DBB2101: Legal and Regulatory Framework Manipal University Jaipur (MUJ)

BACHELOR OF BUSINESS ADMINISTRATION

SEMESTER 3

DBB2101
LEGAL AND REGULATORY
FRAMEWORK

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DBB2101: Legal and Regulatory Framework Manipal University Jaipur (MUJ)

Unit 14
Micro Small and Medium Enterprises
Development Act, 2006
Table of Contents

SL Topic Fig No / Table SAQ / Page No

No / Graph Activity
1 Introduction - -
3
1.1 Objectives - -
2 Classification of Micro, Small and Medium
1, 2 1
Enterprises 4-8
2.1 Principles of computing investment - -
3 Salient Features of Micro, Small and Medium
- -
Enterprises Act
9 - 12
3.1 Filing of memorandum - -
3.2 Clusters - -
4 Reservation Policy - 2 13 - 14
5 Credit Policy - 3 15 - 16
6 Government Policy towards Taxation and
- 4 17 - 19
Incentives
7 Summary - - 19
8 Glossary - -
20
9 Terminal Questions - -
10 Answers - - 21 - 22

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1. INTRODUCTION

The Micro, Small and Medium Enterprises (MSME) sector is an important sector that has
contributed significantly to the economic growth of all nations. India has a vibrant micro,
small and medium enterprise sector that plays an important role in sustaining India’s
economic growth. The main characteristics of this sector are the requirement of low
investment, operational flexibility, location wise mobility, and import substitution.

MSMEs play a major role in fostering new entrepreneurship. Many of these entrepreneurs
start their business on a small scale which provides them with an opportunity to harness
their skills and talents, to experiment and innovate and transform their ideas into goods and
services and finally nurture their small units into larger ones.

The process of economic liberalisation and market reforms have provided a new impetus to
these units. The increasing levels of domestic and global competition have posed new and
formidable challenges that have led to a novel approach of cluster development for the
sector. As a result, private and public sector institutions, both at the central and state levels
are undertaking cluster development initiatives at a rapid pace.

In this unit you will become acquainted with what micro, small and medium enterprises are
and also with what role the government is playing in giving a boost to them. You will also
learn about various policies adopted by the government in this regard.

1.1 Objectives

After studying this unit, you should be able to:

❖ classify micro, medium and small scale industries

❖ discuss the policy for reservation
❖ explain the credit policy for small and medium enterprises
❖ define the role of the government in promoting SMEs

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2. CLASSIFICATION OF MICRO, SMALL AND MEDIUM ENTERPRISES

Despite its importance, the MSME sector has faced many obstacles in accessing finance and
markets. Some of these obstacles include:

• inability to get finance and working capital loans from banks

• inability to access capital from other sources
• lack of access to private equity and venture capital
• exploitation by larger procurement companies
• difficult bureaucratic procedures for registration
• lack of management skills
• lack of financial information and non-formal business practices
• competition from both domestic and multi-national companies
• lack of access to inter-state and international markets
• limited access to secondary market instruments
• fragmented markets in respect of their inputs as well as products
• vulnerability to market fluctuations
• limited access to technology and product innovations
• lack of awareness of global best practices
• considerable delays in the settlement of dues/payment of bills by the large scale buyers

The increasing availability of cheap foreign imports further hindered the development of
Indian micro, small and medium enterprises. These obstacles compelled the MSME lobbies
and the government of India to develop strategies for government intervention to ensure the
continued growth and success of MSME’s.

With the aim of giving a boost to this very important sector, the government of India enacted
the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The Act
received the assent of the President on 16th June, 2006 and came into force on 2nd October,
2006. Subsequent notifications defined the authorities under the Act and also the criteria for
the classification of enterprises. One of the primary objectives of the Act is to make
provisions for ensuring timely and smooth flow of credit to MSMEs and minimise sickness
amongst them. The Act is the first single comprehensive legislation covering all the three

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segments of this sector. The main thrust of the Act is to accomplish many long standing goals
of the government and stakeholders in the MSME sector.

