Kindly Whatsapp On 9820061049 or Email at For Assistance

Encyclopaedia of MSME, Non MSME, Startups (including the law,
subsidy schemes by government of India)
Table of contents
Sr. No Content
1 Introduction- industrial Revolution
2 Industrial Economy, 5year plans and Niti Ayog
3 The primary legislation dealing with industrial undertakings
in India
4 Micro, Small and Medium Enterprises
4 Government initiatives to facilitate innovation and
investment in MSME sector
5 The Micro, Small and Medium Enterprises Development
Act, 2006 (MSME Act 2006)
6 Setting up a MSME unit
7 MSME AND DELAYED PAYMENTS
8 LENDING TO MSME
9 APPLICABILITY OF VARIOUS LAWS TO MICRO, SMALL
AND MEDIUM ENTERPRISES
10 Subsidy Schemes for MSMEs by the Government of India
11 OPPORTUNITIES IN MSME SECTOR
12 Startups and startup eco system
13 Start-up initiative
14 STARTUP under the Ministry of Commerce and industry
(Department for Promotion of Industry and Internal Trade)
15 Registration of start up
16 List of all websites related to MSME and Startups
Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 1

Chapter 1
Technology has played a crucial part on the lives of people at all the stages of
human development. Our dependency of on the technology has been present
even during the nomadic lifestyle where tools carved from the stones were the
technology that human race survived on. The face of technology in every era
has changed drastically from simple tools to complicated machines to
intelligent machines now.
The technology helped people to make their lives easier and at the same time
try to perfect it and bring it to the next level. The use of technology has
resulted in Industrial revolutions. Currently we are in the Fourth Industrial
revolution and are on the verge of seeing the birth of the 5th Industrial
revolution.
Understanding the Industrial revolution its stages and its impact.
Industrial Revolution, in modern history, is the process of change from an
agrarian and handicraft economy to one dominated by industry and machine
manufacturing. This process began in Britain in the 18th century and from
there spread to other parts of the world. Although used earlier by French
writers, the term Industrial Revolution was first popularized by the English
economic historian Arnold Toynbee (1852–83) to describe Britain’s economic
development from 1760 to 1840. Since Toynbee’s time the term has been
more broadly applied.
The main features involved in the Industrial Revolution were technological,
socioeconomic, and cultural. The technological changes included the following:
(1) the use of new basic materials, chiefly iron and steel, (2) the use of new
energy sources, including both fuels and motive power, such as coal, the steam
engine, electricity, petroleum, and the internal-combustion engine, (3) the
invention of new machines, such as the spinning jenny and the power loom
that permitted increased production with a smaller expenditure of human
energy, (4) a new organization of work known as the factory system, which
entailed increased division of labour and specialization of function, (5)
important developments in transportation and communication, including the
steam locomotive, steamship, automobile, airplane, telegraph, and radio, and
(6) the increasing application of science to industry. These technological

changes made possible a tremendously increased use of natural resources and
the mass production of manufactured goods.
There were also many new developments in nonindustrial spheres, including
the following: (1) agricultural improvements that made possible the provision
of food for a larger non-agricultural population, (2) economic changes that
resulted in a wider distribution of wealth, the decline of land as a source of
wealth in the face of rising industrial production, and increased international
trade, (3) political changes reflecting the shift in economic power, as well as
new state policies corresponding to the needs of an industrialized society, (4)
sweeping social changes, including the growth of cities, the development of
working-class movements, and the emergence of new patterns of authority,
and (5) cultural transformations of a broad order. Workers acquired new and
distinctive skills, and their relation to their tasks shifted; instead of being
craftsmen working with hand tools, they became machine operators, subject
to factory discipline. Finally, there was a psychological change: confidence in
the ability to use resources and to master nature was heightened.
THE INDUSTRIAL REVOLUTIONS
The first Industrial Revolution 1765
The first industrial revolution followed the proto-industrialization period. It
started at the end of the 18th century to the beginning of the 19th. The biggest
changes came in the industries in the form of mechanization. Mechanization
was the reason why agriculture started to be replaced by the industry as the
backbone of the societal economy.
At the time people witnessed massive extraction of coal along with the very
important invention of the steam engine that was the reason for the creation
of a new type of energy that later on helped speed up the manufacturing of
railroads thus accelerating the economy.
The second Industrial Revolution 1870
Following the first Industrial Revolution, almost a century later we see the
world go through the second. It started at the end of the 19th century, with
massive technological advancements in the field of industries that helped the
emergence of a new source of energy. Electricity, gas, and oil.

The result of this revolution was the creation of the internal combustion
engine that started to reach its full potential. Other important points of the
second industrial revolution was the development for steel demand, chemical
synthesis and methods of communication such as the telegraph and the
telephone.
Finally, the inventions of the automobile, and the plane in the beginning of the
20th century are the reason why, to this day, the Second Industrial Revolution
is considered the most important one.
The Third Industrial Revolution 1969
Another century passes and we bear witness to the Third Industrial Revolution.
In the second half of the 20th century, we see the emergence of yet another
source of energy, Nuclear energy which was untapped till now
The third revolution brought forth the rise of electronics, telecommunications
and of course computers. Through the new technologies, the third industrial
revolution opened the doors to space expeditions, research, and
biotechnology.
In the world of the industries, two major inventions, Programmable Logic

Controllers (PLCs) and Robots helped give rise to an era of high-level
automation.
Industry 4.0
Industry 4.0 started in the dawn of the third millennium with the birth and rise
of the Internet. With advancement in technology, robotics, analytics, artificial
intelligence and cognitive technologies, nanotechnology, quantum computing,
wearables, the internet of things, additive manufacturing and advanced
materials will become embedded within organisations, people, and assets.
Industry 4.0 is the digital transformation of manufacturing/production and
related industries and value creation processes. Industry 4.0 also popularly
referred to as the fourth industrial revolution, represents a new stage in the
organization and control of the industrial value chain.
Cyber-physical systems form the basis of Industry 4.0 (e.g., ‘smart machines’).
They use modern control systems, have embedded software systems and
dispose of an Internet address to connect and be addressed via IoT (the
Internet of Things). This way, products and means of production get networked
and can ‘communicate’, enabling new ways of production, value creation, and
real-time optimization. Cyber-physical systems create the capabilities needed
for smart factories.
It is characterized by, among others,
1) even more automation than in the third industrial revolution,
2) the bridging of the physical and digital world through cyber-physical
systems, enabled by Industrial IoT,
3) a shift from a central industrial control system to one where smart products
define the production steps,
4) closed-loop data models and control systems and
5) personalization/customization of products.
Industry 5.0
The term Industry 5.0 refers to people working alongside robots and smart
machines. It’s about robots helping humans work better and faster by
leveraging advanced technologies like the Internet of Things (IoT) and big data.
It adds a personal human touch to the Industry 4.0 pillars of automation and
efficiency.
In manufacturing environments, robots have historically performed dangerous,

monotonous or physically demanding work, such as welding and painting in car
factories and loading and unloading heavy materials in warehouses. As
machines in the workplace get smarter and more connected, Industry 5.0 is
aimed at merging those cognitive computing capabilities with human
intelligence and resourcefulness in collaborative operations.
The pairing of human and machine workers opens the door to countless
opportunities in manufacturing. And since the use cases of Industry 5.0 are still
in their relative infancy, manufacturers should be actively strategizing ways to
integrate human and machine workers in order to maximize the unique
benefits that can be reaped as the movement continues to evolve.

Industrial revolutions witnessed by India
India had been primarily an agrarian economy since beginning. The britishers
brought with them the mechanisations and established some of the heavy
industries. The extraction if the iron ore and its use in the mechanisation of
various industries marked the beginning of Industrialisation in India.
Currently we are preparing for the 4th industrial Revolution which is changing
the way India is competing with its products in the Global market. Like all the
countries in the world India is preparing its technology and upskilling its
workforce to embrace the 4th Industrial Revolution.
Bharat 4.0(www.samarthudyog-i40.in )
Smart Advanced Manufacturing and Rapid Transformation Hub (SAMARTH) -
Udyog Bharat 4.0 is an Industry 4.0 initiative of Department of Heavy Industry,
Government of India under its scheme on Enhancement of Competitiveness in
Indian Capital Goods Sector. The initiative aims to raise awareness about
Industry 4.0 among the Indian manufacturing industry through demonstration
centres. Currently there are four centres which include Center for Industry 4.0
(C4i4) Lab Pune; IITD-AIA Foundation for Smart Manufacturing; I4.0 India at IISc
Factory R & D Platform; Smart Manufacturing Demo & Development Cell at
CMTI.
Who will be the catalyst for the 5 trillion dollar economy by 2024?
The vision of achieving the UDS 5 trillion economy by 2024-25,which was
announced by the prime minister on the occasion of the independence day
celebration. The focus is on boosting services sector contribution to $ 3 trillion,
manufacturing to $ 1 trillion and Agriculture to $ 1 trillion.
Contribution Of Different Sectors In Achieving The Goal Of $5 Trillion Economy
Service Sector is the largest sector of India. Gross Value Added (GVA) at current
prices for Service sector is estimated at 92.26 lakh crore INR in 2018-19.
Service sector accounts for 54.40%, Secondary sector (comprising
manufacturing, electricity, gas, water supply & other utility services and
construction) account for 27.03 % while the Primary Sector (comprising
agriculture, forestry, fishing and mining and quarrying account for 18.57 % of
total India’s GVA.

Primary Sector
Investment is the key for the flourishment of areas like agro-processing, and
exports, Agri-startups and Agri-tourism, where the potential for job creation
and capacity utilisation is far less.
Investment needs to be driven to strengthen both public and private extension
advisory systems (educating farmers about technology and management
practices).
It would also serve as a stage to demonstrate resource conservation and
sustainable use through organic, natural and green methods, and also zero
budget natural farming.
India has the highest livestock population in the world, investment should be
made to utilise this surplus by employing next-generation livestock technology.
This would lead to a sustained increase in farm income and savings with an
export-oriented growth model.
Investment in renewable energy generation (using small wind mill and solar
pumps) on fallow farmland and in hilly terrain would help reduce the burden of
debt-ridden electricity distribution companies and State governments, besides
enabling energy security in rural areas.
A farm business organisation is another source of routing private investment to
agriculture. Linking these organisations with commodity exchanges would
provide agriculture commodities more space on international trading
platforms and reduce the burden of markets in a glut season, with certain
policy/procedural modifications.
Manufacturing Sector
A three-pillar strategy has been suggested to achieve required expansion of

output — focus on existing high impact and emerging sectors as well as
MSMEs.

To boost electronics manufacturing, it said the government should consider
offering additional fiscal incentives such as a limited-period tax holiday to
players investing more than an identified threshold of investment.
Similarly, for the auto and auto–components sector, it recommended
encouragement of global leaders for the identified components to set up
manufacturing bases, and incentivising players willing to invest more than a
threshold in identified areas.
The report suggested measures to boost manufacturing in other areas
including aeronautical, space, garments, organic/ayurvedic products besides
emerging areas such as biotechnology, electric mobility, unmanned aerial
vehicles, medical devices, robotics and chemicals.
For micro, small and medium enterprises, the working group said there is a
need to improve access to funding by way of development of SME credit risk
databases, SME credit rating, and creation of community-based funds.
Service Sector
Services sector include improving rail connectivity and seamless connectivity to

major attractions; facilitating visa regime for medical travel; allowing
expatriate professional to perform surgeries in identified hospitals; and e-
commerce policy and regulatory framework for logistics segment.
This sector contributes significantly to India’s GDP, a goal of around 60 %
contribution of services sector has been envisaged for 2024. Exports and job
creation, increased productivity and competitiveness of the Champion Services
Sectors like IT, tourism, medical value travel and legal will further boost
exports of various services from India.
The Commerce Minister has identified 15 strategic overseas locations where
the Trade Promotion Organisations (TPOs) are proposed to be created.
Multi-Modal Logistics Parks Policy (MMLPs) aims to improve the country’s
logistics sector by lowering over freight costs, reducing vehicular pollution and
congestion and cutting warehouse costs with a view to promoting moments of
goods for domestic and global trade.
In the defence sector, there is a need to identify key components and systems
and encourage global leaders to set up manufacturing base in India by offering

limited period incentives; and ensure incentives result in technology/process
transfer.
To promote growth of accounting and financial services, there is a need to FDI
in domestic accounting and auditing sector, transparent regulatory framework,
and easing restriction on client base in the accounting and auditing sector.
Measures like exploring introduction of insurance in the film industry,
promoting private investments in film schools, exploring franchise business
models to exploit film franchise, and promoting gaming industry value chains
aims to push audio visual services.
Foreign universities are allowed to set up campuses in India, easy visa regime
for students and education service providers, removing regulatory bottlenecks,
providing recognition of online degrees and setting up appropriate evaluation
techniques for online courses for the education sector.
INITIATIVES UNDERTAKEN FOR ACHIEVING $5 TRILLION ECONOMY TARGET
The Government is working hard to realise Prime Minister Narendra Modi’s

dream of making the country a five trillion-dollar economy by 2024 and has
taken steps to overcome the phase of economic slowdown. The nation is
witnessing a new sense of dynamism and a number of initiatives are being
taken in line with Modi’s vision of ‘New India’. Principal Secretary to the Prime
Minister Pramod Kumar Misra recently said that while several fundamental
and path breaking reforms have been undertaken in the form of Insolvency
and Bankruptcy Code and GST, continuous opening up and liberalisation of FDI
have resulted in unprecedented inflows of FDI into the country. On December
13, Finance Ministry unveiled a detailed presentation on steps taken to boost
economy. Chief Economic Advisor Krishnamurthy Subramanian said the
government is focusing on increasing consumption to boost economic growth.
Presenting steps taken by the government in the past few months to pull the
economy out from a six-year low growth, he said the measures include
corporate tax cuts to improve risk-return of companies.
Role of Chartered Accountants in achieving the USD 5 trillion Economy
The vision of achieving the USD 5 trillion economy vests in the manufacturing
sector and the intellectual capital of the economy. Our services as the catalyst

for bringing in the change and thrust required to push the economy comes
form the role we play in translating the vision of our clients into reality.
The time has now come to be strategic partners of our entrepreneurs in
building strategies in riding the way of transformation. The latest requirement
of the manufacturing sector is gear up for the transformation of the industry
4.0.
The chartered accountants can play a very vital role in preparing the MSME
sector for this transition. The major feature of the industry 4.0 is automation
and interconnectedness of the various machines. Technology upgradation is
the key element to make MSMEs ready for the transformation. We can assist
the MSMEs in making use of the various schemes of the government that are
being announced for the technological upgrading of the MSMEs.
Along with the machines, the workforce needs to undergo the change in
upskilling themselves. The entrepreneurs have to undergo a paradigm shift in
the way they look at their processes. The automation of the processes, the use
of data analytics and artificial intelligence require the commitment of the
management in terms of time and resources. Also the culture of the
organisation has to be upgraded in becoming the world leader in delivering the
best products and services across the globe. And we, chartered accountants
have to be their catalysts in this change.
In the chapters to follow we shall understand various concepts, legislative
frame work, ecosystems and steps taken by government in the form of
subsidies
Chapter 2
Industrial Economy 5 year plans and Niti Ayog
The industrial economy concerns those activities combining factors of
production (facilities, supplies, work, knowledge) to produce material goods
intended for the market.

