New law for small enterprises on Gandhi Jayanti

New Delhi, Sep 29: A new law that will give a fillip to micro and small and medium enterprises (MSMEs) will come into force on October 2, the birth anniversary of Mahatma Gandhi who wanted these units to be in the vanguard of India's development.

The Micro, Small and Medium Enterprises Development Act, 2006 will ensure smooth credit flow to the MSMEs, minimise sickness among them and enhance their competitiveness.

Up to Rs five crore can now be invested in small manufacturing enterprises and Rs two crore in small service enterprises, Mr Anupam Dasgupta, Secretary, Ministry of Small Scale Industries (SSI), told in a press conference here today.

''A promotional package for these enterprises will be announced next month after the approval by the Cabinet Committee on Economic Affairs,'' Mr Dasgupta said.

The cumbersome two-stage registration process of micro and small enterprises (MSEs) has been dispensed with and replaced by an optional filing of memoranda.

The legal provisions to check delayed payments to MSEs has been strenghtened with the period of payment by the buyers reduced to 45 days, and the rate of interest on outstanding amount increased to three times the prevailing bank rate of RBI compounded on monthly basis.

Mr Dasgupta said the government will notify within one year of the commencement of the Act a scheme for facilitating closure of business.

The state government will be asked to constitute MSE Facilitation Council, and no appeal against the order of the Council will be entertained by any court without deposit of 75 per cent of the decreed amount payable by the buyer. The appellate court may order payment of part of the deposit to the supplier MSE.

Mr Dasgupta said the Centre will issue a notification for the constitution of the Fund for the development of MSMEs to which money will be provided after due appropriation made by Parliament.

UNI