The Ministry of Micro, Small and Medium Enterprises is the nodal Ministry for formulation
of policies, programmes and schemes for the promotion and development of MSMEs in India
as well as their implementation and related co-ordination. The role of the Ministry is to assist
the States in their efforts to promote the growth of these sectors. It is assisted by an attached
office and two public sector enterprises, namely:

• Office of the Development Commissioner (MSME) is an attached office of the

Ministry of MSME, and is the apex body to advise, coordinate and formulate policies
and programmes for the development and promotion of the MSME Sector. The office
also maintains liaison with Central Ministries and other Central/State Government
agencies/organisations financial institutions.
• National Small Industries Corporation Ltd. (NSIC) was established by the
government to promote, aid and foster the growth of MSMEs by focusing on the
commercial aspect of their operations. Its schemes help MSMEs in the areas of raw
material procurement, product marketing, credit rating, acquisition of technologies,
adoption of improved management practices, etc.

Other notable offices that have been set up for promoting various MSMEs include the Khadi
and Village Industries Commission (KVIC), the Coir Board, the National Commission on
Enterprises in the Unorganised Sector (NCEUS), and Entrepreneurship Development
Institutes (EDIs) which include the National Institute for Micro, Small and Medium
Enterprises (NIMSME) at Hyderabad, the National Institute of Entrepreneurship and Small
Business Development (NIESBUD) at Noida and Indian Institute of Entrepreneurship (IIE) at
Guwahati.

As per the MSMED Act the term ‘enterprise’ means ‘any 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 or engaged in providing
or rendering of any service or services.’ The Act not only confers certain privileges upon

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micro, small and medium enterprises but also casts certain obligations on the persons buying
products and services from such enterprises.

In accordance with the provisions of Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified into two
classes:

a) Manufacturing Enterprises: These are enterprises that are engaged in the

manufacture or production of goods pertaining to any industry specified in the first
schedule to the Industries Development and Regulation Act,1951(IDRA).
b) Service Enterprises: These are enterprises engaged in providing or rendering of
services.

The limit for investment in plant and machinery for manufacturing enterprises and in
equipment for service enterprises, as per the notification dated 01.06.2020 are given below
in Table 1 and 2 respectively:

Table 1
Manufacturing Sector Limit of Investment in Plant and Machinery
Enterprises
Micro Enterprises Up to Rs. One Crore
Small Enterprises Up to Rs. Ten Crore
Medium Enterprises Up to Rs. Fifty Crore

Table 2
Service Sector Enterprises Limit of Investment in Equipment
Micro Enterprises Up to Rs. One Crore
Small Enterprises Up to Rs. Ten Crore

Medium Enterprises Up to Rs. Fifty Crore

2.1 Principles For Computing Investment

For computing the amount of investment in plant and machinery, the following principles
have to be followed:

1. The cost of the following items is to be excluded while calculating the extent of investment
in an enterprise:

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a) Pollution control, research and development and industrial safety devices,

b) Other notified items are also to be excluded. These include:
i) equipment such as tools, jigs, die moulds and spare parts for maintenance and the
cost of consumable stores.
ii) installation of plant and machinery.
iii) research and development equipment and pollution control equipment.
iv) power generation set and extra transformer installed by the enterprise as per the
regulations of the State Electricity Board.
v) bank charges and service charges paid to the National Small Industries
Corporation or the State Small Industries Corporation.
vi) procurement or installation of cables, wiring, bus bars, electrical control panels
(not mounted on individual machines), oil circuit breakers or miniature circuit
breakers which are necessarily to be used for providing electrical power to the
plant and machinery or for safety measures.
vii) gas producer plants.
viii) transportation charges (excluding sales tax or value added tax and excise
duty) for indigenous machinery from the place of their manufacture to the site of
the enterprise.
ix) charges paid for technical know-how for erection of plant and machinery.
x) such storage tanks which store raw materials and finished products only and are
not linked with the manufacturing process.
xi) firefighting equipment.
2. Valuation should be based on original cost:

While calculating the investment in plant and machinery, the original price thereof,
irrespective of whether the plant and machinery are new or second hand, shall be
reckoned.

3. Valuation in case of imported machinery:

In case of imported machinery, its value shall include,

i) Import duty (excluding miscellaneous expenses such as transportation from the

port to the factory site, demurrage paid)

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ii) shipping charges

iii) customs clearance charges
iv) sales tax or value added tax
4. Computing investment in service enterprises:

For computing investment in service enterprises, the original cost of furniture, fittings
and other items not directly related to the services rendered is to be excluded. Land
and building would also not be included while computing the cost of
machinery/equipment, etc.