In order to build the economy after independence, India adopted the
centralized and integrated approach in the form of 5 year plans. The First Five-
Year Plan was one of the most important, because it had a great role in the
launching of Indian development after Independence. Thus, it strongly
supported agriculture production and also launched the industrialization of the
country (but less than the Second Plan, which focused on heavy industries). It
built a particular system of mixed economy, with a great role for the public
sector (with an emerging welfare state), as well as a growing private sector.
Among the 12 five year plans that India has witnessed since the independence,
the Second Plan has laid the foundation for industrialisation in India. The 2nd
Five year plan focused on the development of the public sector and "rapid
Industrialisation". The plan followed the Mahalanobis model, an economic
development model developed by the Indian statistician Prasanta Chandra
Mahalanobis in 1953. The plan attempted to determine the optimal allocation
of investment between productive sectors in order to maximise long-run
economic growth. It used the prevalent state-of-the-art techniques of
operations research and optimization as well as the novel applications of
statistical models developed at the Indian Statistical Institute. The plan
assumed a closed economy in which the main trading activity would be
centred on importing capital goods.
The period of the second 5 year plan between 1956 to 1961, was also the
period for consolidation of the legal system in India. It marked the enactment
of various legislations which were in tune with the Independent India. The
object of the act was to provide the Central Government with the means of
implementing the industrial policy. The act was passed to enable the Central to
control the development and regulation of a number of important industries. It
conferred the power to make rules for the registration of existing
undertakings, for regulating the production and development of the industries
in the Schedule.
The Niti Aayog(www.niti.gov.in )
The National Institution for Transforming India, also called NITI Aayog, was
formed via a resolution of the Union Cabinet on January 1, 2015. NITI Aayog is
the premier policy 'Think Tank' of the Government of India, providing both
directional and policy inputs.

Niti Aayog is the new body that gives policy direction. Its founding principal is
‘cooperative federalism’. Niti Ayog has no power to grant funds or make
decisions on behalf of states. It is only an advisory body.
Replacement of 5 year plans with the 3 year action Plan
With the changing situations and dynamism at national and Internationsal
levels, the effectiveness of the static 5 year plans was diminishing. It was
realised that in a country as vast and vibrant as India, having a centralised
control was not giving the required flexibility to make policy decisions that
were required for boosting vibrant economy.
Therefore the 5 year plans are now replaced by 3 year action plans. The three-
year strategic paper, which forms part of its 15-year vision document, and
seven-year national development agenda focus on shorter goals and be aligned
with the finance commission recommendations.
The 3 year Action plan or the strategic paper lays down the broad roadmap
that the government should take on various sectors in the next three years,
finances for which would be provided through the finance commissions.
Chapter 3
The primary legislation dealing with industrial undertakings in India
The primary law which govern Industrial undertaking is the
industries(Development and Regulation) Act 1951
An industry is a branch of an economy that produces a closely related set of
raw materials, goods, or services.
Industrial undertaking means an industry, establishment or other undertaking
engaged in the production or processing of any goods or in the development
and extraction of such mineral resources or products, or in the providing of
such mineral resources or products, or in the providing of such services, as may
be specified in this behalf by the Government.
The Industries (Development and Regulation) Act, 1951, came into force on the
8th May, 1952 was enacted to provide the Central Government with the
means of implementing their industrial policy which was announced in their
Resolution No. I(3)-44(13)-48, dated 6th April, 1948.
The Act brings under Central control the development and regulation of a
number of important industries, the activities of which affect the country as a
whole and the development of which must be governed by economic factors
of all-India import. The planning of future development on sound and balanced
lines is sought to be secured by the licensing of all new undertakings by the
Central Government. The Act confers on Government, power to make rules for
the registration of existing undertakings, for regulating the production and
development of the industries in the Schedule and for consultation with state
Governments on these matters.
Industrial undertaking
According to section 3 (d) of the Industries (Development and Regulation) Act,
1951, ‘industrial undertaking’ means any undertaking pertaining to a
scheduled industry carried on in one or more factories by any person or
authority including government.
Power of Central Government to specify the requirements which shall be
complied with by small scale industrial undertakings.—
Section 11-B of the industries(Development and regulation) Act 1951 gives
Power to the Central Government to specify the requirements which shall be
complied with by small scale industrial undertakings.
(1) The Central Government may, with a view to ascertaining which ancillary
and small scale industrial undertakings need supportive measures, exemptions
or other favourable treatment under this Act to enable them to maintain their
viability and strength so as to be effective in—
(a) promoting in a harmonious manner the industrial economy of the country

and easing the problem of unemployment, and
(b) securing that the ownership and control of the material resources of the
community are so distributed as best to subserve the common good,
specify, having regard to the factors mentioned in sub-section (2), by notified

order, the requirements which shall be complied with by an industrial
undertaking to enable it to be regarded, for the purposes of this Act, as an
ancillary, or a small scale, industrial undertaking and different requirements
may be so specified for different purposes or with respect to industrial
undertakings engaged in the manufacture or production of different articles:
Provided that no industrial undertaking shall be regarded as an ancillary

industrial undertaking unless it is, or is proposed to be, engaged in—
(i) the manufacture of parts, components, sub-assemblies, toolings or

intermediates; or
(ii) rendering of services, or supplying or rendering, not more than fifty per
cent of its production or its total services, as the case may be, to other units for
production of other articles.
(2) The factors referred to in sub-section (1) are the following, namely:—
(a) the investment by the industrial undertaking in—

(i) plant and machinery, or
(ii) land, buildings, plant and machinery;
(b) the nature of ownership of the industrial undertaking;
(c) the smallness of the number of workers employed in the industrial

undertaking;
(d) the nature, cost and quality of the product of the industrial undertaking;
(e) foreign exchange, if any, required for the import of any plant or machinery
by the industrial undertaking; and
(f) such other relevant factors as may be prescribed.
(3) A copy of every notified order proposed to be made under sub-section (1)
shall be laid in draft before each House of Parliament, while it is in session, for
a total period of thirty days which may be comprised in one session or in two
or more successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid, both
Houses agree in disapproving the issue of the proposed notified order or both
Houses agree in making any modification in the proposed notified order, the
notified order shall not be made, or, as the case may be, shall be made only in
such modified form as may be agreed upon by both the Houses.
(4) Notwithstanding anything contained in sub-section (1), an industrial

undertaking which, according to the law for the time being in force, fell,
immediately before the commencement of the Industries (Development and
Regulation) Amendment Act, 1984, under the definition of an ancillary, or

small scale, industrial undertaking, shall, after such commencement, continue
to be regarded as an ancillary, or small scale, industrial undertaking for the
purposes of this Act until the definition aforesaid is altered or superseded by
any notified order made under sub-section (1).
Need for enactment of the micro, Small and medium enterprises development
act 2006.
Section 11-B of the Industries (Development and Regulation) Act, 1951 defines
Small scale industry and Section 29-B of the Act provides for notifying
reservation of items for exclusive manufacture in the small scale industry
sector. Except for these two provisions, there exists no legal framework for this
dynamic and vibrant sector of the country's economy. Many Expert Groups or
Companies appointed by the Government from time to time as well as the
small scale industry sector itself have emphasised the need for a
comprehensive Central enactment to provide an appropriate legal framework
for the sector to facilitate its growth and development.
The interest on Delayed payments to small scale and Ancillary Industrial
undertakings Act 1993
The other legislation which dealt with small scale industry sector was The
interest on Delayed payments to small scale and Ancillary Industrial
undertakings Act 1993.This act was repealed by enactment of the Micro, Small
and Medium Enterprises Development Act 2006.
Need for new law related to micro, small and medium enterprises
Emergence of a large services sector assisting the small scale industry in the
last two decades also warrants a composite view of the sector, encompassing
both industrial units and related service entities. The world over, the emphasis
has now been shifted from “industries” to “enterprises”. Added to this, a
growing need is being felt to extend policy support for the small enterprises so
that they are enable to grow into medium ones, adopt better and higher levels
of technology and achieve higher productivity to remain competitive in a fast
globalisation area.
Thus a new law was required to facilitate the promotion and development and
to enhance the competitiveness of small and medium enterprises. The MSMED
Act 2006 achieves the above by-

(a) providing for statutory definitions of “small enterprise” and “medium
enterprise”.
(b) providing for the establishment of a National Small and Medium

Enterprises Board, a high-level forum consisting of stakeholders for
participative review of and making recommendations on the policies and
programmes for the development of small and medium enterprises.
(c) providing for classification of small and medium enterprises on the basis of
investment in plant and machinery, or equipment and establishment of an
Advisory Committee to recommend on the related matter.
(d) empowering the Central Government to notify programmes, guidelines or

instructions for facilitating the promotion and development and enhancing the
competitiveness of small and medium enterprises.
(e) empowering the State Governments to specify, by notification, that

provisions of the labour laws specified in Clause 9(2) will not apply to small and
medium enterprises employing up to fifty employees with a view to facilitating
the graduation of small enterprises to medium enterprises.
(f) making provisions for ensuring timely and smooth flow of credit to small
and medium enterprises to minimise the incidence of sickness among and
enhancing the competitiveness of such enterprises, in accordance with the
guidelines or instructions of the Reserve Bank of India.
(g) empowering the Central and State Governments to notify preference

policies in respect of procurement of goods and services, produced and
provided by small enterprises, by the Ministries, departments and public sector
enterprises.

(h) empowering the Central Government to create a Fund or Funds for
facilitating promotion and development and enhancing the competitiveness of
small enterprises and medium enterprises.
(i) empowering to prescribe harmonised, simpler and streamlined procedures

for inspection of small and medium enterprises under the labour laws
enumerated in Clause 15, having regard to the need to promote self-regulation
or self-certification by such enterprises.
(j) prescribing for maintenance of records and filing of returns by small and
medium enterprises with a view to reduce the multiplicity of often-overlapping
types of returns to be filed.
(k) making further improvements in the Interest on Delayed Payments to Small

Scale and Ancillary Industrial Undertakings Act, 1993 and making that
enactment a part of the proposed legislation and to repeal that enactment.
Chapter 4
Micro, Small and Medium Enterprises
Worldwide, the micro, small and medium enterprises have been accepted as
the engine of economic growth and the foundation for promoting equitable
development. These enterprises constitute over 90% of total enterprises in
most of the economies and are credited with generating the highest rates of
employment growth and account for a major share of industrial production
and exports.
Micro, small and medium enterprises are also referred to as Micro and Small
enterprises (MSEs) and Small and Medium enterprises (SMEs), and Small and
Medium-sized businesses (SMBs) in some countries. The abbreviation SME

occurs commonly in the European Union and in international organizations,
such as the World Bank, the United Nations and the World Trade Organization.
The term small and medium-sized businesses or SMBs is predominantly used in
the United States of America (USA). In the European Union and USA, SMB’s are
companies whose headcount or turnover falls below certain limits. The
business is classified as per the number of employees employed in the
business. In South Africa the term SMME for Small, Medium and Micro
Enterprises is used. Elsewhere, the term most generally in use is MSME for
Micro, Small and Medium Enterprises.
In India, the sector is referred to as the Micro, Small and Medium Enterprises
(MSMEs). MSMEs play a pivotal role in the overall industrial economy of the
country. In recent years the MSME sector has consistently registered higher
growth rate compared to the overall industrial sector. The major advantage of
the sector is its employment potential at low capital cost.
IMPORTANCE AND POTENTIAL OF MSME SECTOR IN INDIA
The micro, small and medium enterprises (MSMEs) sector is the SECOND
largest employment provider in the country (ranking after the agriculture
sector) and hence forms an important part of the Indian economy. As per the
data of the Central Statistics Office (CSO), Ministry of Statistics & Program
Implementation, the contribution of MSME Sector in country’s Gross Domestic
Product (GDP), at current prices for the year 2019-2020 had been 29% and 48%
towards exports.
It is a highly heterogeneous sector and according to the National Sample

Survey (NSS) 73rd round, conducted by National Sample Survey Office,
Ministry of Statistics & Program Implementation during the period 2015-16,
there were 633.88 lakh unincorporated non-agriculture MSMEs in the country
engaged in different economic activities which have been creating 11.10 crore
jobs ( 360.41 lakh in Manufacturing, 387.18 lakh in Trade and 362.82 lakh in
Other Services and 0.07 lakh in Non-captive Electricity Generation and
Transmission) in the rural and the urban areas across the country.
The sector contributes about 45% to manufacturing output and about 48% of
exports, directly and indirectly. MSME sector can help realize the target of

National Manufacturing Policy of raising the share of manufacturing sector in
GDP to 25% by the end of 2022. As per the Annual Report 2017-2018 of the
Ministry of MSME, State of Uttar Pradesh had the largest number of estimated
MSMEs with a share of 14.20% of MSMEs in the country and West Bengal
came second with a share of 14% MSME’s.
Recognizing the importance of MSME sector in India, the Government of India

passed the Micro, Small and Medium Enterprises Development (MSMED) Act,
2006 which came into force on 2nd October 2006. After the enactment of
MSMED Act 2006, a separate Ministry of Micro, Small and Medium Enterprises
(M/o MSME) was formed on 9.5.2007 by the merger of erstwhile Ministry of
Small-Scale Industry (SSI) and Ministry of Agro & Rural Industries (ARI).
Various Important landmarks achieved by the MSME sector:
• 633.88 lakh MSME units in India
• MSME sector has created 11.10 crore jobs in 2014-2018
• Khadi and Village Industries Commission (KVIC) provides sustainable
employment to approximately 152 lakh persons in rural areas
• Coir industry provides employment to more than 7.30 lakh persons and
has contributed extensively in increasing exports
• Two Schemes of the M/o MSME namely, National Scheduled Caste /
Scheduled Tribe Hub and Zero Defect Zero Effect (ZeD) Scheme were launched
on 18th October, 2016
• Increased credit facilities for MSMEs and increased corpus for Credit
Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
• In Union Budget presented on 1st February 2017, corporate tax for the
MSMEs having a turn-over less than 50 cr. brought down from 30% to 25%
• ‘MyMSME’ android application for submitting and tracking online
applications for availing benefits of various schemes launched (see
https://my.msme.gov.in/MyMsme/Reg/Home.aspx for details)
• Udyog Aadhar Memorandum launched – a simple one-page registration
form which is mobile friendly and permits self-certification (no documents

need to be attached and is free of cost) was launched on 18th September 2015
(https://udyogaadhaar.gov.in/UA/UAM_Registration.aspx)
• A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship
(ASPIRE) launched in March 2015
• The Ministry of MSME has so far entered into 19 long term agreements,
Memorandum of Understanding/Joint Action Plan for cooperation in MSME
sector with foreign countries
• Expansion and up-gradation of the network of technology centers
• MSME Development (Furnishing of Information) Rules, 2016 notified
• As of 2018, there are 49 “Micro and Small Enterprises Facilitation
Council (MSEFC)” across States/Union Territories
• Public Procurement Order has made it mandatory from 1st April 2015
for Central Ministries and Central Public Sector Enterprises (CPSEs) to procure
20% of goods and services from MSEs. 4% out of the 20% are reserved for
SC/ST-owned MSEs
• MSME Samadhan portal launched on 30th October, 2017 to assist
MSMEs in overcoming the issue of delayed payments
(www.samadhaan.msme.gov.in )
• MSME Sambandh portal launched on 8th December 2017 to increase
the participation of MSEs in Government Procurement in a transparent way
www.sambandh.msme.gov.in
In order to provide a simpler and faster mechanism to address the stress in the
accounts of MSMEs and to facilitate the promotion and development of
MSMEs, the Ministry of Micro, Small and Medium Enterprises, Government of
India, vide their Gazette Notification dated May 29, 2015 had notified a
‘Framework for Revival and Rehabilitation of Micro, Small and Medium
Enterprises’. Further, certain changes were made in the framework in order to
make it compatible with the existing regulatory guidelines on ‘Income
Recognition, Asset Classification and provisioning pertaining to Advances’
issued to banks by Reserve Bank of India (RBI).
For facilitating the promotion and development and enhancing the
competitiveness of MSMEs, the Ministry of MSME vide Gazette Notification

