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Micro Small and Medium Enterprises (MSME)

  • Overview
  • Notifications

Overview

Before the Micro, Small & Medium Enterprises Development Act, 2006 came into existence, registration of Small Scale Industries was being done by the Directorate of Industries according to the simplified procedures laid down by Development Commissioner (SSI), New Delhi, and Government of India.

Types of Registration and its Definitions:

Government of India has notified the MSMED Act, 2006. Accordingly Government of Maharashtra has also issued the Notification dated 27.10.2006. As per this Act, “Industries” word is replaced by “Enterprises”. There are three types of manufacturing enterprises and three types of Services Enterprises.

SN Type of Industry Category Investment (In Plant & Machinery)
1. Manufacturing
Micro Upto ₹ 25 Lakhs
Small More than ₹ 25 Lakhs but less than ₹ 5 Crores
Medium More than ₹ 5 Crores but less than ₹ 10 Crores
2. Service
Micro Upto ₹ 10 Lakhs
Small More than ₹ 10 Lakhs but less than ₹ 2 Crores
Medium More than ₹ 2 Crores but less than ₹ 5 Crores

The details about the MSMED Act, 2006 and Entrepreneur’s Memorandum are available on www.dcmsme.gov.in of Govt. of India

As per the MSMED Act, 2006 the Directorate of Industries through DICs used to issue acknowledgement upon filing Entrepreneur’s Memorandum Part – I for proposed enterprises and Entrepreneur’s Memorandum Part – II for the enterprises who has commenced its production / started rendering services.

However, now the Ministry of MSME, Govt. of India has notified a one page Udyog Aadhaar Memorandum (UAM) through Gazette of India on 18.09.2015 as a part of Government’s initiative to ease of registration of MSMEs. The UAM has been introduced and the same replaces the filing of Entrepreneur’s Memorandum Part – I & II. The filing of UAM can be done online on http://udyogaadhaar.gov.in.

Assistance regarding recovery of delayed payment of MSEs from Buyer:

In exercise of the power conferred by sub-section (3) of section 21 of MSMED Act 2006, the Government of Maharashtra has formed 7 MSE Facilitation Councils for six Revenue divisions of the state, under the chairmanship of respective Regional Joint Director of Industries.

The structure of the MSE Facilitation Council as under:

1. Regional Joint Director of Industries of the concerned Region Chairperson
2. Two representative of Association of Micro & Small enterprises Member
3. Zonal or Regional Manager of one of the lead banks’ lending money to Micro & Small enterprises in the concerned revenue division Member
4. Deputy Director of Industries of the concerned Region Member Secretary

The said Act incorporates provisions for encouraging and achieving development of Micro, Small and Medium enterprises and for healthy development of these enterprises. Micro and Small enterprises can file a case with the concerned MSE Facilitation Council under Section 18 (1) of the said Act if there is a delay in payment of their rightful dues / outstanding dues. Once the case is filed, the concerned MSE Facilitation Council after completing due legal process by following the provisions of the said Act/law/Rules passes an order within the ambit of Quasi-Judicial powers vested with it regarding the rightful dues of the said supplier (Micro/ Small enterprise).


Strengths

Economic indicators

Maharashtra ranks first amongst major States in terms of State Domestic Product and accounts for 15% of the National Income. Per capita income of ₹ 23,849, more than 60% higher than the national average and highest amongst States (at current prices - base year 1998-99).

The largest share of public funds amongst any other States for development of industrial and social infrastructure -a hallmark of State policy.

Contributes 22% of India's net value added in organised industrial sector. 40% of India's Internet users are in Maharashtra and the State accounts for around 30% of software export.

70 percent of India's stock transactions in Mumbai, the State capital and commercial capital of India with headquarters of Reserve Bank of India's almost all central financial institutions and banks.

Administration

Progressive and responsive administration with full commitment to maintenance of law and order.

An independent authority established for transparent and scientific determination of power tariffs.

Well set mechanism in position to support industry in the prevailing dynamic situation.

Strategies

The State has entered into the phase of second generation economic reforms, with emphasis on structural changes in addition to fiscal incentives for the promotion of industry and balanced regional growth. This has coincided with increasing international competition and rapid technological changes, which pose new challenges for industry. The Industrial Policy 2001 set out below has been formulated in this context, keeping in view the objectives of sustained growth and employment and an expansion in livelihood opportunities. It supplements the provisions of the Information Technology and other sectorial policies announced earlier. The components of the new Package Scheme of Incentives contained in this Policy will be operative from 1st April, 2001 up to 31st March, 2006:

Strategies based on Taluka Classification

New industries establishing in C, D, and D+ areas and No-Industry District(s) will be exempted from payment of Electricity Duty for a period of 15 years. In other parts of the State, 100% Export Oriented Units (EOUs), Information Technology (IT) and Bio-Technology (BT) units, and industries setting up in Special Economic Zones (SEZs), and Electronic Hardware Technology Parks will be exempted from payment of Electricity Duty for a period of 10 years.

