Government Undertaking Comprehensive Review of MSME Development Act, 2006

Government Undertaking Comprehensive Review of MSME Development Act, 2006

The Indian government has initiated a detailed evaluation of the Micro, Small and Medium Enterprises Development Act, 2006, which includes a revision of the definitions of small businesses. This comprehensive review involves examining all facets of the Act to modernize it in line with current market dynamics and lessons learned over the years.

One key aspect of the proposed amendments to the Act involves reassessing the classifications of MSMEs, strategies for their growth and promotion, and regulations concerning delayed payments. Currently, MSME categorizations are based on both investment in plant and machinery and annual turnover; however, there is a consideration to potentially shift to solely annual turnover to conform with the goods and services tax system.

Moreover, several sectors, such as diamond polishing, gems and jewellery, grills, cables, wire cutting, and pharmaceuticals, face challenges related to value addition and burgeoning turnover. The incorporation of turnover as the defining criterion is anticipated to ensure accurate classification of enterprises in these specific industries. Additionally, Chapter 4 of the MSME Development Act, which concentrates on measures for fostering growth, development, and competitiveness among MSMEs, is also under scrutiny for enhancements.