No. 750(E) dated 29.07.2016 had notified the MSME Development (Furnishing
of information Rules, 2016) under which all MSMEs are to furnish information
relating to their enterprises online to the Central Government in the data bank
maintained by it at www.msmedatabank.in.
The Prime Minister launched the MSME Outreach Program on 2nd November,
2018 and gave 12 new decisions for MSMEs which will enhance their credit
access.
Features of the MSME Outreach Program
1. 59-minutes loan sanction portal
2. Computerized random allocation for inspection
3. Loan option for GST registered firms will be available through the GST portal
itself
4. Cash flow certainty
5. Interest concession on loans for MSME exporters to be raised to 5% from 3%
6. Quick loan access
7. Mandatory for PSUs to procure up to 3 per cent from MSMEs led by women.
8. Trade receivables and e-discounting systems-
9. Government will set up pharma clusters for MSMEs
10. Government e-Marketplace platform procurement will be mandatory
11. Relaxation in environmental rules
12. Relaxation in labour laws
Common Problems faced by the MSME sector:

As per the Report of the Subgroup on Unorganized Sector (of the Working
Group on MSMEs Growth during 12th Plan), although Indian MSMEs are a
diverse and heterogeneous group, they face some common problems, which
are briefly indicated below:
• Lack of availability of adequate and timely credit;

• High cost of credit;
• Collateral requirements;
• Limited access to equity capital;
• Problems in supply to government departments and agencies;
• Procurement of raw materials at a competitive cost;
• Problems of storage, designing, packaging and product display;
• Lack of access to global markets;
• Inadequate infrastructure facilities, including power, water, roads, etc.;
• Low technology levels and lack of access to modern technology;
• Lack of skilled manpower for manufacturing, services, marketing, etc.;
• Multiplicity of labour laws and complicated procedures associated with
compliance of such laws;
• Absence of a suitable mechanism which enables the quick revival of
viable sick enterprises and allows unviable entities to close down speedily; and
• Issues relating to taxation, both direct and indirect, and procedures
thereof
• Lack of Social Security
A prominent drawback of the MSME sector is that a predominant number
(94%) of the enterprises are in the unorganized sector. Due to this, there is
lack of reliable and updated database and it hampers monitoring of
development initiatives and formulation of appropriate schemes to meet the
differential needs of the heterogeneous profile of the enterprises.
One of the major problems facing these enterprises is the access to equity and
credit. Most of the time, the equity is coming from savings and loans from
friends and relatives rather than through banking systems. Very often, the
credit is coming from operations or domestic savings rather than established
systems of cheap banking credit for working capital.

This sector also has poor paying capacity and therefore faces shortage of
skilled manpower resulting in absence of managerial capabilities, marketing
channels and brand building capacity.
Chapter 5
GOVERNMENT INITIATIVES TO FACILITATE INNOVATION AND INVESTMENT IN
MSME SECTOR
India has changed. Young educated professionals, uneducated spirited
individuals, small businesses, large businesses are all together redefining the
business landscape of India. Business in India is no longer confined to mean
patriarchal predominance in specific sectors. It has now become a much larger
word referring to infinite possibilities.
With India’s growing economy and the diversity of the MSME sector, the
Government had set out two major initiatives to facilitate innovation and
investment in India and serve as a pathway to progress for MSME sector.
Startup India, Standup India Initiative

Under the Startup India initiative launched by the Government of India in
2016, there are varied avenues which a person can explore. Business has been
created out of ideas as diverse as specialized shoe washing services to custom-
made image consultancy to high net worth individuals. A few of the Startup
ideas had started in small towns and have now grown into national and
international phenomenon.
The 'Start up India Stand up India' initiative was announced by Prime Minister
Narendra Modi in his Independence day address to the nation from Red Fort
on 15th August, 2015. The Scheme was formally launched on January 16, 2016
from Vigyan Bhawan, New Delhi. The initiative aims at fostering
entrepreneurship and promoting innovation by creating an ecosystem that is
favourable for growth of Start-ups. With a dedicated Start-up fund worth Rs.
10,000 crores created for funding of Start-ups, the goal of the initiative is to
make India a nation of job creators instead of job seekers. In order to provide
funding support to Startups, a fund with an initial corpus of INR 2,500 crore
and a total corpus of INR 10,000 crore over a period 4 years had been set up.
Further, A 'fund of funds' of INR 10,000 crores to support innovation driven
Startups has been established which is being managed by Small Industries
Development Bank of India (SIDBI).
Acknowledging the long gestation period for Startups, the definition of start-up
has been amended where an entity shall be considered as a Startup for up to 7
years (from earlier 5 years) and a Biotechnology Startup for up to 10 years
from the date of its incorporation/ registration. A slew of incentives and
schemes have been put in place for start-up entities viz. compliance regime
based on self-certification; compliance norms eased; relaxed norms of
procurement; patent benefits; tax benefits; establishment of research parks,
tinkering labs, incubators; technology business incubators etc. The Startup
India Yatra which is a platform for helping entrepreneurs (especially from non-
metropolitan cities) realize their startup dream has been has been conducted
in 12 States so far.
Make in India Initiative
‘Make in India’ initiative was launched by the Government of India on 25
September 2014 to encourage companies to manufacture their products in
India and also increase their investment. As per the current policy, 100%
Foreign Direct Investment (FDI) is permitted in most 25 sectors covered under
this initiative.
MSME sector which contributes 7% to India’s GDP is an essential sector for
realizing India’s potential in achieving socio-economic growth. The sector
consists of about 633.88 lakh MSME units which have created approximately
11.10 crore jobs in 2014-2018. Therefore it is for this reason that the ‘Make in
India’ initiative looks to provide an opportunity to MSME sector to enhance
their infrastructure by facilitating investment in this sector. The Foreign Direct
Investment (FDI) in MSMEs is subject to the sectoral caps, entry routes and
other relevant sectoral regulations.
Recognizing the potential of this sector for the nation’s development and the
diversity present in this sector, various steps have been taken by the
Government under this initiative to strengthen the MSME sector and promote
innovation and capacity building in this sector viz. A Scheme for Promoting
Innovation and Rural Entrepreneurship (ASPIRE); An Incubation Cell
‘Knowledge for Innovation in Trade & Technology for Entrepreneurial Start-
ups’ (KITTES); Technology Acquisition and Development Fund (TADF); Training
centers providing technology up-gradation training etc.

Chapter 5
THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006
(MSMED ACT 2006)
The importance and contribution of the SME sector to the economic growth
and prosperity is well established. Their role in terms of employment creation,
upholding the entrepreneurial spirit and innovation has been crucial in
fostering competitiveness in the economy. Towards meeting the National
developmental objectives, it is imperative for the industrial sector to grow at a
faster pace supported by a vibrant SME sector. Towards this, Government’s
policy initiatives like enactment of the Micro, Small and Medium Enterprises
Development Act, 2006, pruning of reserved SSI list, advising Financial
Institutions to increase their flow of credit to the SME sector, are all initiatives
towards boosting entrepreneurship, investment and growth.
The Micro, Small and Medium Enterprises Development Bill 2005, having been
passed by both the houses of Parliament, received the assent of the President
on 16th June 2006. It came on the Statute Book as the Micro, Small and
Medium Enterprises Development Act, 2006 (27 of 2006) and come into force
from 02nd October, 2006.
One of the primary objectives of the Act is to make provisions for ensuring
timely and smooth flow of credit to SME's and minimize sickness amongst
them.
The MSMED Act 2006 comprises of VI Chapters divided into 32 sections:
CHAPTER I –PRELIMINARY (sections 1 & 2)

CHAPTER II - NATIONALBOARD FOR MICRO, SMALL AND MEDIUM
ENTERPRISES (Sections 3 to 6)
CHAPTER III - CLASSIFICATION OF ENTERPRISES, ADVISORY COMMITTEE
ANDMEMORANDUM OF MICRO, SMALL AND MEDIUM ENTERPRISES (Sections
7 & 8)

CHAPTER IV - MEASURES FOR PROMOTION, DEVELOPMENT AND
ENHANCEMENT OFCOMPETITIVENESS OF MICRO, SMALL AND MEDIUM
ENTERPRISES (Sections 9 to 14)
CHAPTER V- DELAYED PAYMENTS TO MICRO AND SMALL ENTERPRISES
(Sections 15 to 25)
CHAPTER VI – MISCELLANEOUS (Sections 26 to 32)
CLASSIFICATION OF ENTERPRISES AS MICRO, SMALL OR MEDIUM ENTERPRISE
In accordance with the MSMED Act 2006, the Central government may classify
any class or classes of enterprises, whether proprietorship, Hindu undivided
family, association of persons, co-operative society, partnership firm, company
or undertaking, by whatever name called.
In exercise of the powers conferred by sub-section (1) read with
sub-section (9) of section 7 of the ‘Micro, Small and Medium Enterprises
Development Act, 2006 the Central Government, has notified the following
criteria for classification of micro, small and medium enterprises, namely:—
(i) a micro enterprise, where the investment in Plant and Machinery or
Equipment does not exceed one crore rupees and turnover does not exceed
five crore rupees;
(ii) a small enterprise, where the investment in Plant and Machinery or
Equipment does not exceed ten crore rupees and turnover does not exceed
fifty crore rupees;
(iii) a medium enterprise, where the investment in Plant and Machinery or
Equipment does not exceed fifty crore rupees and turnover does not exceed
two hundred and fifty crore rupees.
This notification shall come into effect from 01.07.2020.
An enterprise under section 2(e) of the MSMED Act 2006, means an 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 (55 of 1951) or engaged in
providing or rendering of any service or services.
Industries mentioned under Schedule I of the Industries (Development and

Regulation) Act, 1951 are given below. The Micro, Small and Medium
Enterprises Development (MSMED) Act, 2006 will be applicable to this list of
industries.
• Metallurgical industries
• Fuels
• Boilers and steam-generating plants
• Prime movers (other wan electrical generators)
• Electrical equipment
• Telecommunications
• Transportation
• Industrial machinery
• Machine tools:
• Agricultural machinery
• Earth-moving machinery
• Miscellaneous mechanical and engineering industries
• Commercial, office and household equipment
• Medical and surgical appliances
• Industrial instruments
• Scientific instruments
• Mathematical, surveying and drawing instruments
• Fertilizers
• Chemicals (other than fertilizers)

• Photographic raw film and paper
• Dye-stuffs
• Drugs and pharmaceuticals
• Textiles (including those dyed, printed or otherwise processed)
• Paper and pulp including paper products
• Sugar
• Fermentation industries
• Food-processing industries
• Vegetable oils and vanaspati
• Soaps, cosmetics and toilet preparations
• Rubber goods
• Leather. Leather goods and pickers
• Glue and gelatin
• Glass
• Ceramics
• Cement and gypsum products
• Timber products
• Defense industries
• Miscellaneous industries
The present ceiling on investment in plant and machinery / equipment for

manufacturing / service enterprises, as notified, vide S.O. 1642(E) dtd.29-09-
2006 are as under:
A. In case of enterprises 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, the classification is as follows:
1. a micro enterprise, where the investment in plant and machinery does
not exceed twenty-five lakh rupees;

2. a small enterprise, where the investment in plant and machinery is more
than twenty-five lakh rupees but does not exceed five crore rupees; or
3. a medium enterprise, where the investment in plant and machinery is
more than five crore rupees but does not exceed ten crore rupees.
B. In case of enterprises engaged in providing or rendering of services, the

classification is as follows:
1. a micro enterprise, where the investment in equipment does not exceed
ten lakh rupees;
2. a small enterprise, where the investment in equipment is more than ten
lakh rupees but does not exceed two crore rupees; or
3. a medium enterprise, where the investment in equipment is more than
two crore rupees but does not exceed five crore rupees.
Vide Ministry of MSME Notification No. S.O. 1722(E) dated 5th October, 2006,
the Central Government hereby specifies the following items, the cost of which
shall be excluded while calculating the investment in plant and machinery in
the case of the enterprises mentioned in Section 7(1) (a) of the MSMED Act,
2006 namely:
i. equipment such as tools, jigs, dyes, moulds and spare parts for
maintenance and the cost of consumables stores;
ii. installation of plant and machinery;
iii. research and development equipment and pollution-controlled
equipment;
iv. power generation set and extra transformer installed by the enterprise
as per 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 material and finished products and
are not linked with the manufacturing process; and
xi. firefighting equipment.
While calculating the investment in plant and machinery referred to in

paragraph 1 above, the original price thereof, irrespective of whether the plant
and machinery are new or second hand, shall be taken into account provided
that in the case of imported machinery, the following shall be included in
calculating the value, namely;
a. Import duty (excluding miscellaneous expenses such as transportation
from the port to the site of the factory, demurrage paid at the port);
b. Shipping charges;
c. Customs clearance charges; and
d. Sales tax or value added tax

Chapter 6
SETTING UP A MSME UNIT
The Micro, Small and Medium Enterprises (MSME) sector has emerged as a
highly vibrant and dynamic sector of the Indian economy over the last five
decades. It contributes significantly in the economic and social development of
the country and therefore the Government too grants various benefits to this
sector by way of schemes and finances so as to enable more units to be set up
in this sector.
Any enterprises, whether proprietorship, Hindu undivided family, association

of persons, co-operative society, partnership firm, company or undertaking, by
whatever name called may be classified as micro, small or medium enterprise
on the basis of its investment in plant and machinery or equipment. Therefore,
firstly the enterprise must start a business by choosing a type of business
entity it wants to set up as. The different type of legal entities which can be
chosen to conduct business are - Sole Proprietorship, One Person Company,
Partnership Firm, Limited Liability Partnership, Private Limited Company and
Public Limited Company. The choice of the business entity is dependent on
various factors such as taxation, owner liability, compliance burden, and
investment and funding and exit strategy.
The main steps involved in setting up a Micro, Small & Medium Enterprise are
as below:-
Project Selection

Conceptualizing the MSME with respect to selection of product to be
manufactured/ service to be provided and process technology to be decided.
The location of the project keeping in mind availability of raw material and
locational advantages or disadvantages is of utmost importance.
Technology and Machinery

Technology and Machinery needs to be selected. One of the major deficiencies
in the case of micro, small and medium enterprises is the prevalence of
outdated production and management methods due to non-availability of
funds, hindering the efficient operation of micro, small and medium-scale
units. However, the Ministry of MSME provides facilities for technology up-
gradation, modernization, quality improvement and infrastructure to MSMEs.
To provide right stimulus to the growth of industry in the country – particularly
to micro, small and medium enterprises, Ministry has established Technology
Centers across India, many of them through bilateral collaboration of the
Governments of Germany & Denmark and the United Nations. These were
earlier known as Tool Rooms and Technology Development Centers.
Arranging Finance
No business can function without finance. MSME could require the following
types of finance -
• Long and medium term loans;
• Short term or working capital requirements;
• Risk Capital;
• Seed Capital/ Marginal Money;
• Bridge loans etc.
Financial assistance in India for MSME units is available from a variety of
institutions. The important ones are:
(i) Commercial/Regional Rural/Co-operative Banks.

