Micro Small and Medium Enterprises Development (MSMED) Act 2006

The Micro Small & Medium Enterprises Development (MSMED) Act 2006 received Presidents Approval on 16 June 2006 and became operational from 2 October 2006.
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Micro Small and Medium enterprises are defined as below: Manufacturing / Production of Goods:

Micro Enterprises -Investment in Plant and Machinery does not exceed Rs.25 lakhs Small enterprises -Investment in Plant and Machinery is more than Rs.25 lakhs but does not exceed Rs.5.00 crores Medium enterprises-Investment in Plant and Machinery is more than Rs.5.00 crores but does not exceed Es.10 crores

Providing or rendering of Services :

Micro Enterprises -Investment in equipment does not exceed Rs.10 lakhs Small enterprises -Investment in equipment is more then Rs.10 lakhs but does not exceed Rs.2.00 crores Medium enterprises-Investment in equipment is more than Rs.2.00 crores but does not exceed Rs.5 crores

Filing of Memoranda by MSMEs After the MSME Act 2006 has come into effect, the process of two - stage registration of Micro &
Small Enterprises dispensed with & replaced by filing of memorandum of Micro, Small and Medium enterprise with State or Central Govertment. This has to be done as per notified by Central Government (recommended by Advisory Committee of MSME) The Authority with which memorandum will be filed by medium enterprise will be notified by Central government. The Authority with which memorandum will be filed by Micro & Small Enterprises will be notified by State government.

National Board for Micro, Small and Medium Enterprises (MSME) - Apex Consultative Body

The National Board of MSME is the Apex Consultative Body having Head Office at New Delhi.

Following are the members of this Board: Headed by the Central Minister, who handles portfolio of MSMEs Minister of State, who handles portfolio of MSMEs

Representatives of Central Ministries, Ministers of State Governments, UT Administration Representatives, RBI, SIDBI, NABARD, Chairman of Indian Banks Association Associations of MSMEs including women, Persons of eminence and Central Trade Union Organisations
National Board to be now statutory, as against non-statutory SSI Board (the predecessor of National Board)

Quarterly meetings of National Board made mandatory

Advisory Committee for Micro, Small and Medium Enterprises (MSME) Second level Consultative Body

Following are the members of this Committee: Member-Secretary of the national Board is the Member-Secretary of Advisory Committee. Secretary to Govt. of India in Department of MSME is the second Important member. Not more than 5 senior Officers of Govt. of India in MSME Deptt. Not more than 3 State govt. Representatives. Representatives from Association of MSME.s

This Advisory Committee advises the Board, Central Govt. and State Govt.s in the various matters of MSME.s like - Level of Employment in MSME.s, Level of investments in MSME.s in plant and machinery, employment generation possibilities, promotion of entrepreneurship in MSME.s, International standards of classification of MSME.s, etc.

State Facilitation Councils for more Micro, Small and Medium Enterprise :

As per the MSME Act 2006, the State Governments are recommended to establish one or Facilitation Councils (called the MSME Facilitation Councils). This Facilitation Council consists of three to five members, comprising of : 1. Director of Industries, or Industries Commissioner, or by whatever name called, but not below the rank of Director, is the Chairman of this Council. He owns the MSM Enterprises Council, and is representative of Department of State Government, having administrative control over MSM Enterprises. 2. One or more representatives from association of MSM Enterprises. 3. One or more representatives from banks lending to MSM Enterprises. 4. One or more persons having special knowledge in the field of industry, finance, law, trade or commerce.

District Industries Center (DIC)

1. In each district, there is one agency to deal with all requirements of MSME and village Industries. This is called District Industries Centre.

2. The District Industries Centres undertake various programmes for investment promotion at the grassroot level such as organizing seminars workshops, extending support for trade fairs and exhibitions organized by various Industries associations.

3. All the services and support required by for MSME units under the single roof of the District Industries Centre. The Centre has a separate wing to look-after the special needs of cottage and house-hold industries as district from small industries.

4. Functions of DICs Information o Supply information for measures Promotion and development as given by Central Government, particularly for small and micro enterprises, by way of: 1. Development of skills of employees, management and entrepreneurs. 2. Suggesting technological up gradation. 3. Marketing assistance

Supply information for measures of policies and practices in respect of credit to MSM Entreprises, as issues by Reserve Bank, to ensure timely and smooth flow of credit, in order to avoid: 1. Incidents of sickness of MSM Enterprises. 2. Enhance the competitiveness of such enterprises.

Registration o Support in filing of memorandum for MSM Enterprises. Recommendation o Land recommendation

Seminars o District or Taluka Level o Buyer-Seller & Exhibition

Others Activities o Recovery of Package Loan margin Money Loan & Subsidy o Follow up of Industrial Approvals. o Follow up of units which have availed benefits under incentives schemes

Self Employment scheme 1. Recommendation of loan applications under various Central Govt. schemes like Vajpayee Bankable Scheme, PMEGP Scheme, Manav Kalyan Yojana Tool kits to artisans, etc.

