New Delhi The government may adopt an MSME code that will provide a comprehensive set of norms for the sector and provide uniformity in state and central regulations on micro, small and medium enterprises.
Officials said the aim of the new code is to streamline rules and regulations for MSMEs and improve ease of doing business for them.
The code can also bring clarity about the entry and exit criteria of MSMEs. The exit criteria for MSMEs are important as there is no specific insolvency or bankruptcy policy for the sector, although the government introduced a pre-packaged insolvency resolution process for small businesses in 2021.
There is talk within the government of bringing small and medium enterprises under the ambit of the Fast Track Corporate Insolvency Resolution Process of the Insolvency and Bankruptcy Code, 2016 to help entrepreneurs get out of business easily.
The code will be a comprehensive document for the MSME sector, which may make changes in the Micro, Small and Medium Enterprises Development Act, 2006, and may also bring in a sunset clause for several complex and obsolete laws for MSMEs.
It will also enable smooth setting up of small businesses.
The requirement of a code as to the legislative and regulatory framework for MSMEs varies from state to state and each state does not have MSME specific norms in which they are considered to be part of the overall industry.
Lack of coordination among various stakeholders is also a major hurdle for the growth of the segment and the code is expected to bring synergy among them.
Vinod Kumar, President, India SME Forum said, there is a need for a code because of the diversity of laws across the country.
“Further, many government departments do not know which companies are MSMEs. In case of exports also there is no classification for the manufacturer as the difference is made only in terms of product value.”
Kumar said that schemes like enterprise registration are important but registration should be accessible and implemented in all departments. According to government data, 9.32 million MSMEs had registered on the UDYAM portal, of which 8.89 million were micro enterprises, 387,000 small and 37,868 medium businesses.
Queries sent to the Ministry of MSME at press time remained unanswered.
rituraj.baruah@livemint.com