(ii) SIDBI: Small Industries Development Bank of India (refinance and direct
lending)
(iii) SFCs/SIDCs: State Financial Corporations (e.g. Delhi Financial
Corporation)/State Industrial Development Corporations.
For loans from financial institutions and commercial banks a formal application
needs to be made. The details of documentation that need to be provided with
the loan application are indicated below:
Documentation for Loan Application

Balance Sheet and Profit Loss Statement for last three consecutive years
of firms owned by promoters
Income Tax Assessment Certificates of Partners/Directors
Proof of Possession of Land/Building
Architect’s estimate for construction cost
Partnership deed/Memorandum and Articles of Associations of
Company
Project Report
Budgetary Quotations of Plant and Machinery
A sanction or rejection letter is issued by bank after its assessment of the
application. After receiving a sanction letter, applicants need to indicate in
writing their acceptance of terms and conditions laid down by FI/Banks.
Subsequently, loan is disbursed according to the phased implementation of the

project. In today’s environment there are other choices apart from commercial
banks and Government owned financial institutions. These options include
venture capital funds and non-government finance companies.
Udyog Aadhaar Memorandum

Before the MSMED Act, 2006, there was a system of registration by small scale
industrial units to the District Industries Centres (DICs). Subsequently, as per
the provisions of the MSMED Act, 2006, MSMEs used to file Entrepreneurs
Memorandum (Part-I) at District Industries Centres (DICs) before starting an
enterprise. After commencement of production, the entrepreneur concerned
used to file Entrepreneurs Memorandum (Part-II) /[EM-II].
However, the Ministry of Micro, Small and Medium Enterprises (MSME) has
notified the Udyog Aadhaar Memorandum(UAM) under the MSMED Act, 2006
vide gazette notification [SO No. 2576(E)] dated 18-09-2015 in order to
promote ease of doing business for MSMEs. Therefore, since September, 2015,
in view of promoting ease of business, an online filing system under Udyog
Aadhar Memorandum (UAM) based on self-declared information has been put
in place. This is a path breaking step to promote ease-of-doing-business for
MSMEs in India as the UAM replaces the filing of Entrepreneurs’ Memorandum
(EM part-I & II) with the respective States/UTs. The entrepreneurs in the
MSME sector just need to file online, a simple one page UAM on
http://udyogaadhaar.gov.in to instantly get a unique Udyog Aadhaar Number.
The information sought is on self-certification basis and no supporting
documents are required at the time of online filing of UAM.
Features of UAM
The salient features of Udyog Aadhaar memorandum are:
• Registration is online and user-friendly.
• UAM can be filed on self-declaration basis.
• No documentation required.
• No Fee for filing.
• File more than one Udyog Aadhaar with same Aadhaar Number.
Procedure for Filing UAM:

The Government of India, Ministry of Micro, Small & Medium Enterprises
through a office memorandum issued on 17.07.2020 subsititued "Udyog
Aadhaar Memorandum (UAM)" with "Udyam Certificate"
The udyam Certificate shall be issued on registering on the
www.udyamregistration.gov.in .MSME Registration is free, paperless and
based on self- declaration
Following are the feature of registration :
 No documents or proof are required to be uploaded for registering an
MSME.
 Only Adhaar Number will be enough for registration.
 PAN & GST linked details on investment and turnover of enterprises will
be taken automatically from Government data bases.
 Our online system will be fully integrated with Income Tax and GSTIN
systems.
 Having PAN & GST number is mandatory from 01.04.2021.
 Those who have EM-II or UAM registration or any other registration
issued by any authority under the Ministry of MSME, will have to re-
register themselves.
 No enterprise shall file more than one Udyam Registration. However,
any number of activities including manufacturing or service or both may
be specified or added in one Registration.
Approvals and Clearances
An entrepreneur has to obtain several clearances or permissions depending
upon the nature of his unit and products manufactured.
• Product Specific Clearances
• Environment & Pollution Related Clearances
• Regulatory or Taxation Clearances
Furnishing Information related to Enterprise

For facilitating the promotion and development and enhancing the
competitiveness of MSMEs, the Ministry of MSME vide Gazette Notification
No. 750(E) dated 29.07.2016 had notified the MSME Development(Furnishing

of information Rules, 2016) under which all MSMEs are to furnish information
relating to their enterprises online to the Central Government in the data bank
maintained by it at www.msmedatabank.in. This data bank will enable the
Ministry to streamline and monitor the schemes and pass on the benefits
directly to MSMEs. It will also provide the real-time information about the
status of MSMEs under various parameters. Data Bank is helpful to MSME
units, who can now update their enterprise information as and when required
without visiting any government office and also update information about
their products/ services, which can be accessed by government departments
to do procurement under Public Procurement Policy of Government of India.
Disclosure Requirements
The Act strengthens provisions relating to delayed payments to SME's by
specifying a maximum credit period and higher penal interest if delayed
beyond that period. Further, Section 32 of the Act repeals the provisions of
“Interest on Delayed payments to Small Scale and Ancillary Industrial
Undertakings Act, 1993” that was applicable to some of the enterprises
covered under this Act.
The MSMED Act 2006 requires certain additional information to be furnished

in the Annual Accounts of enterprises, which are subjected to an audit under
any law for the time being in force and who are buyers of goods or services
from micro or small enterprises. The disclosure requirements in Section 22 of
the Act requires any buyer, whose annual accounts audited under any law for
the time being in force, to additional information in his annual statement of
accounts.
Procurement from MSMEs and provisions for delayed payments, interest
Section 11 of the MSMED Act 2006 provides for the promotion of the mirco
and small enterprises , the central government or the state government to
frame policy for procurement of goods and services produced and provided by
small and micro enterprises. Accordingly the Central government has notified
Public Procurement Policy for MSEs Order, 2018 on 9th November 2018 to be
effective from 1st April 2019.
Salient features of the Policy:

• Every Central Ministry /Department / PSUs shall set an annual target for
25% procurement from MSE Sector.
• A sub-target of 4% out of 25% target of annual procurement earmarked
for procurement from MSEs owned by SC/ST entrepreneurs.
• Overall procurement goal of minimum 25% has become mandatory from
1st April 2015.
• Special provision for Micro and Small Enterprise owned by women. Out
of the total annual procurement from Micro and Small Enterprises, 3 per cent
from within the 25 per cent target shall be earmarked for procurement from
Micro and Small Enterprises owned by women.
• Tender sets free of cost and exemption from payment of earnest money
to registered MSEs.
• MSEs quoting price within price band L-1 + 15%, when L1 is from
someone other than MSE, shall be allowed to supply at least 25% of tendered
value at L-1 subject to lowering of price by MSEs to L-1.
• 358 items are reserved for exclusive procurement from MSEs.
• Ministry /Department/CPSUs shall prepare their annual procurement
plan to be uploaded on their official website.
• For enhancing participation of MSEs in government procurement,
Ministry /Department/CPSUs shall conduct Vendor Development Programmes
or Buyer Seller Meets for MSEs especially for SC/ST entrepreneurs.
• Universe of the Policy:
A. Buyers:
Central Departments (46)
Central Ministries (51)
CPSUs (277)
B. Suppliers:
All MSEs having registration as per provisions of the Policy i.e. registration with
District Industries Centre (DIC) or Khadi and Village Industries Commission
(KVIC) or Khadi and Industries Board (KVIB) or Coir Board or National Small
Industries Commission (NSIC) or directorate of Handicrafts and Handlooms or

Udyog Aadhaar Memorandum or any other body specified by Ministry of
MSME.
below would not be included in the manufacture or production of goods or
providing or rendering of services in accordance with Section 7 of the Micro,
Small and Medium Enterprise Development Act, 2006:-
Activities (NIC codes) not covered under MSMED Act, 2006 for registration of
Udyam Certificate.
The Ministry of Micro, Small & Medium Enterprises
th
(SME Section) through the Office Memorandum issued on 26 June 2017
clarified that the following activities mentioned in table A shall not be included
in the manufacture or production of goods or providing or rendering of
services in accordance with Section 7 of the Micro, Small and Medium
Enterprise Development Act, 2006:-
Table.1
NIC Activity
Code
02 Forestry and logging
03 Fishing and aquaculture
45 Wholesale and retail trade and repair of motor vehicle and

motorcycles
46 Wholesale trade except of motor vehicles and motor cycles 47
47 Retail Trade Except of Motor Vehicles and motor cycles
97 Activities of households as employees for domestic personnel
98 Undifferentiated goods and services producing activities of private

households for own use

99 Activities of extraterritorial organization and bodies
2. The NIC 2-digit activity 01- crop, animal production, hunting and related
activities would also not be included as per Section 7 of the Act except for the
sub-classes of activities at 5-digit level given in Table 2.:
Table. 2
NIC Activity
Code
01462 Production of eggs
01463 Operation of poultry hatcheries
01492 Bee- keeping and production of honey and beeswax
01493 Raising of silk worms, production of silk worm cocoons
01612 Operation of agricultural irrigation equipment
01620 Support activities for animal production
01631 Preparation of crops of primary markets i.e. cleaning, trimming,

grading disinfecting
01632 Cotton ginning, cleaning and bailing
01633 Preparation of tobacco leaves
01639 Other post-harvest crop activities, n.e.c
01640 Seed processing for propagation

Chapter 7
MSE AND DELAYED PAYMENTS
Chapter V (sections 15 to 25) of the MSMED Act 2006, relates to delayed
payments to Micro and Small enterprises. The buyer who takes any
goods/services from micro and small enterprises is liable to make payment for
those goods/services on or before the date agreed upon between him and the
supplier micro/small enterprise (which should not exceed 45 days from day of
acceptance/deemed acceptance) in writing or where there is no agreement in
writing in this behalf, he is liable to make payment for those goods/services
before the appointed day.
Where the buyer fails to make payment of the amount to the supplier, as
mentioned above, the buyer shall, notwithstanding anything contained in any
agreement between the buyer and the supplier or in any law for the time
being in force, be liable to pay compound interest with monthly rests to the
supplier on that amount from the appointed day or, as the case may be, from
the date immediately following the date agreed upon, at three times of the
bank rate notified by the Reserve Bank.
Which day will be taken as “appointed day” has been defined in section 2(b) of
the MSMED Act 2006 to mean the day following immediately after the expiry
of the period of 15 days from the day of acceptance or the day of deemed
acceptance of any goods or any services by a buyer from a supplier.
For this purpose “the day of acceptance” means,—

(a) the day of the actual delivery of goods or the rendering of services; or
(b) where any objection is made in writing by the buyer regarding acceptance
of goods or services within 15 days from the day of the delivery of goods or the
rendering of services, the day on which such objection is removed by the
supplier.
And “the day of deemed acceptance” means, where no objection is made in
writing by the buyer regarding acceptance of goods or services within 15 days

from the day of the delivery of goods or the rendering of services, the day of
the actual delivery of goods or the rendering of services.
For any goods supplied or services rendered by the supplier, the buyer shall be
liable to pay the amount due with interest thereon as provided and if there is
any dispute with respect to the same, any party to the dispute may make a
reference to the Micro and Small Enterprises Facilitation Council (MSEFC)
established in various states by the State Governments, MSEFC of the State
after examining the case filed by MSE unit will issue directions to the buyer
unit for payment of due amount along with interest as per the provisions
under the MSMED Act 2006 and every reference made shall be decided within
a period of ninety days from the date of making such a reference.
Any Micro or small enterprise having valid Udyog Aadhar(UAM) can apply and
for ease of filing application to MSEFC, the Government has set up MSME
Samadhaan Portal
(https://samadhaan.msme.gov.in/MyMsme/MSEFC/MSEFC_Welcome.aspx
Additional Information to be furnished in Annual Accounts of Buyer

The buyer shall furnish the following additional information in his annual
statement of accounts:
(i)the principal amount and the interest due thereon (to be shown separately)
remaining unpaid to any supplier as at the end of each accounting year;
(ii) the amount of interest paid by the buyer, along with the amount of the
payment made to the supplier beyond the appointed day during each
accounting year;
(iii) 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;
(iv) the amount of interest accrued and remaining unpaid at the end of each
accounting year; and

(v) 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.
Half yearly return in MSME Form 1
The Central Government vide notification number S.O. 5622(E),dated the 2nd
November, 2018 had directed that all companies, who get supplies of goods or
services from micro and small enterprises and whose payments to micro and
small enterprise
suppliers exceed forty five days from the date of acceptance or the date of
deemed acceptance of the goods or services as per the provisions of section 9
of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of
2006) (hereafter referred to as “Specified Companies”), shall submit a half
yearly return to the Ministry of Corporate Affairs stating the following:
(a) the amount of payment due; and
(b) the reasons of the delay;
in exercise of the powers conferred by section 405 of the Companies Act, 2013,
the Central Government, made the Specified Companies (Furnishing of
information about payment to micro and small enterprise suppliers)
Order,2019. The order provides for filing of “MSME Form 1” to provide
information on a half-yearly basis in the context of the outstanding payments
to Micro or Small Enterprises for a period exceeding 45 days with the Registrar
of Companies (ROC)
A half-yearly return is required to be submitted to the Ministry of Corporate

