Guide to Micro Small and Medium Enterprises (Development Act 2006)

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Description
"Small businesses are the backbone of our economy and the cornerstone of our communities." This declaration by former US President Barack Obama resonates deeply with the Indian context, where Micro, Small, and Medium Enterprises (MSMEs) form the very foundation of the nation's economic and social fabric. This treatise seeks to illuminate the legal landscape governing these vital entities, exploring the legislative framework and the pivotal role of judicial interpretation in shaping their operational environment.
The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006,takes clues from its predecessor law on the subject, i.e., Interest on Delayed Payments Act, 1993, a comparative overview of both these laws has been provided by the Madras High Court in Eden Exports,' case, this work is replete with a comprehensive comparative overview of both these laws. MSMED Act, stands as a landmark piece of legislation, representing the first comprehensive legal framework dedicated to the recognition and holistic development of enterprises engaged in both manufacturing and the provision of services. Prior to this enactment, the legal landscape for small-scale industries was less unified. The primary objectives of this Act are clearly articulated as facilitating the promotion, development, and enhancing the overall competitiveness of micro, small, and medium enterprises. The Act defines and classifies MSMEs based on specific criteria related to investment in plant and machinery or equipment. There have been upward revisions in this classification, based upon investment and turnover, the latest one notified by the Finance Act, 2025 to be implemented with effect from 1st April 2025.2 These upward revisions ensure that a greater number of enterprises become eligible to avail the benefits provided by the MSMED Act, 2006. This work is replete with the latest government revisions and updations, reflecting the evolving economic realities.
The MSMED Act, 2006 includes specific mechanisms designed to address the persistent issue of delayed payments to micro and small enterprises, a significant challenge impacting their financial health. The enactment of the MSMED Act, 2006, signifies a pivotal shift towards a more structured and legally underpinned approach to nurturing the MSME sector, moving away from the earlier, less cohesive policy measures. The focus on curbing delayed payments in the Act demonstrates a clear legislative intent to provide a legal recourse for MSMEs facing this critical challenge, with the overriding effect granted to these provisions highlighting the importance of timely financial settlements for their sustainability.
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Table of Contents
PART I GUIDE TO THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006
Chapter 1. Preliminary
Chapter 2. National Board for Micro, Small and Medium Enterprises
Chapter 3. Classification of Enterprises, Advisory Committee and Memorandum of Micro, Small and Medium Enterprises
Chapter 4. Measures for Promotion, Development and Enhancement of Competitiveness of Micro, Small and Medium Enterprises
Chapter 5. Delayed Payments to Micro and Small Enterprises
Chapter 6. Miscellaneous
PART II APPENDICES
DIVISION-A
MSEFC Central, States/Union Territories Rules
App. 1. (State/Union Territory) Micro and Small Enterprises Facilitation Council Rules, 2006
App. 2. MSEFC States and Union Territories Rules
DIVISION-B
Orders, Policy, Circulars, Clarifications, Schemes etc., relating to MSMEs
App. 3. Public Procurement Policy for Micro and Small Enterprises (MSES) Order, 2012
App. 4. Master Direction-Lending to Micro, Small & Medium Enterprises (MSME) Sector
App. 5. Framework for Revival and Rehabilitation of Micro Small and Medium Enterprises (MSMEs)
App. 6. Streamlining flow of credit to Micro and Small Enterprises (MSES) for facilitating timely and adequate credit flow during their 'Life Cycle
App. 7. New Definition of Micro, Small and Medium Enterprises Clarifications
App. 8. The Micro, Small and Medium Enterprises Development (Furnishing of Information) Rules, 2016.
App. 9. Schemes For MSMEs.
App. 10. MSME/Udyam Registration: Circulars & Orders
DIVISION-C
Analogous Laws relating to MSMEs
App. 11. The Factoring Regulation Act, 2011
App. 12. The Khadi and Village Industries Commission Act, 1956
App. 13. The Small Industries Development Bank of India Act, 1989
App. 14. The National Bank for Agriculture and Rural Development Act, 1981
App. 15. The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993.
App. 16. The Mediation Act, 2023
App. 17. The Arbitration and Conciliation Act, 1996
DIVISION-D
Analogous Laws relating to MSMEs
App. 18. Excerpts from Selected Acts and Rules
DIVISION-E
Selected Leading Supreme Court and High Courts Decisions Related to MSEFCS
App. 19. Landmark Judgments of Supreme Court Ruling of MSME
App. 20. Selected Leading Supreme Court Cases related to MSEFC
App. 21. Landmark High Court Decisions related to MSEFC
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Author Details
Rao Garvit Singh
Ravi Bhushan Wadhwa