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CONT_21LCT-362 :: MSMES & FINANCING VENTURES
Home My courses CONT_21LCT-362 :: MSMES & FINANCING VENTURES Chapter 1.2
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Lecture Topic Policy, Regulatory, and Legal Framework for SMEs:
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Lecture Topic Policy, Regulatory, and Legal Framework for
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SMEs:

Policy, Regulatory, and Legal Framework for SMEs:

1. Introduction to Policy Framework for SMEs:
Definition of SMEs:
SMEs are defined based on criteria such as investment in plant and machinery, turnover, and employment.
Importance of SMEs:
SMEs play a crucial role in economic development, contributing to employment generation, innovation, and
fostering entrepreneurship.

2. Policy Shifts since 1991:

Pre-1991 Era:

Limited focus on SMEs, restrictive policies, and a controlled economic environment.

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Post-1991 Liberalization:

Shift towards liberalization, privatization, and globalization.

Introduction of policies encouraging entrepreneurship, technological upgradation, and export promotion.
Focus Areas:

Policies targeted at easing access to finance, technology, and markets for SMEs.

3. Regulatory Framework:
Role of Regulatory Bodies:

Regulatory bodies play a crucial role in overseeing and implementing policies for SMEs.
Compliance Requirements:

SMEs must adhere to regulations related to taxation, labor laws, environmental norms, etc.

4. Laws and Regulations for SMEs:

Company Act:

Compliance with the Companies Act for incorporation, governance, and dissolution.
Taxation Laws:

Adherence to tax laws, including Goods and Services Tax (GST) and Income Tax regulations.
Labor Laws:

Compliance with labor laws concerning wages, working conditions, and employee welfare.
Environmental Regulations:

Adherence to environmental norms and sustainable practices.

5. SME Development Bill, 2005:

Objectives:

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 Facilitate the development of SMEs through financial support, technology upgradation, and skill development.
Incentives:

Provision of incentives for SMEs to enhance competitiveness and market access.

Credit Facilities:

Establishment of credit facilities and support mechanisms for SMEs.

6. LLP Act:
Limited Liability Partnership (LLP) Act:

Introduction of LLP Act to provide a flexible and less regulated form of business organization.
Advantages for SMEs:

Offers limited liability, ease of compliance, and simplified management structure.

7. Changing Policy Framework & SME Strategies:

Adaptation to Global Changes:

Policies evolving to align with changing global economic scenarios.

Digitalization and Technology:

Emphasis on adopting digital technologies for enhanced productivity and market reach.
Access to Finance:

Strategies to improve access to finance through credit guarantee schemes, venture capital, and angel
investments.
Skill Development:

Focus on skill development and capacity building to meet the demands of evolving markets.

8. Challenges and Opportunities:

Challenges:

Addressing issues related to finance, infrastructure, and global competition.

Opportunities:

Opportunities for SMEs in emerging sectors, innovation, and global supply chains.

9. Conclusion:
Continuous Evolution:

The policy, regulatory, and legal framework for SMEs continues to evolve to create an enabling environment for
growth and sustainability.
Role of Stakeholders:

Collaboration between government, industry associations, and financial institutions is vital for the success of
SMEs.

Last modified: Wednesday, 10 January 2024, 11:58 AM

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