Affairs on a mandatory basis, by all those companies who receive the supply of
goods or services from Micro or small enterprises and the payment done to
these micro and small enterprise suppliers exceed forty-five days from the date
of acceptance (or deemed acceptance) of the relevant good or services.
Specified Companies: As per the provisions of section 9 of the MSME
Development Act, 2006, Specified companies are those companies who receive
the supply of goods or services from MSMEs and the payment against these
supplies to the suppliers of these MSMEs exceed 45 days from the date of
acceptance (deemed acceptance) of the goods or services

Applicability on Companies:
As per a notification issued by the MCA it has been mandated to file
disclosures through Form MSME I for every type of the Company – Public or
Private Company, Micro or Small Companies; the Company that satisfies the
following two conditions:
Condition 1: Company must have received Goods and/or Services from Micro
or Small Enterprise
Condition 2: Payment must have been due/not paid, to such Micro and Small
Enterprise for 46 days from the date of acceptance
Note: Date of deemed delivery refers to the acceptance of goods and services
by the buyer in written with no objection with the product or services received
within the 15 days time period.
Every specified company should file a return as per MSME Form I, by 31st
October for the period from April to September and by 30th April for the
period from October to March.
Interest paid to Micro and small enterprises on account of delayed payment is
not allowable as deduction from income
In the landmark case of Dy. CIT (LTU) Vs. Bosch Ltd. , the ITAT Bangalore
pronounced that the interest paid to the Micro, Small & Medium Enterprises
on account of delayed payment is not allowable as deduction from income.
Section 23 of MSMED Act has specifically provided that the interest paid to the
Micro, Small & Medium Enterprises on account of delayed payment is not
allowable as deduction from income.
Section 23 of MSMED Act has specifically prohibited the assessee from
claiming the deduction from the income on account of interest paid to MSME.
Section 24 is having overriding effect to the extent of any inconsistent
provisions contained in any other law for the time being. We further note that
as per the section 15 of the MSMED Act, the liability of the buyer to make the
payment to MSME within the period as agreed between the parties or in case
there is a delay beyond 45 days from the date of acceptance or date of
deemed acceptance the interest payable as per section 16 shall be three times
of the bank rate notified by the RBI. Thus as per section 16 of the MSMED Act,
the payment of interest on delayed payment is in the nature of penalty or it is
penal interest. Therefore once the payment of interest on delayed payment to
MSME is regarded as a penal in nature then the said expenditure is otherwise
not allowable under section 37 of the Income Tax Act, 1961 (in short ‘the Act’).
Hence, in view of the specific provisions under MSMED Act, 2006 for payment
of interest to the MSME being penal in nature and having the overriding effect
of sections 15 to 23, we do not find any error or illegality in the orders of the
authorities below in disallowing this claim of interest paid to the MSME.

Chapter 8
LENDING TO MSME
Bank’s lending to the Micro and Small enterprises engaged in the manufacture
or production of goods specified in the first schedule to the Industries
(Development and regulation) Act, 1951 and notified by the Government from
time to time is reckoned for priority sector advances. Bank loans to Micro and
Small Enterprises engaged in providing or rendering of services and defined in
terms of investment in equipment under MSMED Act, 2006 are eligible to be
reckoned for priority sector advances.
Detailed guidelines on lending to the Micro, Small and Medium enterprises

sector are available in the Reserve Bank of India Master Direction FIDD.MSME
& NFS.12/06.02.31/2017-18 dated July 24, 2017. The provisions of the Master
Direction - Lending to Micro, Small & Medium Enterprises (MSME) Sector shall
apply to every Scheduled Commercial Bank {excluding Regional Rural Banks
(RRBs)} licensed to operate in India by the Reserve Bank of India.
Applicability of the Guidelines

‘Micro, Small and Medium Enterprises’ mean the enterprises as defined in the
MSMED Act, 2006 and the amendments, if any, carried out therein by the
Government of India from time to time.
‘Manufacturing’ and ‘Service’ Enterprises mean the enterprises as defined in
the MSMED Act, 2006 or as notified by the Government of India, Ministry of
MSME under the MSMED Act, 2006 from time to time.
Priority Sector Guidelines for MSME sector
‘Priority Sector’ means the sectors as defined in Master Direction - Reserve
Bank of India (Priority Sector Lending –Targets and Classification) Directions,
2016 dated July 07, 2016 or as modified from time to time.
In terms of Master Direction FIDD.CO.Plan.1/04.09.01/2016-17 dated July 07,
2016 on ‘Priority Sector Lending - Targets and Classification’, bank loans to
Micro, Small and Medium Enterprises, for both Manufacturing and Service
sectors are eligible to be classified under the Priority Sector as per the
following norms:
a. Manufacturing Enterprises
The Micro, Small and Medium Enterprises engaged in the manufacture or
production of goods to any industry specified in the first schedule to the
Industries (Development and Regulation) Act, 1951 and as notified by the
Government from time to time. The Manufacturing Enterprises are defined in
terms of investment in plant and machinery.
b. Service Enterprises
All bank loans to MSMEs, engaged in providing or rendering of services as
defined in terms of investment in equipment under MSMED Act, 2006, shall
qualify under priority sector without any credit cap.
c. Khadi and Village Industries Sector (KVI)

All loans to units in the KVI sector will be eligible for classification under the
sub-target of 7.5 percent prescribed for Micro Enterprises under priority
sector.
d. Bank loans to food and agro processing units shall form part of agriculture.
e. Other Finance to MSMEs
a. Loans to entities involved in assisting the decentralized sector in the
supply of inputs to and marketing of outputs of artisans, village and cottage
industries.
b. Loans to co-operatives of producers in the decentralized sector viz.
artisans, village and cottage industries.
c. Loans sanctioned by banks to MFIs for on-lending to MSME sector as per
the conditions specified in the extant Master Direction on ‘Priority Sector
Lending - Targets and Classification’.
d. Credit outstanding under General Credit Cards (including Artisan Credit
Card, Laghu Udyami Card, Swarojgar Credit Card, and Weaver’s Card etc. in
existence and catering to the non-farm entrepreneurial credit needs of
individuals).

e. Overdrafts extended by banks after April 8, 2015 up to Rs.5,000/- under
Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts provided the borrower’s
household annual income does not exceed Rs.100,000/- for rural areas and
Rs.1,60,000/- for non-rural areas. These overdrafts will qualify as achievement
of the target for lending to Micro Enterprises.
f. Outstanding deposits with SIDBI and MUDRA Ltd. on account of priority
sector shortfall.
To ensure that MSMEs do not remain small and medium units merely to
remain eligible for priority sector status, the MSME units shall continue to
enjoy the priority sector lending status up to three years after they grow out of
the MSME category concerned.
As the MSMED Act, 2006 does not provide for clubbing of investments of
different enterprises set up by same person / company for the purpose of
classification as Micro, Small and Medium enterprises, therefore, the Gazette
Notification No. S.O.2 (E) dated January 1, 1993 on clubbing of investments of
two or more enterprises under the same ownership for the purpose of
classification of industrial undertakings as SSI has been rescinded vide GOI
Notification No. S.O. 563 (E) dated February 27, 2009.
Targets / sub-targets for lending to Micro, Small and Medium Enterprises

(MSME) sector by Domestic Commercial Banks and Foreign Banks operating in
India
Advances to Micro, Small and Medium Enterprises (MSME) sector shall be
reckoned in computing achievement under the overall Priority Sector target of
40 percent of Adjusted Net Bank Credit (ANBC) or credit equivalent amount of
Off-Balance Sheet Exposure, whichever is higher, as per the extant guidelines
on priority sector lending.
Domestic Commercial Banks and foreign banks with 20 branches and above
are required to achieve a sub-target of 7.5 percent of ANBC or Credit
Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, for

lending to Micro Enterprises. However, this sub-target for lending to Micro
Enterprises is not applicable to foreign banks with less than 20 branches
operating in India.
In terms of the recommendations of the Prime Minister’s Task Force on

MSMEs, banks are advised to achieve:
(i) 20 per cent year-on-year growth in credit to micro and small enterprises,
(ii) 10 per cent annual growth in the number of micro enterprise accounts and
(iii) 60 per cent of total lending to MSE sector as on corresponding quarter of
the previous year to Micro enterprises.
Common guidelines / instructions for lending to MSME sector
a. Issue of Acknowledgement of Loan Applications to MSME borrowers

Banks are advised to mandatorily acknowledge all loan applications, submitted
manually or online, by their MSME borrowers and ensure that a running serial
number is recorded on the application form as well as on the
acknowledgement receipt. Banks are further advised to put in place a system
of Central Registration of loan applications, online submission of loan
applications and a system of e-tracking of MSE loan applications.
b. Collateral
Banks are mandated not to accept collateral security in the case of loans up to
Rs.10 lakh extended to units in the MSE sector. Banks are also advised to
extend collateral-free loans up to Rs. 10 lakh to all units financed under the
Prime Minister Employment Generation Programme (PMEGP) administered by
KVIC.
Banks may, on the basis of good track record and financial position of the MSE
units, increase the limit to dispense with the collateral requirement for loans
up to Rs.25 lakh (with the approval of the appropriate authority).

Banks are advised to strongly encourage their branch level functionaries to
avail of the Credit Guarantee Scheme cover, including making performance in
this regard a criterion in the evaluation of their field staff.
c. Composite loan
A composite loan limit of Rs.1 crore can be sanctioned by banks to enable the
MSE entrepreneurs to avail of their working capital and term loan requirement
through Single Window.
d. Revised General Credit Card (GCC) Scheme

In order to enhance the coverage of GCC Scheme to ensure greater credit
linkage for all productive activities within the overall Priority Sector guidelines
and to capture all credit extended by banks to individuals for non-farm
entrepreneurial activity, the GCC guidelines were revised on December 2,
2013.
e. Credit Linked Capital Subsidy Scheme (CLSS)

Government of India, Ministry of Micro, Small and Medium Enterprises had
launched Credit Linked Capital Subsidy Scheme (CLSS) for Technology
Upgradation of Micro and Small Enterprises subject to the following terms and
conditions:
(i) Ceiling on the loan under the scheme is Rs.1 crore.
(ii) The rate of subsidy is 15% for all units of micro and small enterprises up to
limit of loan ceiling
(iii) Calculation of admissible subsidy will be done with reference to the
purchase price of plant and machinery instead of term loan disbursed to the
beneficiary unit.
(iv) SIDBI and NABARD will continue to be implementing agencies of the
scheme.

f. Streamlining flow of credit to Micro and Small Enterprises (MSEs) for
facilitating timely and adequate credit flow during their ‘Life Cycle’:
In order to provide timely financial support to Micro and Small enterprises
facing financial difficulties during their ‘Life Cycle’, guidelines were issued to
banks vide circular FIDD.MSME & NFS.BC.No.60/06.02.31/2015-16 dated
August 27, 2015 on the captioned subject. Banks are advised to review and
tune their existing lending policies to the MSE sector by incorporating therein
the following provisions so as to facilitate timely and adequate availability of
credit to viable MSE borrowers especially during the need of funds in
unforeseen circumstances:
i) To extend standby credit facility in case of term loans
ii) Additional working capital to meet with emergent needs of MSE units
iii) Mid-term review of the regular working capital limits, where banks are
convinced that changes in the demand pattern of MSE borrowers require
increasing the existing credit limits of the MSMEs, every year based on the
actual sales of the previous year.
iv) Timelines for Credit Decisions
g. Debt Restructuring Mechanism for MSMEs

(i) All scheduled commercial banks are advised to follow the guidelines /
instructions pertaining to SME Debt Restructuring, as contained in circular
DBR.No.BP.BC.2/21.04.048/2015-16 dated July 1, 2015 on ‘Master Circular -
Prudential norms on Income Recognition, Asset Classification and Provisioning
pertaining to Advances’ and as updated from time to time.
(ii) All commercial banks are also advised in terms of RBI circular
RPCD.SME&NFS.BC.No. 102/06.04.01/2008-09 dated May 4, 2009 to do the
following:
• put in place loan policies governing extension of credit facilities,
Restructuring/Rehabilitation policy for revival of potentially viable sick units /
enterprises (now read with guidelines on Framework for Revival and
Rehabilitation of Micro, Small and Medium Enterprises issued on March 17,
2016) and non- discretionary One Time Settlement scheme for recovery of
non-performing loans for the MSE sector, with the approval of the Board of
Directors and
• give wide publicity to the One Time settlement scheme implemented by
them, by placing it on the bank’s website and through other possible modes of
dissemination. They may allow reasonable time to the borrowers to submit the
application and also make payment of the dues in order to extend the benefits
of the scheme to eligible borrowers.
• implement recommendations with regard to timely and adequate flow
of credit to the MSE sector.
h. Framework for Revival and Rehabilitation of MSMEs

The Ministry of Micro, Small and Medium Enterprises, Government of India,
vide their Gazette Notification dated May 29, 2015 had notified a ‘Framework
for Revival and Rehabilitation of Micro, Small and Medium Enterprises’ to
provide a simpler and faster mechanism to address the stress in the accounts
of MSMEs and to facilitate the promotion and development of MSMEs. After
carrying out certain changes in the captioned Framework in consultation with
the Government of India, Ministry of MSME so as to make it compatible with
the existing regulatory guidelines on ‘Income Recognition, Asset Classification
and provisioning pertaining to Advances’ issued to banks by RBI, the guidelines
on the captioned Framework along with operating instructions were issued to
banks on March 17, 2016.
The revival and rehabilitation of MSME units having loan limits up to Rs.25
crore would be undertaken under this Framework. The revised Framework
supersedes the earlier Guidelines on Rehabilitation of Sick Micro and Small
Enterprises issued vide RBI circular RPCD.CO.MSME& NFS.BC.
40/06.02.31/2012-2013 dated November 1, 2012, except those relating to
Reliefs and Concessions for Rehabilitation of Potentially Viable Units and One
Time Settlement, mentioned in the said circular.
The salient features of the Framework are as under:

i) Before a loan account of an MSME turns into a Non-Performing Asset (NPA),
banks or creditors should identify incipient stress in the account by creating
three sub-categories under the Special Mention Account (SMA) category as
given in the Framework
ii) Any MSME borrower may also voluntarily initiate proceedings under this
Framework
iii) Committee approach to be adopted for deciding corrective action plan
iv) Time lines have been fixed for taking various decisions under the
Framework
i. Structured Mechanism for monitoring the credit growth to the MSE sector
In view of the concerns emerging from the deceleration in credit growth to the
MSE sector, an Indian Banking Association (IBA)-led Sub-Committee was set up
to suggest a structured mechanism to be put in place by banks to monitor the
entire gamut of credit related issues pertaining to the sector.
Based on the recommendations of the Committee, banks are advised to:
• strengthen their existing systems of monitoring credit growth to the
sector and put in place a system-driven comprehensive performance
management information system (MIS) at every supervisory level (branch,
region, zone, head office) which should be critically evaluated on a regular
basis;
• put in place a system of e-tracking of MSE loan applications and monitor
the loan application disposal process in banks, giving branch-wise, region-wise,
zone-wise and State-wise positions. The position in this regard is to be
displayed by banks on their websites; and
• monitor timely rehabilitation of sick MSE units. The progress in
rehabilitation of sick MSE units is to be made available on the website of
banks.
Institutional arrangements