Waiver of Stamp Duty and Registration Fees

At present, IT units in public IT Parks are exempted from stamp Duty and Registration fees up to 31st March 2006. Now all new industrial units (including IT and BT units) and expansions, will be exempted from payment of Stamp Duty and Registration fees up to 31st March 2006 in C, D and D+ areas and No-Industry District(s). However, 50% of the Stamp Duty and Registration fees will be waived for IT units set up in other IT Parks in talukas/areas in the State in "A" and "B" categories.

Octroi Refund

The scheme of refund of octroi provided under the Package Scheme of Incentives, 1993 will be included in the new Scheme up to 31-3-2006 on the same pattern. Where account-based cess or other levy is charged instead of or in lieu of octroi, such change will also be eligible for refund as in the case of octroi.

Incentives to SSI units
  • Special Capital Incentives for SSI units
  • New small-scale industries (including IT and BT units) setting up in different parts of the State will be eligible for Capital Subsidy as follows:

    Taluka/Area Classification Ceiling as percentage of fixed capital investment Monetary ceiling(₹ in Lakhs)
    A - -
    B - -
    C 20 10
    D 30 20
    D+ 35 25
    No Industry District 40 35

    The subsidy will be disbursed in equal annual instalments over 5 years. Existing SSI and small-scale IT and BT units will be eligible for 75% of the subsidy admissible as above for expansion, diversification or modernization involving additional investment to the extent of 25% or more.

  • Interest Subsidy to New Textile, Hosiery and Knitwear SSI units
  • New textile, hosiery and knitwear small-scale industries setting up indifferent parts of the State will also be eligible for Interest Subsidy on the interest actually paid to the financial institution/bank on the term loan for creating fixed capital assets, equal to the interest payable at 5% per annum as stated in the table below. The monetary ceiling will be applicable for the complete period of eligibility.

    Taluka/Area Classification Ceiling as percentage of fixed capital investment Monetary ceiling(₹ in Lakhs)
    A - -
    B - -
    C 10 4
    D 20 5
    D+ 25 6
    No Industry District 35 7

Development of Non-Conventional Energy

In order to give an impetus to the development of non-conventional energy, such projects will be eligible for benefits under the new Package Scheme of Incentives.

Classification of talukas/areas

The present classification of different talukas/areas in the State in A, B, C, D and D+ categories on the basis of their level of development is contained in the Package Scheme of Incentives, 1993, and will continue for the present. The matter of revision of the area classification will be separately considered by a Committee under the Chairmanship of the Minister (Industries). Norms for the mid-term reclassification of talukas depending on changes in their development status will also be considered, and No Industry District(s) will be separately categorized.

Financing of capital incentives and refunds under the Package Scheme

A budgetary provision of at least ₹ 200 crores will be made each year from 2001-2002 onwards to meet past commitments and the incentives under the new Scheme. Additional resources will also be raised through bonds linked with Sales Tax repayments under past Schemes.

Exemption from Sales Tax for Khadi & Village Industries

24khadi and village industries are exempt from Sales Tax up to certain limits on annual turnover. Considering the potential of this sector for employment generation and rural industrialization, Sales Tax will also be waived in respect of the 72 remaining industries for their turnover up to ₹ 20 lakhs per annum. This concession would be available to khadi and village industry units registered with and assisted by the Maharashtra State Khadi and Village Industries Board.

Sales Tax on IT products

Up to 31st March, 2006, the Sales Tax rates on IT products would be maintained at the level of the minimum floor rates, wherever applicable. No turn-over tax, additional Sales Tax, surcharge or any other additional levy related to Sales Tax shall be applied to IT products.

Sick SSI units

Issues relating to the rehabilitation of sick SSI units are reviewed in the State-Level Inter Institutional Committee and Sub Committee of the Reserve Bank of India, and in the District Level Committee which have been set up as an adjunct of the Zilla Udyog Mitras. Sick SSI units taken up for re-scheduling of arrears of Government and electricity dues, to be repaid in 36 monthly installments at 13% interest. The interest rate on the rescheduled arrears will now be reduced to 10%, in all except 'A' areas of the State. The repayment of such arrears would be allowed in 60 monthly installments.

Stamp Duty on Corporate Restructuring

The stamp duty for demerger of companies as defined under section 2(19-AA) of Income Tax Act, 1961 will be made applicable on lines of the stamp duty structure applicable for amalgamation of companies under every order made by the High Court under section 394 of the Companies Act, 1956.