Self-Assessment Questions - 1

Fill in the blanks:

1. MSME sector has long faced many obstacles in accessing _________ and ___________.
2. Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 came
into force on __________ .
3. Manufacturing Enterprises are defined in terms of investment in_________________.
4. Service Enterprises are defined in terms of investment in _____________ .

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3. SALIENT FEATURES OF MICRO, SMALL AND MEDIUM ENTERPRISES

ACT
The Micro, Small and Medium Enterprises Development Act, 2006 is aimed at facilitating the
promotion and development of MSMEs as well as enhancing their competitiveness. The
salient features of the Act are:

a. The Act establishes the necessary structure for overseeing and regulating the
development of MSMEs in India. It provides for the structure and composition of the
National Board for Micro, Small and Medium Enterprises. The Board’s duties and long-
term objectives are clearly stated. These include managing development, training
entrepreneurs, developing infrastructure, and promoting financial access. The Act
ensures a diverse representation on the Board such as persons belonging to the
government, industry, financial, and civil society.
b. The Act classifies the MSMEs by the level of investment in Plant and Machinery (P&M)
or equipment in manufacturing units or service enterprises, etc. This eliminates any
confusion over the category to which a business belongs. The categorisation has
already been explained in Table 1 aand 2.
c. The MSMED Act simplifies the registration process for new MSMEs. The previous time-
consuming process of registration has been replaced by a simpler method of
registration as provided by the Act. The previous system discouraged many enterprises
from formal registration. The simpler process of filing of memorandum stipulated in
MSMED Act has encouraged the formalisation of previously informal enterprises. The
new process has also relieved the administrative burden of the District Industry
Centres (DICs), thus making it easier for them to focus on encouraging MSME growth.
d. The Act has substantially increased the penalties for late payments by buyers of goods
and services from MSMEs. One major constraint on MSMEs has been a lack of working
capital; often this lack of capital stems from the tendency of many larger companies to
delay payments to smaller suppliers. The Act provides for the imposition of more
stringent deadlines and penalties for such companies to ensure a smoother cash flow
to MSMEs.
e. The Act has a set agenda for formulating and implementing specific policies such as the
Procurement Preference Policy, which guides the government bodies on how much of

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their supplies should be purchased from MSMEs. Another such policy is Close of
Business, or Exit Policy, which regulates the liquidation of sick or weak units. Sick units
have become a major problem in India, so this policy aims to bail them out and absolve
many of these units of their liabilities.
f. The Act strengthens provisions relating to delayed payments to micro and small
enterprises by specifying a maximum credit period and higher penal interest if
payments are delayed beyond that period. The Act requires that the buyers of goods or
services from small, micro or medium enterprises should furnish the following
additional information in their annual accounts:
• the principal amount and the interest due thereon (to be shown separately)
remaining unpaid to any supplier (i.e. a micro or small enterprise who has filed a
memorandum) at the end of each accounting year;
• the amount of interest paid by the buyer, along with the amounts of the payment
made to the supplier beyond the appointed day during each accounting year;
• the amount of interest due and payable for the period of delay in making payment
(which have been paid but beyond the appointed day during the year) but without
adding the interest specified under this Act;
• the amount of interest accrued and remaining unpaid at the end of each accounting
year; and the amount of further interest remaining due and payable even in the
succeeding years, until such date when the interest dues as above are actually paid to
the small enterprise.

3.1 Filing Of Memorandum

It is mandatory for medium enterprises engaged in manufacture or production of goods

pertaining to any industry specified in the First Schedule to the Industries (Development and
Regulation) Act, 1951 to file a memorandum. It is optional for micro and small industries,
and medium enterprises engaged in providing or rendering services.

However, it is desirable to avail privileges conferred on a ‘supplier’ under the Act.

The memorandum in the prescribed form is to be filed by micro and small enterprises with
the authority notified by the state government and by medium enterprises with the authority

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notified by the central government. The authorities shall follow the procedure laid down by
the Central Government.