1. Specialised MSME branches
Public sector banks are advised to open at least one specialised branch in each
district. Further, banks have been permitted to categorise their general
banking branches having 60% or more of their advances to MSME sector as
specialized MSME branches in order to encourage them to open more
specialised MSME branches for providing better service to this sector as a
whole. As per the policy package announced by the Government of India for
stepping up credit to MSME sector, the public sector banks would ensure
specialized MSME branches in identified clusters/centres with preponderance
of small enterprises to enable the entrepreneurs to have easy access to the
bank credit and to equip bank personnel to develop requisite expertise.
Though their core competence will be utilized for extending finance and other
services to MSME sector, they will have operational flexibility to extend
finance/render other services to other sectors/borrowers. Banks may take care
to train the officials posted in such branches appropriately.
2. State Level Inter Institutional Committee (SLIIC)

In order to deal with the problems of co-ordination for rehabilitation of sick
micro and small units, State Level Inter-Institutional Committees were set up in
the States. However, the matter of continuation or otherwise, of the SLIIC
Forum has been left to the individual States / Union Territory.
3. Empowered Committee on MSMEs

As part of the announcement made by the Union Finance Minister,
Empowered Committees on MSMEs are constituted at the Regional Offices of
Reserve Bank of India, under the Chairmanship of the Regional Directors with
the representatives of State Level Banker’s Committee (SLBC) Convenor, senior
level officers from two banks having predominant share in MSME financing in
the state, representative of SIDBI Regional Office, the Director of MSME or
Industries of the State Government, one or two senior level representatives
from the MSME Associations in the state, and a senior level officer from State
Financial Corporation /State Industrial Development Corporation (SFC/SIDC) as
members. The Committee would meet periodically and review the progress in

MSME financing as also revival and rehabilitation of stressed Micro, Small and
Medium units. It would also coordinate with other banks/financial institutions
and the state government in removing bottlenecks, if any, to ensure smooth
flow of credit to the sector. The committees may decide the need to have
similar committees at cluster/district levels.
4. Banking Codes and Standards Board of India (BCSBI)

The Banking Codes and Standards Board of India (BCSBI) has formulated a
Code of Bank's Commitment to Micro and Small Enterprises. The Code sets
minimum standards of banking practices for banks to follow when they are
dealing with Micro and Small Enterprises (MSEs) as defined in the Micro, Small
and Medium Enterprises Development (MSMED) Act, 2006. It provides
protection to MSE and explains how banks are expected to deal with MSE for
their day to-day operations and in times of financial difficulty.
The Code also mentions, inter alia, that the banks are expected to dispose of
MSE loan application for a credit limit or enhancement in the existing credit
limit up to Rs.5 lakh within two weeks; and for credit limit above Rs.5 lakh and
up to Rs.25 lakh within 3 weeks; and for credit limit above Rs.25 lakh within 6
weeks from the date of receipt, provided the application is complete in all
respects and is accompanied by documents as per ‘check list’ provided.
However, every effort should be taken to reduce further the time taken to
process and dispose of MSE loan applications.
The Code does not replace or supersede regulatory or supervisory instructions
issued by the Reserve Bank of India (RBI) and banks will comply with such
instructions /directions issued by the RBI from time to time.
5. Micro and Small Enterprises Sector – The imperative of Financial Literacy

and consultancy support
Keeping in view the high extent of financial exclusion in the MSME sector, it is
imperative for banks that the excluded units are brought within the fold of the
formal banking sector. The lack of financial literacy, operational skills, including
accounting and finance, business planning etc. represent formidable challenge
for MSE borrowers underscoring the need for facilitation by banks in these
critical financial areas. Moreover, MSE enterprises are further handicapped in

this regard by absence of scale and size. To effectively and decisively address
these handicaps, Scheduled commercial banks were advised vide circular
RPCD.MSME & NFS.BC.No.20/06.02.31/2012-13 dated August 1, 2012 that
they could either separately set up special cells at their branches, or vertically
integrate this function in the Financial Literacy Centres (FLCs) set up by them,
as per their comparative advantage. The bank staff should also be trained
through customised training programs to meet the specific needs of the sector.
6. Cluster Approach
All State Level Bankers' Committee (SLBC) Convenor banks are advised to
incorporate in their Annual Credit Plans, the credit requirement in the clusters
identified by the Ministry of Micro, Small and Medium Enterprises,
Government of India. They are also encouraged to extend banking services in
such clusters / agglomerations which have come up and identified
subsequently by SLBC / DCC members.
Clusters may be identified based on factors such as trade record,

competitiveness and growth prospects and/or other cluster specific data.
The Ministry of Micro, Small and Medium Enterprises has approved a list of
clusters under the Scheme of Fund for Regeneration of Traditional Industries
(SFURTI) and Micro and Small Enterprises Cluster Development Programme
(MSE-CDP) located in 121 Minority Concentration Districts. Accordingly,
appropriate measures have been taken to improve the credit flow to the
identified clusters of micro and small entrepreneurs from the Minority
Communities residing in the minority concentrated districts of the country.
In terms of recommendations of the Prime Minister’s Task Force on MSMEs

banks should open more MSE focused branch offices at different MSE clusters
which can also act as Counselling Centres for MSEs. Each lead bank of a district
may adopt at least one MSE cluster.
7. Delayed Payment
In the Micro, Small and Medium Enterprises Development (MSMED), Act 2006,
the provisions of the Interest on Delayed Payment Act, 1998 to Small Scale and
Ancillary Industrial Undertakings, have been strengthened as under:
(i) The buyer has to make payment to the supplier on or before the date
agreed upon between him and the supplier in writing or, in case of no
agreement, before the appointed day. The period agreed upon between the
supplier and the buyer shall not exceed forty five days from the date of
acceptance or the day of deemed acceptance.
(ii) In case the buyer fails to make payment of the amount to the supplier, he
shall be liable to pay compound interest with monthly rests to the supplier on
the amount from the appointed day or, on the date agreed on, at three times
of the Bank Rate notified by Reserve Bank.
(iii) For any goods supplied or services rendered by the supplier, the buyer shall
be liable to pay the interest as advised at (ii) above.
(iv) In case of dispute with regard to any amount due, a reference shall be
made to the Micro and Small Enterprises Facilitation Council, constituted by
the respective State Government.
Further, banks are advised to fix sub-limits within the overall working capital
limits to the large borrowers specifically for meeting the payment obligation in
respect of purchases from MSMEs.
DEVELOPMENT AND ADMINISTRATION OF MSMEs
The administration of the MSME sector falls under the Ministry of Micro, Small
and Medium Enterprises of the Government of India. Implementation of
policies and various programmes schemes for providing infrastructure and
support services to MSME's is undertaken through its attached office, namely
the Office of the Development Commissioner, National Small Industries
Corporation (NSIC), Khadi and Village Industries Commission (KVIC); the Coir
Board, and three training institutes viz., National Institute for Entrepreneurship
and Small Business Development (NIESBUD), NOIDA, National Institute for
Micro, Small and Medium Enterprises (NI-MSME), Hyderabad, Indian Institute
of Entrepreneurship (lIE), Guwahati and Mahatma Gandhi Institute for Rural
Industrialization (MGIRI), Wardha a society registered under Societies
Registration Act, 1860.

Office of the Development Commissioner (MSME) assists the Ministry in
formulating, co-ordinating, implementing and monitoring different policies and
programmes for the promotion and development of MSMEs in the country. In
also provides a comprehensive range of common facilities, technology support
services, marketing assistance.
The Khadi & Village Industries Commission (KVIC), established under the Khadi
and Village Industries Commission Act, 1956, is a statutory organization
engaged in promoting and developing khadi and village industries for providing
employment opportunities in rural areas, thereby strengthening the rural
economy.
The Coir Board is a statutory body established under the Coir Board Industry
Act, 1953 for promoting overall development of the coir industry and
improving the living conditions of the workers engaged in this traditional
industry.
The National Board for Micro, Small and Medium Enterprises (NBMSME) was
established by the Government under the Micro, Small and Medium
Enterprises Development Act, 2006 and Rules made thereunder. It examines
the factors affecting promotion and development of MSME, reviews existing
policies and programmes and make recommendations to the Government in
formulating the policies and programmes for the growth of MSME.
The Ministry has two divisions called Small & Medium Enterprises (SME)
Division and Agro & Rural Industry (ARI) Division. The SME Division is allocated
the work, inter- alia, of administration, vigilance and administrative supervision
of the National Small Industries Corporation (NSIC) Ltd., a public sector
enterprise and the three autonomous national level entrepreneurship
development/training originations and is also responsible for implementation
of the schemes relating to Performance and Credit Rating and Assistance to
Training Institution, among others. The ARI Division looks after the
administration of two statutory bodies viz. the Khadi and Village Industries
Commission (KVIC), Coir Board and a newly created organization called
Mahatma Gandhi Institute for Rural Industrialization (MGIRI). It also supervises
the implementation of the Prime Minister's Employment Generation
Programme (PMEGP).

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is
the main legislation governing MSMEs. The Coir Industry Act, 1953 and the
Khadi& Village Industries Commission Act, 1956 are the main legislations
governing Coir MSMEs and Khadi MSMEs respectively. Various categories of
laws are applicable to the MSME sector viz., Fiscal Laws; Foreign Exchange
Laws; Foreign Trade Laws; Labour & Industrial Laws; Environmental and Safety
Laws; Intellectual Property Laws; Competition Law; Banking & Financial
Institutions Laws; Industry Specific Laws etc.
Chapter 9
APPLICABILITY OF VARIOUS LAWS TO MICRO, SMALL AND MEDIUM
ENTERPRISES
The Following categories of Laws amongst others are applicable to MSME
sector
o Fiscal Laws
o Foreign Exchange Laws
o Foreign Trade Laws
o Labour & Industrial Laws
o Environmental and Safety Laws
o Laws applicable to various forms of Business organisation
o Intellectual Property Laws
o Competition Law
o Banking & Financial Institutions Laws
o Industry Specific Laws
A representative list of Acts applicable to Micro, Small Scale and Medium

Industries:
I. Registration related Laws and laws relating to formation of business
enterprise

• The Micro, Small and Medium Enterprises Development (MSMED) Act,
2006
• The Industries (Development and Regulation) Act, 1951
• The Companies Act, 2013
• The Indian Partnership Act, 1932
• The Multi-State Co-operative Societies Act, 2002 and respective State
Co-operative Acts
• The Limited Liability Partnerships Act 2008
• The Indian Trusts Act,1882
II. Labour related Laws
• The Employees State Insurance Act, 1948

• The Employees’ Provident Funds and Miscellaneous Provisions Act,1952
• The Child and Adolescent Labour (Prohibition and Regulation) Act, 1986
• The Contract Labour (Regulation and Abolition) Act, 1970
• The Equal Remuneration Act, 1976
• The Industrial Disputes Act, 1947
• The Maternity Benefit Act, 1961
• The Minimum Wages Act, 1948
• The Payment of Bonus Act, 1965
• The Payment of Gratuity Act, 1972
• The Payment of Wages Act, 1936
• The Employers’ Liability Act, 1938
• The Factories Act, 1948
• The Plantations Labour Act, 1951
• The Trade Unions Act, 1926

• The Employee’s Compensation Act, 1923
III. Environment related Laws
• The Environment (Protection) Act, 1986

• The Public Liability Insurance Act, 1991
• The Biological Diversity Act, 2002
• The Water (Prevention and Control of Pollution) Act, 1974
• The Air (Prevention and Control of Pollution) Act, 1981
• The Atomic Energy Act, 1962
• The Forest Conservation Act 1980
• The Indian Forest Act, 1927
• The Wildlife Protection Act, 1972
IV. Tax related Laws
• The Income Tax Act, 1961

• The Goods and Services Tax Act 2017
V. Laws related to contract and transfer of property and other laws
• The Transfer of Property Act, 1882

• The Indian Contract Act, 1872
• The Registration Act, 1908
• The Indian Stamp Act, 1899
• The Powers of Attorney Act, 1882

• The Architects Act 1972
• The Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013
VI. Laws related to Product & Process
• The Bureau of Indian Standards Act 2016

• The Drugs and Cosmetics Act, 1940
• The Pharmacy Act, 1948
• The Legal Metrology Act 2009
• The Insecticides Act, 1968
• The Prevention of Food Adulteration Act, 1954
• The Food Safety and Standards Act, 2006
• The Trade Marks Act, 1999
• The Geographical Indications of Goods (Registration and Protection) Act,
1999
• The Designs Act, 2000
• The Patents Act, 1970
• The Copyrights Act, 1957
• The Protection of Plant varieties and Farmers Rights Act, 2001
VII. Laws relating to Consumer protection and Competition
• The Consumer Protection Act, 1986

• The Competition Act, 2002
PROGRAMMES AND SCHEMES FOR MSME SECTOR

The Ministry of MSME runs numerous schemes targeted at
a. providing credit and financial assistance,
b. skill development training,
c. infrastructure development,
d. marketing assistance,
e. technological and quality up-gradation and
f. Other Services for the MSMEs.
The implementations of schemes are done at various levels:
1. Schemes implemented directly by the Ministry of MSME

2. Schemes implemented through National Small Industries Corporation
(NSIC)
3. Schemes implemented through Khadi & Village Industries Commission
(KVIC)
4. Schemes implemented through Coir Board
5. Schemes implemented by the Office of the DC(MSME)
Some of the major Schemes of the Ministry of MSME:

• Prime Minister’s Employment Generation Programme (PMEGP)
• Credit Linked Capital Subsidy Scheme (CLCSS)
• Credit Guarantee Trust Fund For MSEs (CGTMSE) - Provision of collateral
free credit for MSMEs
• A Scheme for Promotion of Innovation, Rural Industry &
Entrepreneurship (ASPIRE)
• Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

• Scheme for Micro & Small Enterprises Cluster Development Programme
(MSE-CDP)
• Scheme for providing financial assistance to Khadi institutions under
MPDA
• Zero Defect Zero Effect (ZED) Certification (Financial Support to MSMEs
in ZED certification)
• National Scheduled Caste and Scheduled Tribe Hub
• Scheme for Promotion of MSMEs in N.E. Region and Sikkim
• MSME Sambandh
• MSME Sampark
• International Cooperation
• Information Technology Support for MSME ( https://msme.gov.in/it-
initiative)
Schemes implemented by the Coir Board
• Coir Udyami Yojana

