Micro, Small and Medium Enterprises

Micro, Small and Medium Enterprises

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Today we will discuss about ‘Micro, Small and Medium Enterprises’.

 Micro, Small and Medium Enterprises

Micro, Small and Medium Enterprises have been defined under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, in terms of the investment, which varies for the Manufacturing and the Service Sector.
Let us now have a look at the classification of the Micro, Small and Medium Enterprises, in terms of investment.

(a) For the enterprises that are engaged in the Manufacture or Production, Processing or Preservation of goods, classification based on investment in Plant and Machinery may be made as-

Manufacturing Enterprise	Investment in Plant and Machinery
Micro enterprise	Investment does not exceed Rs. 25 lakh
Small enterprise	investment is more than Rs. 25 lakh but does not exceed Rs. 5 crore
Medium enterprise	Investment is more than Rs.5 crore but does not exceed Rs.10 crore.

In these enterprises, the investment in plant and machinery is the original cost excluding land and building and the items, as specified by the Ministry of Small Scale Industries.

(b)  For the enterprises, that are engaged in providing or rendering of Services, classification of the enterprises based on investment in Equipment is done as -

Service Sector Enterprise	Investment in Equipment
Micro enterprise	Investment does not exceed Rs. 10 lakh
Small enterprise	investment is more than Rs.10 lakh but does not exceed Rs. 2 crore
Medium enterprise	Investment is more than Rs. 2 crore but does not exceed Rs. 5 crore

Highlights of MSMED Act -

• Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 was enacted on June 16, 2006.
• Micro, Small and Medium enterprises Development Act, 2006 aimed to support economic recovery and sustained growth by encouraging a more diversified and efficient industrial structure. To achieve this objective, it is focused on these main areas, these are - 
• (i) strengthening competition by establishing an appropriate legal and regulatory framework and removing barriers to competition and trade.
• (ii) facilitating investment and trade by strengthening the framework governing the policy, credit facilities, grants, administration and utilisation of funds, development of skill in the employees, management and entrepreneurs, provisioning for marketing assistance or infrastructure facilities and cluster development of such enterprises with a view to strengthening backward and forward linkages
• (iii) developing a SME policy, regulatory and financing framework.

• The Micro, Small and Medium Enterprises Development Act, 2006 has empowered the Central Government to establish a National Board for MSMEs with its head office at Delhi.
• Accordingly, the National Board for Micro, Small & Medium Enterprises (NBMSME) was established for the first time on 15th May 2007. It consisted of 47 members, including Chairman, Vice- Chairman and Member Secretary.
• The Minister in charge of Ministry of MSME is ex-official Chairman of the National Board of MSME.
• Bank’s lending to the Micro and Small enterprises engaged in the manufacture or production of goods specified in the first schedule to the Industries (Development and regulation) Act, 1951 and notified by the Government from time to time is reckoned for priority sector advances.
• Bank loans up to Rs.5 crore per borrower / unit to Micro and Small Enterprises engaged in providing or rendering of services and defined in terms of investment in equipment under MSMED Act, 2006 are eligible to be considered for priority sector advances. Lending to Medium enterprises is not eligible to be included for the purpose of computation of priority sector lending.
• Banks have a target of 7.5 percent of ANBC (Adjusted Net Bank Credit) or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher to be invested in micro enterprises for priority sector lending. This is to be achieved in a phased manner i.e. 7 per cent by March 2016 and 7.5 per cent by March 2017.
• The Sub-Target for Micro Enterprises for foreign banks with 20 branches and above would be made applicable post 2018 after a review in 2017.

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Team AIMSUCCESS..!!