Steps for registration as Micro, Small and Medium Enterprises (MSME):
The Micro, Small and Medium Enterprises (MSME) Act was introduced in the year 2006 with the objective to facilitate promotion and development of MSMEs. It also aimed at enhancing competitiveness within the MSMEs to accelerate growth in the sector.
The MSME Act covers all categories of enterprises including proprietorship, Hindu Undivided Family, association of persons, co-operative society, partnership firm, company or undertaking. It defines and classifies the MSMEs in manufacturing and service sectors as:
i) Manufacturing Enterprises:
Micro Enterprises refer to enterprises wherein the investment in plant and machinery is up to INR 25 Lakhs. In Small Enterprises, the investment in plant and machinery is above INR 25 Lakhs and up to INR 5Crores. In the case of Medium Enterprises, the investment in plant and machinery is above IMR 5Crores and up to INR 10Crores.
ii) Service Enterprises
Micro Enterprises refer to those enterprises wherein the investment in equipment is up to INR 10Lakhs. In Small Enterprises, the investment in equipment is above INR 10Lakh and up to INR 2Crores. In the case of Medium Enterprises, the investment in equipment is above INR 2Crore and up to INR 5Crores.
Section 8 of the MSME Act of 2006 encompassed the procedure for filing a memorandum (also known as Entrepreneurs Memorandum - EM) which is optional in case of Micro and Small enterprises, but compulsory for the Medium enterprises (excluding the service sector). The EM is divided in two parts, namely Part -I and Part –II, wherein any person who intends to establish Micro, Small or Medium Enterprise, whether in manufacturing or in service sector, shall file Part-I and after commencing the production shall file Part-II. The filing of this EM was always seen as a cumbersome procedure and also resulted in several delays.
As per the report provided by the Committee, headed by Mr. K. V. Kamath, which was set up to...