• Coir Vikas Yojana
• Mahila Coir Yojana
Major Schemes being implemented by KVIC

• Workshed Scheme for Khadi Artisans
• Strengthening Infrastructure of Existing Weak Khadi Institutions and
Assistance for Marketing Infrastructure
• Khadi Reform and Develoment Programme (KRDP)
• Interest Subsidy Eligibility Certificate (ISEC) Scheme
• Market Promotion and Development Assistance Scheme (MPDA)
• Aam Admi Bima Yojana

International Co-operation
Government of India enters into Agreements and Memorandum of
Understanding (MoUs) with various countries for promoting cooperation in the
field of MSMEs in the broad areas of capacity building, industrial surveys and
feasibility studies, enterprise to enterprise collaboration, participation in
exhibitions and trade fairs, exchanging business missions, technology transfer
etc.
The Ministry of MSME has so far entered into 19 long term agreements,
Memorandum of Understanding/Joint Action Plan for cooperation in MSME
sector with foreign countries. During 2014-2018, the Ministry has signed two
MoUs at Government to Government level with Sweden (2015) and United
Arab Emirates (2017).
In addition to the above, National Small Industries Corporation (NSIC) has also
signed MoUs during 2014 to 2018 with counterpart organizations from
Botswana, South Africa, Tanzania, Malaysia, South Korea for cooperation in
MSME sector. NSIC has also established Vocational Training Centres/Rapid
Incubation Centres under India Africa Forum Summit (IAFS-I) in seven countries
namely: Burundi, Burkina Faso, Egypt, Ethiopia, Rwanda, Gambia and
Zimbabwe.
Chapter 10 Subsidy Schemes for MSMEs by the Government of India

Subsidy
Since ancient times, kings often granted exemptions and subsides on trade and
offered land grants. Manu smriti mentions of the grants and exemptions as a
duty of a king to be given to his fellow citizens. Land grant such as
Brahmadeya, Devadana and Agrahara were in practice. Land grants to religious
institutions were called Brahmadeya, (i.e. donated to Brahmins) Devadana

(donated to Gods) and Agrahara (Settlement – of priests) These lands donated
to the temples and monasteries apart from being used as normal tenancy also
carried a right vested with the temple authorities to call for unpaid labour
(called Vishti) as a religious service to the temple from the tillers on the
donated land. Arthashastra by Kautilya also mentions about such tax
exemptions and other such policies.
Subsidies and countervailing measures by WTO
The World Trade Organization (WTO) is the only global international
organization dealing with the rules of trade between nations. The WTO
officially commenced on 1 January 1995 under the Marrakesh Agreement,
signed by 123 nations on 15 April 1994, replacing the General Agreement on
Tariffs and Trade (GATT), which commenced in 1948. It is the largest
international economic organization in the world.
The Agreement on Subsidies and Countervailing Measures (“ASCM” or
“Agreement”) interprets and expands on the subsidies and countervailing duty
portions of Article VI and Article XVI of the General Agreement on Tariffs and
Trade 1994 (“GATT 1994”). It came into force from 1995.
The ASCM covers two different topics Subsidies and Countervailing. Subsidies
are the multilateral disciplines regulated by SCM Agreement of WTO whereas
countervailing measures are the kind of remedy for damage caused by subsidy.
One nation may impose countervailing duties on that member who tries to
affect the importer’s country market by the means of providing subsidies to its
domestic market. The action of investigation can be carried by the victim
country and can raise a complaint to WTO Dispute Resolution Body (DSB) with
their investigation reports either to warn or impose countervailing duties on
the accused nation.
Structure of ASCM:
The ASCM is divided into 11 parts.
• Part I: Like most of the structures Part- I of this agreement also contains
definitions and certain other aspects. Part I of these agreements specifically
contains the definitions of Subsidies, the definition of specificity and speaks
about the extent of application of subsidies which specifically deals with an
enterprise or industry or group of industries and other such enterprises.

• Part II & Part III: This part of this agreement divides all the specific
subside into two different categories that are prohibited & actionable
subsidies. Both the parts of these agreements also deal with the effects of
these subsidies, remedy and a DSB authority to grant a remedy for violation of
this part of the agreement. Conclusively we may assume that this part of the
agreement has rules and regulations for different aspects.
• Part V: This part of the agreement deals with the procedural
requirements, rules etc. for application or executing Countervailing measures.
It also contains various topics such as application of article VI of GATT 1994,
the procedure of investigation & evidence of the event, consultation &
approaching DSBs etc.
• Part VI & Part VII: It includes institution such as committee on subsidies
& countervailing measures, subsidiary bodies, notification & surveillance by
those regulatory bodies for implementing SCM Agreement.
• Part VIII: This part deals with rules and regulations related to special
treatments to different kinds of countries like developed, under-developed,
developing, LDC’s etc.
• Part X & Part XI: Both these parts only deal with the principles of DSB
and final provisions.
Subsidy
Article 1 (Part I) of the SCM Agreement defines Subsidies as-
“1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if:
(a)(1) there is a financial contribution by a government or any public body
within the territory of a Member (referred to in this Agreement as
“government”), i.e. where:
(i) a government practice involves a direct transfer of funds (e.g. grants,
loans, and equity infusion), potential direct transfers of funds or liabilities (e.g.
loan guarantees);
(ii) government revenue that is otherwise due is foregone or not collected
(e.g. fiscal incentives such as tax credits)
(iii) a government provides goods or services other than general
infrastructure, or purchases goods;

(iv) a government makes payments to a funding mechanism, or entrusts or
directs a private body to carry out one or more of the type of functions
illustrated in (i) to (iii) above which would normally be vested in the
government and the practice, in no real sense, differs from practices normally
followed by governments;
or
(a)(2) there is any form of income or price support in the sense of Article XVI of
GATT 1994;
and
(b) a benefit is thereby conferred.”
Thus, in order for a subsidy to exist, there must be a financial contribution by a
government and a benefit conferred thereby. The application of this
agreement requires financial contributions such as loan, financial incentives,
special grants etc., and explains that any financial contribution even from the
sub-governments is considered as subsidies if they raise any benefit to the
recipient.
Article 2 of the SCM Agreement explains different types of specificity which are
as follows:
There are four types of “specificity” within the meaning of the ASCM
Enterprise-specificity: A government targets a particular company or
companies for subsidization;
Industry-specificity: A government targets a particular sector or sectors for
subsidization.
Regional specificity: A government targets producers in specified parts of its
territory for subsidization.
Prohibited subsidies: A government targets export goods or goods using
domestic inputs for subsidization.
Categories of Subsidies
ASCM mentions two types of prohibited subsidies:
“Article 3: Prohibition

3.1 Except as provided in the Agreement on Agriculture, the following
subsidies, within the meaning of Article 1, shall be prohibited:
(a) subsidies contingent, in law or in fact, whether solely or as one of several
other conditions, upon export performance, including those illustrated in
Annex I;
(b) subsidies contingent, whether solely or as one of several other conditions,
upon the use of domestic over imported goods.”
The SCM Agreement not only has the dos and don’ts rather it also comes with
sanction with respect to a violation of rules laid down in the SCM Agreements
which are dealt with DSB of WTO.
Actionable Subsidies– The SCM Agreement does not prohibits any nations from
taking actions on actionable subsidies rather they can be restricted and are
subjected only when any nations bring an action in terms of challenging either
through DSB or through Countervailing Duties. The actionable subsidy has
three adverse effects on the member nation which are: -
• They cause injury to the domestic market of the member nations.
• Serious Prejudice to the interest of other members- It means when the
government is helping and giving subsidies more than 5% to cover any
operating loss of any industry or sector by the process of directly forgiving
them from any government debts. The effects of granting such subsidies cause
displacement of other net exporter countries to the importing country of Like
Products.
• Nullification or Impairment- it is a process of damaging the importer
country’s benefits and expectations from other member nations of WTO
through another country’s or third country’s change in its trade regime not
according to the GATT/ WTO Agreements obligation.
Non- Actionable Subsidies – It is a kind of subsidy which is neither prohibited
nor restricted by GATT/ WTO and does not permit any of the member nations
to impose countervailing duties against them. It is observed that most of the
subsidies are either restricted or prohibited by the GATT/ WTO and whosoever
overrule these guidelines agreed in the agreement then they are subjected to
countervailing measures by other member nations especially by the affected
nations. However, Non- actionable subsidies are not subject to these tariffs

(Countervailing duties) like environmental subsidies, agricultural subsidies,
scientific subsidies etc.
CVDs
CVDs are the counterbalance tariff to maintain a balance between domestic
producers and other foreign producers of the like product because the
subsidies producers can afford to sell it at a relatively lower price than that of
other producers because all the producers don’t get the same or even such
types of subsidies by their government or any public body. If these are left
unchecked, then there could be a great possibility that these subsidized
imports may severely affect any importer country like deflation/ inflation, loss
of employment etc., that’s the only reason why GATT/ WTO has reflected the
concept of CVDs in the agreement and mentioned that these export subsidies
are unfair trade practice and must be restricted or prohibited.
Part V of the SCM Agreement has mentioned a substantive rule to check if the
imported goods can be subjected in imposing CVDs, the rules contain three
essentials to establish the objective of imposing CVDs on imported goods
which are as follows: -
• To impose CVDs on any imported goods the importer country has to
determine whether there are any subsidies provided to the producers in their
country by their government or any such public body.
• When these subsidize goods are imported in the country, they must
create some threat to their domestic market.
• There must be a direct causal link between subsidized goods and a
threat to the domestic market.
Subsidies in India Under MSME schemes by central Government.
Development of Khadi, Village and Coir Industries
Market Promotion & Development Scheme (MPDA)

The Market Promotion and Development Assistance Scheme (MPDA) has been
launched as a unified scheme by merging different schemes implemented by
the Khadi sector including publicity, marketing, market promotion and
marketing development assistance. Further, grant/subsidy will also be
available for construction of Khadi plazas. The overall objective of the scheme
is to ensure increased earnings for artisans.
The Khadi institutions, having valid Khadi certificate and categorized as A+, A, B
and C only are eligible to avail MMDA grant from KVIC.
The total amount of MMDA on production will be claimed by the producing
Institution from the KVIC and will be distributed amongst the stakeholders viz.,
spinners and weavers, producing Institutions and selling Institutions in the
ratio 40%, 20% and 40% respectively. Producing Institutions shall submit
quarterly claim of MMDA based on the actual production achieved during the
preceding quarter of the financial year. The difference, if any, would be
adjusted in the last quarter of the financial year on the basis of accounts
audited by a Chartered Accountant. The MMDA, preferably, shall be
reimbursed electronically by the State/Divisional office of the KVIC on a
quarterly basis.
Revamped Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

The Scheme would cover three types of interventions namely:
'Soft Interventions', 'Hard Interventions' and 'Thematic Interventions'. The
project outlay for various clusters is as follows: Heritage cluster (1000-2500
artisans *): ₹ 8 cr; Major cluster (500-1000 artisans *): ₹ 3 cr; Mini cluster (Up
to 500 artisans*): ₹ 1.5 cr.
*For NER/ J&k and Hill States, there will be 50% reduction in the number of
artisans per cluster.
Soft Interventions: A maximum ceiling of ₹ 25.00 lakhs (100% scheme funding)
Hard Interventions: As per project requirement (75% scheme funding)
Cost of Technical Agency is calculated at 8 % of Soft and Hard Interventions
(100% scheme funding). Cost of Implementing Agency/ Cluster Executive is
fixed at a ceiling of ₹ 20.00 lakhs (100% scheme funding).

Coir Vikas Yojana (CVY)
The interventions under CVY Scheme envisage a wide range of activities like
skill development of artisans, mahila coir yojana, for modernization,
upgradation and/or establishing a new unit under Coir Industry Technology
Upgradation Scheme (CITUS), promoting the domestic as well as export
market, providing of trade and industry related functional support services,
and welfare of coir workers.
Coir Industry Technology Upgradation Scheme (CITUS)

A new component namely “Coir Industry Technology Upgradation Scheme
(CITUS)” has been introduced replacing the earlier component i.e.
“Development of Production Infrastructure” of Coir Vikas Yojana for giving
away assistance to the entrepreneurs for procurement of eligible Plant &
Machinery for modernization, upgradation and/or establishing a new unit on
making application for the purpose to go for larger investment in the coir
sector. The financial assistance shall be 25% of the cost of admissible items of
Plant and Machinery procured by the Coir units. The upper ceiling of the
financial assistance will be Rs.2.50 crores per coir unit/ project.
The financial assistance shall be 25% of the cost of admissible items of Plant
and Machinery procured by the Coir units for modernization, upgradation
and/or establishing a new unit. The upper ceiling of the financial assistance will
be Rs.2.50 crores per coir unit/ project.
All coir production/processing units newly established will be eligible to apply
for assistance. All coir production/ processing units registered with Coir Board
under Coir Industry (Registration) Rules, 2008 and having Udyog Aadhar are
eligible to apply for financial assistance for modernisation under this scheme.
Science and Technology Scheme (S&T) for Coir

The component envisages extension of the outcomes of research at the
laboratory level for application at the field level and extension of testing and
service facility. The Research and Development activities of the Board are
carried out through the twin research institutes: the Central Coir Research
Institute, Kalavoor and Central Institute of Coir Technology, Bangalore.