Establishment of IT/BT units on textile mill lands in Greater Mumbai

While granting permission for the sale of textile mill lands in Greater Mumbai, the lands becoming available to the Maharashtra Housing and Area Development Authority (MHADA) for residential use would also be permitted to be used for the development of IT and BT industries by MHADA itself, or by MIDC.

FSI for IT Units

Twice the admissible Floor Space Index (FSI) is allowed for certain types of IT units setting up in IT Parks promoted by public bodies. Such units are also permitted in No-Development Zones of cities up to FSI of 0.2. Such IT units will now be permitted to establish in No-Development Zones with an enhanced FSI of 1.0.

New Industrial Townships

Maharashtra pioneered the establishment or institutions of democratic decentralizations and local self-governance several decades ago. More recently, these concepts were extended through statutory amendments to enable the establishment of independent Industrial Townships. In the first phase, self-governing Industrial Townships with the power to raise resources and determine their application will be established in industrial areas being developed by MIDC at twelve locations across the State, i.e. at Vile-Bhagad (Raigad), Airoli (Thane), Talegaon (Pune), Hinjewadi - Man (Pune), Shendre (Aurangabad), Additional Latur (Latur), NandgaonPeth (Amravati), Additional Yavatmal (Yavatmal), Tadali (Chandrapur), Butibori (nagpur), Additional Sinnar (Nashik) and Nardhana (Dhule). The industrial townships so set up will pay 25% of their revenue to the concerned Gram Panchayat(s) or local bodies for the initial period of 5 years.

Special Economic Zones

The establishment of Special Economic Zones has been allowed under the recent policy of Government of India. India's most successful Export Processing Zone (SEEPZ), which was promoted by the State Government at Mumbai nearly three decades ago, has been converted into one of the country's first Special Economic Zones. Another Special Economic Zone is being developed by the City and Industrial Development Corporation (CIDCO) at Dronagiri, near the Jawaharlal Nehru Port. All the concessions, benefits and facilities extended to such Special Economic Zones promoted by public bodies will also be extended to Special Economic Zones set up by other parties. The establishment of Special Economic Zones at Aurangabad and Nagpur will also be proposed to the Government of India.

Specialized Industrial Areas

In the last few years, specialized industrial infrastructure has been developed by State agencies for various sectors, including Information Technology, leather, chemicals, etc. More recently, the establishment of textiles and food processing zones have been taken up. Taking into account the potential and requirements of agro-industry in different parts of the State, MIDC will set up new complexes for this sector, including 'Grape Wine Parks' at Nashik and Sangli, 'Orange City Park' for orange processing, Floriculture Complexes and Biotechnology Parks at suitable locations.

Promotion of Education and Research Institutions

Educational and research institutions of international or national standards, including world-class business education institutions, would be provided land in industrial areas/estates at nominal or concessional rates.

Captive Power Generation

Captive power generation is permitted for industries throughout the State in respect of IT units, and in the case of co-generation, hydroelectric power and non-conventional energy. Other types of captive power generation are at present permitted in respect of new industries in D+ and tribal areas. New as well as existing industries in D and D+ areas and No Industry District(s) will also be permitted to set up captive power plants. Public bodies or joint ventures promoted by them can establish 'Independent Power Producers' for the dedicated provision of power to IT and BT Park and special Economic Zones promoted by them.

Gas Cooperation Agreement

Gas is an important fuel and raw material for industry. As Mumbai High gas supply declines, commercial supply of LNG will become increasingly important for industrial units. To facilitate the planned development of gas supply infrastructure in the State, the Gas Authority of India Limited (GAIL), MIDC and the Maharashtra Petrochemicals Corporation Limited (MPCL) have recently entered into a Gas Cooperation agreement. A techno-economic feasibility study for the development of gas infrastructure and associated facilities has been taken up by GAIL, which will include assessment of the medium and long-term gas requirement for the State and various supply options.

Labour Laws and Procedures

The State Government has initiated a review of labour laws an procedures, including Central statutes, to enable industry and labour to meet the new economic challenges. The review is intended to remove disincentives to additional employment generation, facilitate restructuring and technological upgradation in the context of increasing global competition, provide an impetus to industrial dispersal, and promote production at efficient levels. It is also intended to safeguard labour interests and provide workers with greater financial security during re-structuring.

