ONE OR MORE OFFICE-BEARER OR REPRESENTATIVE OF
ASSOCIATIONS .
3. ONE OR MORE REPRESENTATIVE OF BANKS AND FINANCIAL
INSTITUTIONS.
4. ONE OR MORE PERSONS HAVING SPECIAL KNOWLEDGE IN THE
FIELD OF INDUSTRY, FINANCE, LAW, TRADE OR COMMERCE.

8. CLOSURE OF BUSINESS
OF MICRO, SMALL
MEDIUM
ENTERPRISES
SECTION 25 PLACES THE CENTRAL GOVT. UNDER
OBLIGATION TO NOTIFY A SCHEME FOR FACILITATING
CLOSURE OF BUSINESS BY A MICRO, SMALL AND
MEDIUM ENTERPRISES, NOT BEING A COMPANY
REGISTERED UNDER COMPANY ACT 1956, WITHIN
ONE YEAR FROM THE DATE OF COMMENCEMENT OF
THE ACT.

9. SECTION 27 INTENTIONAL CONTRAVENTION OR ATTEMPTING
CONTRAVENTION OR ABETTING THE CONTRAVENTION OF
PROVISIONS OF SECTION 8(1) OR SECTION 26(2), HAS BEEN MADE
PUNISHABLE IN THE CASE OF THE FIRST CONVICTION, WITH FINE
WHICH MAY EXTEND TO RS.1000 ; AND IN THE CASE OF ANY
SUBSEQUENT CONVICTION, WITH FINE WHICH SHALL NOT BE LESS
THAN RS.1000 BUT MAY EXTEND TO RS.10,000.
CONTRAVENTION OF THE PROVISIONS OF SECTION 22, BY A
BUYER HAS BEEN MADE PUNISHABLE WITH A FINE WHICH SHALL
NOT BE LESS THAN RS.10,000.

10. THE ACT ESTABLISHES THE NECESSARY STRUCTURE FOR
OVERSEEING AND REGULATING THE DEVELOPMENT OF MSMEs
IN INDIA. THIS ACT SIMPLIFIES THE REGISTRATION PROCESS
FOR NEW MSMEs. THE ACT SETS THE AGENDA FOR SPECIFIC
POLICIES THAT IT WILL CREATE AND IMPLEMENT IN THE FUTURE.
THIS ACT PROVIDE GREAT HELP IN THE DEVELOPMENT AND
EXPANSION OF THE MICRO, SMALL AND MEDIUM ENTERPRISES
IN INDIA, WHICH ALSO LEADS TO RISE IN EXPORT AND GROWTH
IN GDP AND WELFARE OF THE PEOPLE.THIS ACT ALSO INCREASED
THE PENALITIES FOR LATE PAYMENT WHICH RESULT IN FAST AND
SMOOTH PAYMENT MECHANISM IN THE MARKET.