Memorandum by Existing Enterprises: The Act also stipulated that all existing industries,
as on the date of commencement of the Act i.e. 2.10.2006 had to file such memorandum if:

i) they were already registered as a small scale industry

ii) they were engaged in the manufacture or production of goods pertaining to any
industry specified in First Schedule of IDRA
iii) they had made an investment in plant and machinery of more than Rs. 1 crore but not
exceeding Rs. 10 crore, and
iv) they had filed an Industrial Entrepreneur’s Memorandum
3.2 Clusters
‘Cluster Development’ is a very important aspect of MSMAD Act. Clusters are defined as
sectoral and geographical concentration of enterprises of the same kind, particularly, small
and medium enterprises, faced with common opportunities and threats. India has over 400
SME clusters and about 2000 artisan clusters. These clusters of the same type of enterprises
work collectively and give rise to external economies. This favours the emergence of
specialised technical, administrative and financial services and creates a conducive ground
for the development of inter-firm cooperation to promote local production, innovation and
collective learning. Clustering and networking has helped the small and medium enterprises
in boosting their competitiveness.
It is estimated that these clusters contribute 60 per cent of the manufactured exports from
India. Most of the gems and jewellery exports are from the clusters of Surat and Mumbai.
Some of the small-scale enterprise clusters account for 90 per cent of India's total production
output in selected products. For example, the clusters of Chennai, Agra and Kolkata are well
known for leather and leather products.
The government has been encouraging and supporting the MSME sector through policies for
infrastructural support, technology upgradation, preferential access to credit, reservation of
products for exclusive manufacture in the sector, preferential purchase policy, etc. It has
been offering packages of schemes and incentives through its specialised institutions in the
form of assistance in obtaining finance; help in marketing; technical guidance; training and
technology upgradation, etc.

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4. RESERVATION POLICY
MSMEs have contributed a lot to the industrial sector of India’s economy and therefore the
government has always granted them special privileges and incentives to boost their growth.
The policies framed under MSMED Act have been formulated to encourage the growth of
micro and small-scale industries. In this direction several promotional measures have been
taken. One of the most important of these is the policy of reservation of products for exclusive
manufacture by the micro-small scale sector.

The Reservation Policy has two main objectives:

• Ensure increased production of consumer goods in the MSE sector.

• Expand employment opportunities through setting up of MSE industries.

Reservation of items for exclusive manufacture in MSME sector was statutorily provided for
in the Industries (Development and Regulation) Act, 1951. The Policy of Reservation of
Products for exclusive manufacture in the Small-Scale Industries (now MSEs) was first
formulated in 1967. In the Industrial Policy document of 1991, which heralded the first
generation of economic reforms in India, small-scale enterprises were awarded a special
status by notifying reservation of items for exclusive manufacture in the SSI sector. The
second phase of economic reforms also laid great emphasis on the development of the small-
scale sector.

Initially, the objective of reservation was to protect the interests of the SSI sector. However,
with the gradual opening up and liberalisation of the economy, there has been progressive
de-reservation of a number of items reserved for exclusive manufacture by the micro and
small-scale sector.

The issue of reservation/de-reservation of product is examined on a continual basis by an

Advisory Committee on Reservation constituted under the I(D&R) Act 1951. The
recommendations are made on the criteria of the economies of scale, the level of
employment, the possibility of encouraging and diffusing entrepreneurship in industry, the
prevention of concentration of economic power to the detriment of the common interest and
any other issue which the Committee may think fit.

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The objective of progressive de-reservation is to provide opportunities for technological

upgradation, promotion of exports and economies of scale. This would help to encourage
modernisation and enhance the competitiveness of MSEs in view of the liberalisation and
globalisation of the economy. Over the years, the list of reserved items has been periodically
revised to keep it in sync with the need of the time. The remaining 20 items reserved for
exclusive manufacture in the MSE sector were de-reserved vide Government Notification
dated 10.05.2015.

Self-Assessment Questions - 2

State whether the following statements are true or false:

5. The policy of reservation pertains to reservation of products for exclusive

manufacture in the small scale sector.
6. The list of reserved items has remained unchanged over the years.
7. The issue of reservation/de-reservation of product is examined on a continual
basis by an Advisory Committee.
8. The number of reserved items, as of now is 20.

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5. CREDIT POLICY
Micro, Small and Medium Enterprises sector accounts for almost 45% of manufacturing
output, 95% of the number of industrial units, 40% of the export and provide employment
to almost 60 million people making it the largest source of employment after the agriculture
sector. With the Services sector dominating the MSME, and MNCs outsourcing their various
requirements to Indian service providers, the requirement for MSME finance has increased
even further.