As an outcome of the first phase of this review, the following steps will be taken:-

  • Subject to the approved of the Legislature and Govt. of India's assent, the Industrial Disputes Act will be amended to limit the applicability of Chapter V-B to industries employing 300 or more workers, as against 100 workers at present. The condition of prior Government permission for retrenchment under Section 25-N will be waived in cases where substantially higher financial payment is made to the retrenched workers, viz. three times the existing retrenchment compensation (four times in case the principle of 'last in - first out' is not followed). Section 25-M, which provides for prior Government permission for lay-offs, is proposed to be deleted, and lay-offs in such cases will be governed by the provisions of Section 25-C. Section 9-A will be amended to obviate the need for giving notice of change unless such change affects the number or hours of work, holidays or emoluments of workers. Keeping in view rising salary levels, supervisory personnel drawing wages upto ₹ 6,500/- per month will be brought within the purview of the Act, as against those earning upto ₹ 1,600/- per month at present.
  • Subject to the approval of the Legislature and Government of India's assent, the Contract Labour (Regulation and Abolition) Act will be amended to exclude certain activities such as cleaning services, loading and un-loading of materials and goods, canteen services, distribution of mail, gardening, etc, from its purview. Keeping in view the context in which 100% EOUs operate, such units would also be excluded from the purview of the Act.
  • A Committee, which will include representatives of industry and labour, will be set up to comprehensively review the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices (MRTU and PULP) Act.
  • In order to rationalize and reduce the multiplicity of minimum wages stipulated for different industries and also within each industry under the Minimum Wages Act, steps will be taken to club the scheduled industries in a few groups, and also the move towards a single minimum wage within each such industry group.
  • The process of inspections under various labour laws will be rationalized, and the number or such inspections will be reduced and regulated.
  • The paper work required of industrial units under various labour laws will be reduced. 46 registers, forms and returns required from industrial establishments have recently been clubbed, substituted or deleted.

Keeping in view the nature of their operations, the provisions of the Mumbai Shops and Establishments Act relating to shift working, employment of women, etc. have been relaxed in respect of Information Technology units.

Film Industry

The film Industry has an important position in the economic and social life of Maharashtra and Mumbai is the entertainment capital of the country. The Central Government has accorded industry status to the film sector. Keeping in view the potential for further development and employment generation in this sector, Minister (Industries) will have deliberations with representatives of the film industry for possible assistance from the State Govt.

Eligibility Criteria

Types of Registration and its Definitions:

Government of India has notified the MSMED Act, 2006. Accordingly Government of Maharashtra has also issued the Notification dated 27.10.2006. As per this Act, “Industries” word is replaced by “Enterprises”. There are three types of manufacturing enterprises and three types of Services Enterprises.

SN Type of Industry Category Investment (In Plant & Machinery)
1. Manufacturing
Micro Upto ₹ 25 Lakhs
Small More than ₹ 25 Lakhs but less than ₹ 5 Crores
Medium More than ₹ 5 Crores but less than ₹ 10 Crores
2. Service
Micro Upto ₹ 10 Lakhs
Small More than ₹ 10 Lakhs but less than ₹ 2 Crores
Medium More than ₹ 2 Crores but less than ₹ 5 Crores
GR's and Notifications
MSMED Act 2006 View Details
Nagpur MSEFG for 15.07.2011 - 26.07.2011 View Details
Amravati MSEFG - 15.07.2011 View Details
Facilitation Council - 11.12.2009 View Details
MSME Development Act, 2006 - 07.01.2008 View Details
GR Gazette of India Hindi-English Notification - 29.09.2006 View Details

Frequently Asked Questions - MSME

Who can file Entrepreneur’s Memorandum (EM)?

The Entrepreneur who wants to manufacture any products or intends to render services or already engaged in manufacturing/rendering services and having constitution in Proprietorship / Hindu Undivided Family association of persons / Co-operative Society / Partnership Firm / Private Limited Company/ limited company / Public Limited Company / Self Help Group can file Entrepreneur’s Memorandum with District Industries Centre.

Who shall file EM Part-I and who shall file EM-Part-II?

The form of Entrepreneur’s Memorandum (EM )is in two parts. Any Entrepreneur who intends to establish a Micro, Small or Medium Service or Manufacturing Enterprise shall file EM Part-I to his/her concerned District Industries Centre. The Entrepreneur who has already commenced production/started rendering services can file EM Part-II to the concerned District Industries Centre.

What is the validity of EM- Part I & EM-Part II?

EM Part-I (acknowledgement) is valid for period of 2 years (Two Years) from its date of issue and EM Part-II (acknowledgement) issued on permanent basis & is valid till the enterprise is functioning.

As per MSMED Act, 2006, is it compulsory to file Entrepreneur’s Memorandum?

For medium enterprise who is engaged in manufacturing it is compulsory to file EM to DIC and for other Entrepreneurs filing of Entrepreneur’s Memorandum is optional.

To whom shall Entrepreneur contact in case of recovery of their delayed payment from buyer?

The entrepreneur can file the case for recovery of their delayed payment from buyer to concerned Micro Small Enterprises facilitation Council.

Content owned by Directorate of Industries, Government of Maharashtra. Last Updated On: 11.02.2016