POLICY AND REGULATIONS FOR MSMEs

Sucharita Kumar VIT- Business School 2012

Areas of Promotional Measures of GOI

Industrial extension services Institutional support in respect of credit facilities Provision of developed sites for construction of sheds, Provision of training facilities, Supply of machinery on hire-purchase terms, Assistance for domestic marketing as well as exports, Special incentive for setting up enterprises in backward areas etc. Technical consultancy & financial assistance for technological upgradation.

POLICY SUPPORT
Revised Eligibility Limits for SSI Review and Redefine Micro, Medium and Small Enterprises for investment in Plans and Equipment MSME Act 2006 Set up District Industries Centres in all state and district HQs to co-ordinate and register MSMEs and co-ordinate statement level activities for enterprise creation

Investment in plant & machinery

Manufacturing Sector Enterprises Micro: Investment in plant and machinery less than 25 lac Small : Investment in plant and machinery over 25 lac but not exceeding 5 Cr Medium : Investment in plant and machinery over 5 Crores but less than 10 Cr Service Sector Enterprises Micro: Does not exceed 10 lac Small: More than 10 lacs but does not exceed 2 Cr Medium: More than 2 Cr but does not exceed 5 Cr

FINANCIAL SUPPORT
Small Industries Development Bank of India (SIDBI), set up on April 2, 1990 under an Act of Indian Parliament, is the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Coordination of the functions of the institutions engaged in similar activities. Banks are also required to earmark a certain percentage of their credit to MSME sector. The eligibility criteria for MSMEs are also periodically reviewed and revised to keep base with the economic development Special marketing organisations at the Centre and State levels have been created to assist rural artisans in financial and other support

Financial Support
The composite loans limit (combined term loan and working capital) for certain industries fixed at Rs.25 lakhs. MSMEs with ) with a maximum investment of Rs. 10 lakhs will qualify for priority lending. In the National Equity Fund Scheme, the project cost limit raised to Rs. 50 lakhs. The soft loan limit will be retained at 25 per cent of the project cost subject to a maximum of Rs. 10 lakhs per project. Assistance under the NEF will be provided at a service charge of 5 per cent per annum. Eligibility for coverage under the Credit Guarantee Scheme for Loans upto to Rs.25 lakhs. A beginning has been made towards solving the problem of delayed payments to small industries by setting up of factoring services through Small Industries Development Bank of India (SIDBI).

Excise and MSME

Full exemption from the Payment of central excise duty on a specified output and thereafter slab-wise concessions for MSMEs products upto an annual turnover of .50 lakhs and thereafter on slab basis.

Rate of duty in respect of Clearances of Excisable Goods

Value of Clearance () Rate of duty Upto 50 Lakhs Nil 50-100 Lakhs 5% ad valorem 100-300 Lakhs Normal rate of duty

Excise and MSME

Rate of duty in respect of Clearances of Specified Goods on MRP Value of Clearance () Rate of duty Upto 50 Lakhs 60% of normal rate 50-100 Lakhs 80% of normal rate of duty 100-300 Lakhs Normal rate of duty

TECHNOLOGICAL SUPPORT AND QUALITY IMPROVEMENT

Setting up of incubation Centres in Sunrise Industries like Information Technology, Biotechnology, Renewable energy, Biofuels etc.. The TBSE set up by SIDBI strengthened so that it functions effectively as a Technology Bank. It will network with all agencies SIDO, SIDBI and NSIC jointly preparing a Compendium of available technologies for the R&D institutions in India and abroad for the dissemination of the latest technology related information. Commercial Banks requested to develop Schemes together with SIDBI to encourage investment in technology upgradation One time Capital Grant of 50% will be given to Small Scale Associations which wish to develop and operate Testing Laboratories of international standards

MARKETING SUPPORT
Market Development Assistance (MDA) Programme for MSMEs by SIDO Vendor Development Programme. Buyer-Seller Meets Exhibitions being held in different locales to cover different industries/groups

ENTREPRENEURSHIP DEVELOPMENT
Capacity building of entrepreneurs Skill development of labour force Management education for managers of MSMEs Specific programmes customised for each industry

GOVERNMENT'S PRICE AND PURCHASE PREFERENCE POLICY FOR MSME PRODUCTS

More than 800 items are presently reserved for exclusive manufacture in the MSME Sector. Of these 68 reserved items were found to account for 80% of the production under reserved category. Non-MSME units can undertake manufacture of reserved items only if they undertake 50% export obligations. The Purchase Policy of the Government has been modified to fall broadly under the following two major groups, viz. (i) Units and Items of stores reserved for exclusive purchase from KVIC/Women's Development Corporations/MSME (nearly 500 items) (ii)Others not so reserved.

PRICE PREFERENCE POLICY

Reservation of certain products for exclusive purchase from the small scale sector Price preference upto 15% in case of selected items (which are produced in large scale as well) for MSMEs. The Single Point Registration Scheme of NSIC under whichthe following benefits are given to MSMEwhich get themselves registered with the NSIC:-

Availability of Tender Sets free of cost; Exemption from payment of Earnest Money Deposit; Exemption from payment of Security Deposit; Price preference upto 15% over the lowest quotation of the large scale units (on merits) to compensate them on account of non-availability of economies of scale, poor resource base, poor access to raw-material etc. as compared to the large scale sector. The units will be assesses by NSIC as to their eligibility to benefit from the scheme