Further, keeping in view the impact of global economic slowdown on MSMEs, the
government, the Reserve Bank of India (RBI) and the Public Sector Banks have taken several
measures for protecting and providing a stimulus to the MSMEs which, inter alia, include;

i) extending the loan limit under Credit Guarantee Scheme to Rs. 1 crore with a guarantee
cover of 50%.
ii) Providing guarantee cover under the Credit Guarantee Scheme up to 75% of the credit
facility up to Rs.50 lakh (85% for loans up to Rs. 5 lakh provided to micro enterprises,
80% for MSEs owned/ operated by women and all loans to NER) with a uniform
guarantee at 50% of the credit exposure above Rs.50 lakh and up to Rs.100 lakh.
iii) A composite all-in Annual Guarantee Fee of 1.0 % of the credit facility sanctioned
(0.75% for credit facility upto Rs. 5 lakh and 0.85% for above Rs. 5 lakh and upto 100
lakh for Woman, Micro Enterprises and units in NER including Sikkim) is now being
charged.

Availability of credit is crucial for MSMEs therefore the government has put in place a
focused credit policy for this sector. ‘Priority sector lending’ is its most important
component. Under it, banks are compulsorily required to ensure that a defined percentage
of their overall lending is made to the priority sectors, which includes small industries.
Advances made to small and micro enterprises are treated as “priority sector credit".

As a part of the institutional arrangement, Small Industries Development Bank of India

(SIDBI) has been set up as the apex bank for this purpose. Term loans are provided by
State Financial Corporations (SFCs) and Scheduled Banks. Several other schemes and

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programmes have also been undertaken by the government with the aim of facilitating
access to:

i) adequate credit from financial institutions

ii) funds for technology upgradation and modernisation
iii) integrated infrastructural facilities
iv) modern testing facilities and quality certification laboratories
v) modern management practices, entrepreneurship development and skill upgradation
through appropriate training facilities; etc.

The role of banks, in general, has become very important in the above context. Various
schemes and norms have been formulated by the central government and the Reserve Bank
of India to adequately meet the MSME sector’s demands and needs. Several initiatives have
been taken in this direction such as:

• Providing timely and adequate credit to the MSMEs

• Financing of clusters with adequate and concessionary bank finance on liberal terms.
• Single window dispensation.
• Quick decision with least turnaround time through specially constituted MSME cells.
• Better service.
• Encouraging technology upgradation for better qualityand competitiveness
of their products.
• Proactively detecting sick and viable units in time so as to nurse them back to health
through appropriate restructuring.

Self-Assessment Questions - 3

Fill in the blanks:

9. Public sector banks have taken several measures for protecting and providing a
__________ to the MSMEs.

10. __________ are defined as sectoral and geographical concentration of enterprises of

the same kind.

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6. GOVERNMENT POLICY TOWARDS TAXATION AND INCENTIVES

The Micro and Small Enterprises (MSEs) have a vital role in the socio- economic development
of India. The resilience of the MSE sector to adjust to the fast changing economic scenario is
reflected in the fact that its growth rate has always been higher. Accordingly, in order to
assist the MSEs in fully harnessing their potential by enhancing their competitiveness to face
the challenges of stiff competition (both in the domestic and global markets) and in availing
opportunities generated by trade liberalisation, the government provides them with full
support in the areas of credit, technological upgradation, marketing and infrastructure
upgradation in industrial infrastructure.

On 10th August, 2005 the government announced a ‘Policy Package for Stepping up Credit
to Small and Medium Enterprises (SMEs)’. This envisaged public sector banks to fix their
own targets for funding of MSMEs in order to achieve a minimum 20 per cent year-on-year
growth in credits to the MSME sector. The government also announced in February 2007 a
‘Package for Promotion of Micro and Small Enterprises’ which included measures to address
the following concerns:

• Fiscal support
• Cluster based development
• Development of infrastructure and technology
• Capacity building of MSME associations
• Support to women entrepreneurs
• Technology and quality management support for SMEs
• Maintenance of quality management standards
• Access to quality technology tools
• Investment in intellectual property
• Assistance in marketing products
• Technology upgradation

The MSMED Act, 2006 also offered a number of incentives to the MSMEs. These are as
follows:

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1. Tax and Subsidies: MSMEs are granted certain tax benefits under the Income Tax Act
and various subsidies like capital, interest and excise subsidies, etc.
2. Easy Access to Credit: In order to ensure smoother and competitive credit flow to
MSMEs, RBI has instructed banks to allow:
• Concessional credit to MSMEs including dispensation of collateral for loans up to
certain limits.
• Single window clearance for loans to MSMEs.
• Specialised branches for MSMEs.
3. Preference and Procurement Policies for Central and State Government
Contracts: The government has policies for central and state government departments,
aided institutes and public sector enterprises to procure goods and services from
MSMEs.
4. Protection against Delayed Payments: The Act provides for timely payment of dues
to MSMEs. The Act stipulates that:
• Buyers from MSMEs should pay them before the date agreed upon between the
buyer and the MSME or within 45 days whichever is earlier.
• Where there is a delay in payment the Act provides for payment of interest at three
times the RBI rate, compounded on a monthly basis.
• The period of 45 days is said to begin from the date of acceptance or deemed
acceptance of the bill by the buyer.
• It has also been made mandatory for all companies to disclose the amounts payable
to MSMEs with the interest due.
• Another interesting feature is that the interest payable or paid under or in
accordance with the provisions of this Act shall not be allowed as deduction for the
purpose of computation of taxable income under the Income Tax Act.
5. State governments are to constitute a facilitation council to facilitate the collection
provision and to act as a dispute resolution mechanism.

All these benefits are available to all such enterprises that have filed a memorandum as per
the provisions of the MSMED Act.

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Self-Assessment Questions - 4

State True or False:

11. The Government announced a “Package for Promotion of Micro and Small
Enterprises’ in February 2007.
12. RBI has instructed banks to set up ________ window clearance for loans to MSMEs.
13. Incentives and benefits are available only to those enterprises that have filed a as
per the provisions of the MSMED Act.

7. SUMMARY

• Micro, Small and Medium Enterprises (MSME) sector play an important role in
sustaining the economic growth of India. Despite its importance, the MSME sector has
long faced many obstacles in accessing finance and markets. With the aim of giving a
boost to this very important sector, the government of India enacted the Micro, Small
and Medium Enterprises Development (MSMED) Act, 2006.
• The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 classifies
MSMEs into two classes: manufacturing enterprises and service enterprises. These are
further classified into micro, small and medium enterprises on the basis of the extent
of investment in plant and machinery or equipment respectively.
• The MSMED Act marks a milestone for MSMEs. Its features include filing of
memorandum, cluster development, increased penalty for late payment by buyers’
goods and services from MSMEs, etc.
• The government along with the Reserve Bank of India has taken various steps to make
loans and finance easily accessible to MSMEs. Advance of credit to MSEs as a ‘priority
sector lending’.
• With a view to promote MSMEs, the government has extended various privileges and
incentives to MSMEs. These along with tax incentives have given a boost to this sector.

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8. GLOSSARY
Clusters: group

Memorandum: document written for record

Micro: very small

Priority: importance over other things

Upgradation: rise in rank

9. TERMINAL QUESTIONS

1. How are MSMEs classified? Discuss in detail.

2. Elaborate on the salient features of MSMED Act.
3. Discuss the Reservation and Credit Policy with regard to MSMED Act.
4. What are the benefits and incentives available to MSMEs?

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10. ANSWERS
Self-Assessment Questions

1. Finance, markets
2. 2nd October, 2006
3. Plant and Machinery
4. Equipment
5. Correct
6. Incorrect
7. Correct
8. Incorrect
9. Stimulus
10. Clusters
11. True
12. Single
13. Memorandum

Terminal Questions

1. MSMEs are classified on the basis of the extent of investment made in them. For details,
refer to section 2.
2. MSMED Act is a mile stone legislation because it contains many features that have given
a boost to MSMEs. For details, refer to section 3.
3. Reservation Policy refers to the reservation of items for exclusive manufacture by the
small sector and Credit Policy refers to the special benefits granted to MSMEs with
regard to easy accessibility of finance. For details, refer to section 4 and 5.
4. Various benefits and incentives are available to MSMEs under the MSMED Act. For
details, refer to section 6.

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References:

• Bedi, Suresh. (2004). Business Environment. Excel Books, New Delhi.

• Tulsian P.C. (2000). Business Law. Tata Mcgraw-Hill Publishing Company Ltd. New
Delhi.
• Pathak, Akhileshwar. (2007). Legal Aspects of Business. Tata Mcgraw- Hill Publishing
Company Ltd. New Delhi.

E-References:

• http://www.icai.org/
• http://www.ifmr.ac.in/pdf/msmedback.pdf

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