MSME makeover: New definitions unlock bigger benefits, faster resolutions

Subscribe to enjoy similar stories. New Delhi: India’s micro, small, and medium enterprises have new definitions that promise to open doors wider for them this financial year as well as improve their chances of securing delayed payments faster.

The union government, in a notification dated 21 March, amended the definitions of micro, small, and medium enterprises, raising limits for investments in plant and machinery as well as turnover from this fiscal year. The new definitions will push a considerable number of medium-sized businesses into the category of small enterprises, allowing them access to benefits such as the government’s public procurement policy, the government's e-marketplace (GeM) for exports, and access to dispute resolution services for delayed payments.

India’s Micro, Small, and Medium Enterprises Development (MSMED) Act, which came into force in 2006, allowed only micro and small enterprises access to certain benefits, leaving out businesses categorised as medium-sized enterprises. Also read | Govt plans to decriminalise MSMEs’ minor defaults Delayed payments have been the most common issue plaguing India’s MSMEs, especially if this involved micro and small enterprises trying to secure dues from large companies.

Now, a larger number of newly categorised micro and small enterprises can avail the services of the Micro and Small Enterprises Facilitation Councils (MSEFCs), which use methods such as arbitration, conciliation, and mediation to resolve delayed payments disputes. But of the ₹28,398 crore payable to MSMEs from 92,794 cases filed, MSEFCs had resolved only 50,507 disputes over dues worth about ₹8,740 crore as of 12 March, as per the government’s Samadhaan platform for tracking disputes related to