MSMED Act 2016

Guide to the MSMED Act in India

Guide to the MSMED Act, 2006 in India

The Government of India has legislated and enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 on June 16, 2006. With the passing of Micro, Small and Medium Enterprises Development Act 2006, a standard shift has taken place to include services in the definition of Micro, Small and Medium Enterprises and simultaneously extend the capacity to support Medium Enterprises. The article studies Definition of terms related to Micro, Small and Medium Enterprises in Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, Investments and Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, Examples of enterprises engaged in providing or rendering services in accordance with Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, Guidelines referring to Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, Micro, Small and Medium Enterprises Development (Amendment) Bill, 2015 and Central Government and Investment Limits related to Micro, Small and Medium Enterprises Development (Amendment) Bill, 2015.

Definition of MSME as per MSMED Act, 2006

The Micro, Small and Medium Enterprises Development Act, 2006 defines the Micro, Small and Medium Enterprises on the basis of:

  1. Investment in plant and machinery for those engaged in fields of manufacturing or production, the processing/preservation of goods, and
  2. Investment in equipment for enterprises engaged in the provision or rendering of services.

The Micro, Small and Medium Enterprises Development Act, 2006 advocates the provision of marketing assistance, infrastructural facilities and backward as well as forward linkages to all Micro, Small and Medium enterprises. Benefits of MSME registration.

 

According to Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 the investment made in plant and machinery is based on the original cost while excluding land and building and other items as specified by the Ministry of Small Scale Industries. Click here to know about the MSME eligibility criteria.

Examples of MSME Businesses

  • Small road and water transport operators related to which original investment in vehicles are made up to Rs.200 lakhs under the priority sector.
  • Small business for which original cost price of the equipment utilized for the reason of business is not in excess of Rs.20 lakhs.

Micro, Small and Medium Enterprises Development (Amendment) Bill, 2015

  • The Micro, Small and Medium Enterprises (Amendment) Bill, 2015 has proposed to alter the Micro, Small and Medium Enterprises Development Act, 2006. The Act permits the classification and regulation of enterprises as micro, small and medium enterprises. Further, the Bill aims to expand the allowance for investments undertaken for setting up plant and machinery in micro, small and medium enterprises.  Know more about the MSME Amendment Bill, 2015.

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