2. Recommendation of loan applications under various State Govt. schemes

Co-operative Package Scheme 1. Handloom Development Scheme 2. Training & Production centre 3. Recovery of Loan & Share contribution of Co-operative Societies 4. Preparation of Project Profiles 5. Audit of Industrial Society

Administration of District Industries Center (DIC)

Usually, a General Manager is the head of the District Industries Centre. The post of General Manager is of Joint / Deputy Commissioner level. The General Manager has senior officers to assist him, such as Manager (Raw Material), Manager (Credit), Manage (Economic Investigation), Manager (Marketing) Industrial Promotion Officer(IPO) and Technical Officer cum Project Manager (PM) General Manager Accounts Officer Cl.-II Manager (Credit) Cl.-II Manager (RM) Cl.-II Manager (EI) Cl.-II Manager (Marketing) Cl.-II Tech.Officer & Manager (Project) Cl.-II Industrial Promotion Officer Cl.-II

Director of Industries (also known as Industries Commissioner):

1. Director of Industries (also known as Industries Commissioner) is the Chairman of Facilitation Council for Micro, Small and Medium Enterprises (MSM Enterprises). He is thus, the representative of Department of Industries and Commerce in his state for all Micro, Small and Medium Enterprises. 2. The functioning of all District Industries Centers (DICs) and their achievement is monitored by Industries Commissioner (also called Director of Industries). He looks after the work of all MSM Enterprises in his state. 3. He presides over the meetings of General Managers (of District Industries Centers), from all Districts in his state. Such meetings are organized frequently by Industries Commissioner to evaluate the performance and also help in resolving difficulties in implementation of different schemes. 4. He is a Key decision influencer during the Central level National Board meetings and is the Key Decision maker in the States Facilitation Council for Micro, Small and Medium Enterprises, w.r.t Credit policies, Procurement policies, Provisions for checking Delayed payments, Loan disbursals, Land allocations, etc. Credit Policies: The policies and practices in respect of credit provided to the MSMEs need to be progressive and such as may be specified in the guidelines issued by the Reserve Bank of India, with the aims of : ensuring smooth credit flow to the MSMEs, minimising sickness among them and ensuring enhancement of their competitiveness. Procurement Policies : Central Government or a State Government to notify preference policies in respect of procurement of goods and services, produced and provided by MSEs, by its Ministries, departments or its aided institutions and public sector enterprises (non-statutory till now). Provisions to Check Delayed Payments : Period of payment to MSEs by the buyers reduced to forty five days Rate of interest on outstanding amount increased to three times the prevailing bank rate of RBI compounded on monthly basis. Declaration of payment outstanding to MSE supplier mandatory for buyers in their annual statement of accounts Interest (paid or payable to buyer) disallowed to supplier for deduction for income tax purposes No appeal against order of Facilitation Council to be entertained by any Court without deposit of 75% of the decreed amount payable by buyer Appellate Court may order payment of a part of the deposit to the supplier MSE Facilitating Closure of Business Central Government may (within one year of the commencement of the Act) notify a scheme for

facilitating closure of business by a micro, small or medium enterprises. The problem of delay in payment of bills for supplies made by Small Scale Industries was seriously considered by the Government of India and to protect the seller units in getting payments in time, the Interest on Delayed Payment to Small Scale Industrial Undertakings, Act, 1993 was introduced. As provided under 17(a) of the amendment Act, the State Governments were recommended to constitute Regional Industrial Facilitation Councils in the state to monitor these issues.

5. Besides States Facilitation Councils, to resolve the problems of industries/industrialists, there can be two types of committee at the district level viz. a) District Industrial Executive Committee (DIEC) DIEC is constituted for solving industry related problems And promoting industrial growth. District Collector (D.C.) is the Chairman of this Committee and General Manager of DIC is the Member Secretary. The other members of the DIEC are President of District Panchayat, DDO, MPs, MLAs, Prominent persons active in Industries in the district and members of all district level industries associations.

b) Single Window Industrial Follow up Team (SWIFT) Entrepreneurs face many difficulties when they start new industries. They have to deal with many government agencies and get many clearances. SWIFT helps them in guiding solving their problems at a single spot. This committee is working under the District Collector, General Manager of DIC is the Member Secretary and District Development Officer is Vice President of SWIFT. All industries related officers in the district are members of this committee.

Appendix:
List of Commissioner / Director of Industries of North Indian States / UT.s S.N. 1 Address of Director of Industries Shri Pradeep Gupta, Director of Industries & Commerce, Government of Jammu & Kashmir, Exhibition Ground, Jammu-190 001. Shri Anil Khachi, Director of Industries, Government of Himachal Pradesh, Udyog Bhavan, Bemloe, Shimla-171 001. Shri V.K. Janjua, Director of Industries & Commerce, Government of Punjab, 17-Bays Building, Sector-17, Chandigarh. Shri D.R. Dhingra Director of Industries, Chandigarh Administration, 39- Industrial Area, Phase-II, Ram Darbar, Chandigarh-160 001. Shri P.C. Sharma Secretary & Director of Industries, Government of Uttarakhand, Industrial Estate, Patel Nagar, Dehradun-248 001. Shri D. R. Dhingra, Director of Industries & Commerce, Government of Haryana, 30- Bays Building, Sector-17, Chandigarh-160 017. Shri Darmendra, Commissioner of Industries, Plot No. 419, Patparganj Industrial Area, Delhi-110092. Shri Ajit Kr. Singh Commissioner of Industries, Government of Rajasthan, Udyog Bhavan, Tilak Marg, Jaipur-302 005. Shri Atul Kumar Gupta, Commissioner/Director of Industries, Government of Uttar Pradesh, Udyog Bhawan, G. T. Road, Kanpur208002. State Jammu & Kashmir Phone No. 0191-2544471

Himachal Pradesh

0177-2813414 Fax: 2650657

Punjab

0172-2722945/2701214 Fax: 0172-2712636

Chandigarh

0172-2701344/2701363

Uttarakhand

0135-2728227 Fax: 2728266

Haryana

0172-2701344

Delhi

22157011 Fax: 22516996

Rajasthan

01412227796

Uttar Pradesh

0512-2239530/2238283