Over the past few decades, Indian economy has undergone a massive change by opening up its markets to multinational giants. In such circumstances, several small and medium sized business entities due to their inability to cope with the changing market scenario, either have shut down or in a bid to survive, opted to merge with these conglomerates. At this juncture, experts felt the need of a comprehensive central legislation to not just to facilitate the growth and development of these industries but also to extend such support as would enable to them to adopt advanced technology and remain in the competitive era of globalization.
Previously, the growth and development of small scale industries was governed by Industries (Regulation and
Development) Act, 1951. The Micro , Small and Medium Enterprise Development Act, 2006 was introduced to specifically tend to the needs of the small and medium sized industries.
The MSMED Act categorizes Micro, Small and Medium enterprises based on investment made in plant and machinery. For determining the status of an enterprise, the following slabs have been prescribed:
All types of enterprises, whether sole proprietorship firm, partnership firm, Hindu undivided family business, cooperative society, company or undertaking falling under the above mentioned slabs can apply for registration under this Act, The registration under MSMED Act, 2006 is voluntary and not mandatory.
There are two types of registration:
- Provisional registration- A business unit can provisionally register itself under the Act in its pre-investment period in order to take necessary steps to apply for financial credit, water, power, land etc.
- Permanent Registration- A unit which is provisionally registered at the time of commencing production can apply for final or permanent registration. An existing unit is eligible to apply for the same without going through the provisional registration process.
The Entrepreneur’s Memorandum has to be filed with the General Manager of District Industries Centre (DIC) of the concerned district of the business enterprise. Filing of the same is compulsory for Medium enterprises (except those in private sector) and optional for Micro and Small enterprises. It is divided into two parts:
|EM Part I||EM Part II|
|Any person who intends to establish any micro, small or medium enterprise engaged in manufacturing or service sector shall file EM Part I. This validity of EM Part I is for 2 years after the expiry of which no renewal will be granted.||Existing units who have already commenced their activities has to file EM Part II within 2 years of doing the same.|
Online registration under MSMED Act can also be undertaken by entrepreneurs so that acknowledgement to EM Part I can be obtained without contacting DIC and Regional Joint Director. Online Entrepreneur Memorandum Acknowledgement is valid only when it is self-certified by the applicant and the same has been submitted with 4 copies within 30 days from the date of filing of online application to DIC/ Regional Joint Director of Industries and Commerce.
An application for registration can be made the Director of a company, any partner of a partnership firm or a sole proprietor or by the any person authorized to do so. Information of the applicant has to be provided.
An application should contain the following information:
- Name of the enterprise.
- Location of the enterprise
- Category of the enterprise
- Nature of activity (either manufacturing or service)
- Nature of operation
- Month of Installation of plants and equipment
- Other information
Other than these, information as to investment in fixed assets, disclosure of installed capacity of machinery, power requirements of the enterprise, details of employment, entrepreneur’s profile and the date of commencement of production also have to be provided.
De registration under MSMED has to be undertaken when the units produce more than the specified capacity or undertakes production of any item which requires a industrial or other statutory license.
Through the MSMED Act the government has provided a helping hand to micro, small and medium sized industries by keeping the registration process simple so that the benefits can be easily availed of. This Act has gone a long way in helping the small scale industries survive in the competitive global sphere.