Study on MSME: A Game Changer

Introduction

All Business Enterprises, whether commercial or non-commercial, commence their activities in a bootstrapped manner. Over the years, with their vision, persistent conviction, dedication, and relentless efforts they unfold their wings to grow by leaps and bounds to establish themselves progressively as Larger and Bigger Companies. These Enterprises may be owned by HNIs, Companies and Multinational Conglomerates, and could have operations which may stretch even beyond the Indian frontiers. Some can even be called Global Citizens of the world harnessing modern technology innovations and/or developments - participating competitively in the international arena.

The Ministry of Micro Small and Medium Industries vide Notification no SO 2119 (E) dated June 26,2020 issued a Master Circular on definition of MSME,which majorly revamped the old definition of MSME, 2006 by explicitly widening the eligibility criteria of registration for MSMEs viz. Manufacturing and Services - both now considered on the same footing. By this, the Ministry has heeded to the demands of Trade and Industry to consider both the activities for the purpose of eligibility of registration andalso in terms of transitioning of existing registered participants in the MSME category. Accordingly, the old criterion of either manufacturing or services has been done away w.e.f July 1,2020and now registration has been designated as "Udyam"in place of Udyog Registration. The Ministry of MSME is of the view that "Udyam" Registration explicitly depicts both the manufacturing as well as service sectors of business, trade and commerce etc. This shift recognises that over time, the eligibility models need to change by being broader and more inclusive. "Udyog" Registration was essentially tilted towards manufacturing, although the MSME Act 2006 recognised both the activities viz. Manufacturing activities and Services activities for eligibility of registration under its definition of enterprises.

With the change in criteria as per new MSME schema, every new registered person needs to obtain registration only as per new schema from July 1,2020. Thus, it must be noted that the old criteria have become redundant in respect of new registrations.

In the case of old Registrants, who are registered under EM II or UAM, they can apply for new registration any time after July 1,2020 till March 31,2021 which was extended to 30.06.2022 through series of notifications. If they fail to so register before March 31,2022, then the benefits that were available pursuant to their MSME registrations shall stand suspended/withdrawn permanently.

As I understand,the MSME Sector contributes around 30% to the GDP of the Country. With the latest expansionary amendments in the definition of term "Enterprise" whereby the registration criteria has been amended by increasing the limits of turnover and investment combined together, the message stands out and positively indicates that the Sovereign intends and is committed with conviction to increase the contribution of MSME Sector to the GDP of Country. This growth will be catalysed through significant initiatives such as introducing Fiscal incentives, Monetary incentives, Stringent Law compliances, Robust monitoring systems, Direct Transfer Benefits, Public and Private Partnerships, SME Exchange Listing, Online E commerce platforms, Preferential Trade Treatments, Cross Border Trade Benefits, Commitment to release MSME dues within 45 days by all PSUs etc. Such measures should propel the overall growth of the wider cross-section of the population and provide a level playing field for all the stakeholders in general.

Definition and Criteria of MSME viz. New and Old

New Definition of MSME

Section 2 (e) defines "enterprise" means an industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner, pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (55 of 1951) or engaged in providing or rendering of any service or services.

For upward change, Notification No S 0 4926 (E) dated 18.10.2022 - clarification on continuation of benefits in the case of Upward change of MSME re-classification happening in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise shall continue to avail of all nontax benefits of the category (micro or small or medium) it was in before the re-classification, for a period of three years from the date of such upward change."

Thus, it can be observed that the Classification norms have been amended from July 1,2020 for eligible enterprises intending to get themselves registered under new MSME Schema and dispensation.

Consequent to the issue of above Notifications w.e.f July 1,2020, following notifications stand withdrawn with immediate effect:

• S 0 1702 (E) dated 01.06.2020 - New definition of MSME
• S 0 2052 (E) dated 30.06.2017 - was regarding UAM and Its guidelines
• S 0 3322 (E) dated 01.11.2013 - was regarding non tax benefits for 3 years in case of upward graduation
• S 0 1722 (E) dated 05.10.2006 - was for exclusion of certain plant and machineries

Objective and peculiar features of Udyam Registration under new MSME Schema

CHAMPIONS: Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength

It has been felt necessary to put up and promote a unified, empowered, robust, bundled and technology driven platform for helping and promoting the Micro, Small and Medium Enterprises (MSMEs) of the country. As the name suggests, it will aim at Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength. Accordingly, the name of the system is CHAMPIONS. This is basically for making the smaller units big by helping and handholding.

Three basic objectives of the CHAMPIONS

1. To help the MSMEs in this difficult situation in terms of finance, raw materials, labour, permissions, etc.
2. To help the MSMEs capture new opportunities including manufacturing of medical items & accessories.
3. To identify the sparks, i.e., the bright MSMEs who can withstand at present and become national and international champions.

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