Carry your umbrellas as the Monsoon Session of Parliament is expected to rain bills. From Goods and Services Tax (GST) to MSME Development (Amendment) Bill, this hot and humid session has a lot on its plate for the MSME Sector.
A total of 11 Bills are pending in the Lok Sabha and there are as many as 45 Bills pending in the Rajya Sabha.
Following the GST Bill, the most important agenda concerning the MSME sector is The Micro, Small and Medium Enterprises Development (Amendment) Bill, 2015. The bill would increase the allowance for investment in MSME manufacturing and services sector. It was introduced in the Lok Sabha by the MSME Minister Kalraj Mishra on April 20, 2015. The Bill amends the Micro, Small and Medium Enterprises Act, 2006.
MSME MoS Giriraj Singh had said in 2015 that the MSME Development (Amendment) Bill, 2015 is to –
- enhance the existing limit for investment in plant and machinery considering changes in price index and cost of inputs consistent with the emerging role of the MSMEs in various Global Value Chains
- include medium enterprises apart from small enterprises in section 7(9) to enable the aforesaid category of enterprises to avail the benefits and become competitive
- empower the Central Government to revise the existing limit for investment, by notification, considering the inflation and dynamic market situation.
Table 1: Comparison of investment limits for enterprises in manufacture/production (in Rs.)
| Type of Enterprise | MSME Act, 2006 | MSME Bill, 2015 |
| Micro | 25 lakh | 50 lakh |
| Small | 25 lakh to 5 crore | 50 lakh to 10 crore |
| Medium | 5 crore to 10 crore | 10 crore to 30 crore |
Table 2: Comparison of investment limits for enterprises providing services (in Rs.)
| Type of Enterprise | MSME Act, 2006 | MSME Bill, 2015 |
| Micro | 10 lakh | 20 lakh |
| Small | 10 lakh to 2 crore | 20 lakh to 5 crore |
| Medium | 2 crore to 5 crore | 5 crore to 15 crore |
Source: PRSIndia.org
The concept of facilitating SMEs can be traced back to the Industries Development and Regulation Act, 1961. Under that Act, the government had the power to amend the Act from time to time in order to ensure the development of SMEs.
Subsequently, the MSME Development Act, 2006 was enacted to ensure the promotion and development of small scale industry. It classifies and regulates enterprises as micro, small and medium enterprises. This Act received attention during the ‘Make in India’ campaign of the new government and then bill was introduced in the Lok Sabha.
Delayed payments also need to be addressed in MSME Bill, 2015. As per the MSME Development Act, 2006, for delayed payment beyond 45 days, the buyer has to pay interest to the MSME supplier at three times the Bank rate and also clearly mention in their annual accounts, separately, the interest due, paid and remained unpaid, to the MSME suppliers whose payment is delayed. But there are still a large number of business houses who turn a blind eye when it comes to payment to MSEs.
Recently RBI Governor Raghuram Rajan had said that MSMEs get squeezed all the time by their large buyers, who pay after long delays. So there is a need for strong actions to be taken against those who flout their responsibilities for timely payment to MSMEs in the new amended Act.
Apart from the MSME Development (Amendment) Bill, other relevant bills in the agenda of the Parliament are The Child Labour (Prohibition and Regulation) Amendment Bill, 2012, The Electricity (Amendment) Bill, 2014.
Also, the Industrial Relations Code Bill which combines Industrial Disputes Act, 1947, Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946 is still stuck in Law Ministry for approval (as sources said) and Small Factories Bill which aims to improve ease of doing business and create an ecosystem for encouraging small businesses was sent to Cabinet months ago for its nod.
