Monday 24 August 2015

MICRO SMALL & MEDIUM SCALE ENTERERPISES REGISTRATION & BENEFITS UNDER MSMED ACT

The Micro Small & Medium Enterprises Development (MSMED) Act 2006 was become operational from 2nd October 2006.  The Act replaces the concept of “Industry” with “Enterprises”.
Consequent to the implementation of this act, SSI Registration process has been dispensed with. The entrepreneur files the Entrepreneur Memorandum and gets an acknowledgement..

Micro Small and Medium enterprises are defined as below:


CATEGORY
Investment in Plants & Machinery(Manufacturing Units)
Investment in Equipment  (Service Sector)
MICRO
Up to Rs 25 Lacs
Up to Rs 10 Lacs
SMALL
Rs 25 Lacs ≤ Rs 500 Lacs
Rs 10 Lacs ≤ Rs 200 Lacs
MEDIUM
Rs 500 Lacs ≤ Rs1000 Lacs
Rs 200 Lacs ≤ Rs 500 Lacs

Further, as per the said notification, the following are excluded while calculating the investment in plant & machinery:
·         Equipments such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumable stores;
·         Installation expenditure for plant & machinery;
·         Research & development equipment and pollution control equipment;
·         Power generation set and extra transformer installed by the
·         enterprise as per the regulations of the state electricity board;
·         Bank charges and service charges paid to the national small industries corporation of the state small industries corporation;
·         Procurement or installation of cables, wiring, bus bars, electricalcontrol panels (not mounted on individual machines), oil circuitbreakers or miniature circuit breakers which are necessarily to be used for providing electrical power to the plant & machinery or for safety measures;
·         Gas producer plants;
·         Firefighting equipment;
·         Transportation charges (excluding sales-tax or value added tax and excise duty) for indigenous machinery from the place of their manufacture to the site of the enterprise;
·         Charges paid for technical know-how for erection of plant & machinery and
·         Such storage tanks which store raw materials and finished products only and are not linked with the manufacturing process.
·         Investment in land, building, vehicles, furniture & fixtures, office equipments etc. shall not be considered in determining the threshold limits of plant & machinery or equipment as the case may be.

Filing of Memoranda by MSMEs for registration                                    
·         Process of two - stage registration of Micro & Small Enterprises dispensed with & replaced by filing of memoranda.
·         Filing of memorandum optional for all Micro & Small Enterprises.
·         Filing of memorandum optional for service sector Medium Enterprises.
·         Filing of memorandum mandatory for  manufacturing  sector Medium Enterprises

Benefits of Micro Small and Medium enterprises are defined as below:

Act
Benefits
Micro

Small

Medium



Applicability(Yes/No)
Chapter V of the act
Protection against delayed payments by buyers of goods/services.
(Like Payment in 45 Days, Interest on delayed payment @ 3 times of bank rate notified by RBI, In case of dispute Reference to Micro and Small Enterprises Facilitation Council, Disclosure Requirement to specify unpaid amount with interest in the annual statement of accounts.)
Yes
Yes
No
Sec 9 of the Act
Central Governments measures for promotion and development of MSME.
(Like development of skill in the employees, management and entrepreneurs, provisioning for technological upgradation, providing marketing assistance or infrastructure facilities and cluster development of such enterprises with a view to strengthening backward and forward linkages)
Yes
Yes
Yes
Sec 10 of the act
Credit facilities.
(Like RBI’s progressive credit policies for ensuring timely and smooth flow of credit, minimise the incidence of sickness among and enhance the competitiveness of such enterprises)
Yes
Yes
Yes
Sec 11 of the Act
Procurement Preference policies notified by
Central/ state government
(Like procurement of goods and services, produced and provided by micro and small enterprises, by its Ministries or departments, as the case may be, or its aided institutions and public sector enterprises.)
Yes
Yes
No
Sec 12 of the Act
Funding Facilities or Grants by Central Government.
(Like after due appropriation made by Parliament by law in this behalf, credit to the Fund or Funds by way of grants for the purposes of this Act, such sums of money as that Government may consider necessary to provide)
Yes
Yes
Yes
Sec 25 of the act
Simplified exit scheme (winding up the business) but NA to companies
Yes
Yes
Yes