The Research and Development activities of the Board are carried out through
the twin research institutes: the Central Coir Research Institute, Kalavoor and
Central Institute of Coir Technology, Bangalore. These institutes are eligible for
use of funds released under Science & Technology.
The research outcomes are beneficial to the coir industry and trade in India
and abroad.
Skill Upgradation & Mahila Coir Yojana (MCY)

Skill Upgradation & Mahila Coir Yojana (MCY) is one of the key components
under the Scheme Coir Vikas Yojana. Coir Board imparts training in processing
of coir and value addition to potential workers, coir artisans/entrepreneurs
through its training centers, i.e., National Coir Training and Design Centre
(NCT&DC), Kalavoor, Alleppey and Research-cum-Extension Centre, Thanjavur,
and Field Training Centres of Regional Officers/ Sub Regional Officers of the
Board located at various parts of the country. The Mahila Coir Yojana (MCY) is
intended to provide self-employment opportunities to rural women artisans in
regions processing coconut husk.
The stipend per trainee for the skill development programs will be limited to
Rs.3,000/- per month and in the case of training programs of less than one-
month duration, stipend will be disbursed on prorata basis. The honorarium
for the trainer will be limited to Rs. 15.000/- per month. An amount of Rs.400/-
per head per month will be provided as financial assistance to the training
sponsoring agency to meet the operational cost of the training for raw
material, power charges, other incidentals etc
Coir artisans and workers engaged in the coir industry may avail of the financial
assistance for procurement of machines/equipment’s under PMEGP scheme
for setting up of new coir units for which the maximum project cost is Rs.25
lakhs.
Domestic Market Promotion Scheme (DMP)

In pursuance of Section 10(1) of Coir Industry Act 1953, Coir Board has been
taking various measures for popularizing coir and coir products and expanding

the domestic market. Establishment and maintenance of Showroom and Sales
depots, participation in fairs / exhibitions organized by other agencies and
organizing exclusive fairs for Coir and coir goods within the country, providing
Market Development Assistance to State supported organizations for enlarging
marketing network, organizing generic publicity through press, television,
website and radio and erection of hoardings, fixing of quality standards,
inspection and a certification of quality of coir goods are some of the measures
taken by Coir Board towards achieving the objective. The activities undertaken
by the Board for the purpose are publicity, participation in domestic
exhibitions, Extension of performance linked Market Development Assistance,
construction/renovation/interior decoration of new and existing
showrooms/market development centers of the Board and field
demonstration/displays.
The component proposes to provide financial assistance to the Apex Co-
operative Societies, Central Co-op. Societies, Primary Co-operative Societies,
Public Sector Enterprises, franchisees appointed by Coir Board in the coir
industry and the Showroom and Sales Depots / Hindustan Coir of the Coir
Board. The MDA is granted at the rate of 10% of their average annual sales
turnover of coir products including coir fibre, coir pith, coir pith block, coir pith
products, coir pith organic manure, coir yarn, mats, matting, rubberized coir
goods, coir geotextile, garden articles, coir bags, coir umbrella, coir chapel, coir
ornaments, coir handicrafts, coir wood and other innovative products during
the preceding three financial years, subject to the condition that 5% increase
should have been achieved over the immediate previous year. This Assistance
will be shared on 1:1 basis between the Central Government and the
concerned State/Union Territory Government. The disbursement of Central
share of MDA will be subject to the budgetary outlay available with the Coir
Board under the relevant schemes.
Apex Co-operative Societies, Central Co-op. Societies, Primary Co-operative
Societies, Public Sector Enterprises, franchisees appointed by Coir Board in the
coir industry and the Showroom and Sales Depots / Hindustan Coir of the Coir
Board can apply for this scheme.
Trade and Industry Related Functional Support Services (TIRFSS)

Collection of statistical data pertaining to various aspects like production,
productivity, labour infrastructure, raw material, marketing etc. is required for
providing feedback to the trade and industry and for evolving appropriate
policy for the overall organized and systematic development of the coir
industry. Introduction and maintenance of an updated and effective IT related
management information system is an in escapable requirement for the
development of this highly competitive sector.
The component provides accessible export data such as name of importing
countries, value and quantum of export to each country. Survey & Study
reports of various sectors are available for the Coir Industry. HRD Program can
be utilised by coir workers for the betterment of their knowledge in tune with
modern technology.
The Board's officials, stake holders of the industry, manufacturers, coir workers
and major market player can avail of HRD program organized under the
scheme.
Welfare Measures (Pradhan Mantri Suraksha Bima Yojana (PMSBY))

Coir Board had been implementing Coir Board Coir Workers Group Personal
Accident Insurance Scheme for the benefit of the coir workers in the country.
The scheme started from the year 1998 was aimed at providing insurance
coverage against accidental death, permanent total disability and permanent
partial disability to the coir workers. The coir workers aged 18 and above
engaged in the industry were covered under the scheme. The insurance
coverage was given on the basis of a comprehensive policy covering 4 lakh coir
workers without naming each and every worker.
The scheme titled "Coir Board Coir Workers Group Personal Accident Insurance
Scheme" which was in operation up to 31.05.2016 has been converged to
"Pradhan Mantri Suraksha Bima Yojana"(PMSBY) with effect from 01.06.2016.
The scheme is for a period of one-year cover, renewable from year to year.
Accident insurance coverage is given for death or disability cover for death or
disability on account of accident to coir workers.
The coir workers to be enrolled through Coir Board may be self-employed,
employed under the SFURTI coir clusters, coir workers engaged in the units

already registered with the Board, coir workers coming under the fold of
Welfare Fund Board, PSUs, Corporations, Federations, Cooperative Societies,
etc.
Technology Upgradation and Quality Certification

Financial Support to MSMEs in ZED Certification Scheme
The objectives of the scheme include inculcating Zero Defect & Zero Effect
practices in manufacturing processes, ensure continuous improvement and
supporting the Make in India initiative.
The ZED Certification scheme is an extensive drive to create proper awareness
in MSMEs about ZED manufacturing and motivate them for assessment of their
enterprise for ZED and support them. After ZED assessment, MSMEs can
reduce wastages substantially, increase productivity, expand their market as
IOPs, become vendors to CPSUs, have more IPRs, develop new products and
processes etc.
The scheme envisages promotion of Zero Defect and Zero Effect (ZED)
manufacturing amongst MSMEs and ZED Assessment for their certification so
as to:
Develop an Ecosystem for Zero Defect Manufacturing in MSMEs.
Promote adaptation of Quality tools/systems and Energy Efficient
manufacturing.
Enable MSMEs for manufacturing of quality products.
Encourage MSMEs to constantly upgrade their quality standards in products
and processes.
Drive manufacturing with adoption of Zero-Defect production processes and
without impacting the environment.
Support ‘Make in India’ campaign.
Develop professionals in the area of ZED manufacturing and certification.

A Scheme for promoting Innovation, Rural Industry & Entrepreneurship
(ASPIRE)
The main objectives of the scheme are to:
(i) Create new jobs and reduce unemployment (ii) Promote entrepreneurship
culture in India (iii) Boost Grassroots economic development at district level
(iv) Facilitate innovative business solution for un-met social needs, and (v)
Promote innovation to further strengthen the competitiveness of the MSME
sector
NSIC/KVIC or Coir Board or any GoI or State Government agency to set up 80
Livelihood Business Incubators for the period 2014 to 2016. The objectives are:
Promotion of Innovation, Entrepreneurship and Agro-Industry organisation of
the M/o MSME, and one-time grant of 100% of cost of Plant & Machinery
other than the land and infrastructure, or an amount up to Rs 100 lakhs,
whichever is less is to be provided In case of incubation centres to be set up
under PPP mode with NSIC, KVIC or Coir Board or any other Institution/agency
of GoI/State Government, one- time grant of 50% of cost of Plant & Machinery,
other than the land and infrastructure, or Rs 50.00 lakhs, whichever is less is to
be provided.
Credit Linked Capital Subsidy for Technology Upgradation (CLCSS)

CLCSS provides 15% subsidy for additional investment up to ₹ 1 cr for
technology upgradation by MSEs. Technology upgradation would ordinarily
mean induction of state-of-the-art or near state-of-the- art technology. In the
varying mosaic of technology covering more than 7,500 products in the Indian
small scale sector,
List of technologies is available at http://www.dcmsme.gov.in
Units looking to replace existing equipment/technology with the same
equipment/technology will not qualify for subsidy under this scheme. Similarly,
units upgrading with used machinery would not be eligible under this scheme.
The revised scheme aims at facilitating technology upgradation by providing
15% up front capital subsidy to MSEs, including tiny, khadi, village and coir
industrial units, on institutional finance availed by them for induction of well
established and improved technologies in specified sub-sectors/products
approved under the scheme.
Design Clinic for Design Expertise to MSMEs

The scheme is for increasing competitiveness of MSMEs through adoption of
design and its learning. Funding support of (1) ₹60,000 per seminar and 75%
subject to a maximum of ₹3.75 lakhs per workshop, (2) To facilitate MSMEs to
develop new Design strategies and or design related products and services
through project interventions and consultancy.
Expert agencies (Industry Associations, Technical Institutions or other
appropriate bodies), for conducting seminars and workshops, MSMEs or
groups of MSMEs, Academic Institutes/ design companies/ design consultants,
etc., applying as co-applicants along with a designated MSME.
Expert agencies can directly apply to design clinic centres expressing intent to
conduct workshops and seminars. MSMEs can apply alone or along with a
design company or a design consultant/academic institute for design projects
by submission of a proposal to the Design Clinic Centre or through the internet
by making an online application.
Applicants can apply online at http://www.designclinicsmsme.org/or
download the form from http://www.dcmsme.gov.in/schemes.
Technology and Quality Upgradation Support to MSMEs

The scheme advocates the use of energy efficient technologies (EETs) in
manufacturing units so as to reduce the cost of production and adopt clean
development mechanism.
Nature of assistance Capacity building of MSME clusters for energy
efficiency/clean development and related technologies. Funding support of up
to 75% for awareness programs, subject to maximum of Rs 75,000 per
program;
Implementation of energy efficient technologies in MSME units 75% of actual
expenditure for cluster level energy audit and preparation of model DPR;

Setting up of Carbon Credit Aggregation Centres. 50% of actual expenditure
subject to maximum Rs 1.5 lakh per DPR towards preparation of subsequent
detailed project reports for individual MSMEs on EET projects;
Encouraging MSMEs to acquire product certification / licenses from National /
International bodies. 75% of the actual expenditure, subject to a maximum Rs
15;
25% of the project cost as subsidy by Government of India, balance amount to
be funded through loan from SIDBI/banks/ financial Institutions. MSMEs are
required to make the minimum contribution as required by the funding
agency;
75% subsidy towards licensing of products to national/ international standards;
ceiling Rs 1.5 lakh for obtaining product licensing/marking to National
standards and Rs 2 lakhs for International standards.
This scheme covers expert organisations like PCRA, BEE, TERI, IITs, NITs, etc.
State Govt. agencies like MITCON, GEDA, etc.
Cluster/industry-based associations of MSMEs
NGOs and Technical Institutions.
Entrepreneurial and Managerial Development of SMEs through Incubators

The objective of the scheme scheme is to provide early stage funding to
nurture innovative business ideas (new indigenous technology, processes,
products, procedures, etc.) that could be commercialised in a year. The
scheme provides financial assistance for setting up business incubators.
Funding support for setting up of ‘Business Incubators (BI)’: The cost may vary
from Rs 4 to 8 lakh for each incubatee/idea, subject to overall ceiling of Rs 62.5
lakh for each BI.
a) Upgradation of infrastructure Rs 2.50 lakh
b) Orientation/training Rs 1.28 lakh
c) Administrative expenses Rs 0.22 lakh
Total assistance per BI Rs 66.50 lakh

Any individual or MSME with innovative ideas ready for commercialisation can
apply to the host institution (e.g., IITs, NITs, technical colleges, research
institutes, etc.) in order to obtain fund support.
Marketing Promotion Schemes

International Cooperation Scheme
The scheme covers the following activities:
a) Visit of MSME delegations to other countries in international exhibitions/
trade fairs, conferences/ summits/workshops etc. for exploring new areas of
technology infusion/upgradation, joint ventures, improving market of MSMEs
products, etc.
b) Participation of MSME delegations in international exhibitions, trade fairs
and buyer-seller meets in foreign countries.
c) Holding international conferences/summits/workshops/seminars relating to
MSME sector to be organized in India by the Industry Associations/
Government organizations.
d) Holding/organising mega international exhibition or fair and international
conferences/seminars/workshops, Joint Committee Meetings/Joint Working
Group Meetings/Government to Government bilateral meetings with outer
countries in India by Ministry of MSME or organizations under it.
e) Sending a delegation of the Ministry of MSME to an International
Exhibition/Fairs/Conference in foreign countries.
IC Scheme provides financial assistance on reimbursement basis for airfare,
space rent, freight charges, advertisement & publicity charges and
entry/registration fee on reimbursement basis in case of participation in
international exhibitions/trade fairs.
Government Institutions and Registered Industry Associations associated with
promotion and development of MSME sector can apply for this scheme.
Marketing Assistance Scheme

The marketing assistance scheme provides assistance for the following
activities:
a) Organisation of exhibitions abroad and participation in international
exhibitions/ trade fairs
b) Co-sponsoring of exhibitions organised by other organisations/industry
associations/ agencies;
c) Organising buyer-seller meets, intensive campaigns and marketing
promotion activities.
(a).The maximum net budgetary support for participating in an international

exhibition/trade fair would normally be restricted to an overall ceiling of Rs. 30
lakh per event (Rs. 40 lakh for Latin American countries).
(b). The budget for organizing the Domestic Exhibitions/Trade Fair would
depend upon the various components of the expenditure, i.e. space rental
including construction and fabricating charges, theme pavilion, advertisement,
printing material, transportation etc. However, the budgetary support towards
net expenditure for organizing such exhibition/trade fair would normally be
restricted to a maximum amount of Rs. 45 lakh. The corresponding budgetary
limit for participation in an exhibition/trade fair shall be Rs. 15 lakh.
Financial assistance will be provided ranging from 25% to 95% of the Air-Fare
and space rent to entrepreneurs on the basis of size and type of the enterprise.

Financial assistance for co-sponsoring an event would be limited to 40% of the
net expenditure, subject to a maximum amount of 5 lakh.
MSMEs, Industry Associations and other organisations related to MSME sector
are eligible to apply.
Procurement and Marketing Support Scheme
The Procurement and Marketing support Scheme would cover the following
activities:
• To encourage Micro and Small Enterprises (MSEs) to develop domestic
markets and promotion of new market access initiatives.
• To facilitate market linkages for effective implementation of Public
Procurement Policy for MSEs Order of 2012.
• To educate MSMEs on various facets of business development.
• To create an overall awareness about trade fairs, latest market technique
and other such related topics etc.

Chapter 11
OPPORTUNITIES IN MSME SECTOR
The MSME sector is a dynamic and vibrant sector of the Indian economy. As
the economy is growing, it is undergoing important structural changes which
are making an impact on MSME sector too. This creates a requirement for a
virtual assistance professional – a single person or an association of persons –
who like an outsourced service provider, offers highly skilled assistance in the
requirements of the micro, small or medium enterprise, just like the
professional does for large organizations. Various areas can be tremendous
opportunity areas in the MSME sector.
Technology and Innovation

Entrepreneurship is driven by technology and innovation. Presently, the MSME
sector is associated, in public perception, with low quality standards. It is
envisioned that the MSME sector will be upgraded through modern and new
technologies to achieve global quality standards. Niche markets will be
identified and developed for MSME products, including khadi and coir
products. Technology will be the foremost factor for enhancing the global
competitiveness of Indian MSME Sector. There will be tremendous opportunity
in technology acquisition and support.
Skilled Manpower
India has a large capital of human resources. There is tremendous opportunity
in the MSME sector for skilled manpower. Skill development and training of
existing workers and entrepreneurs is necessary for enhancing managerial
capabilities, brand building capacity and developing new marketing channels.
Credit and Finance Availability

Credit availability in the MSME sector is a major cause of concern. Apart from
access to bank credit, alternate routes for equity funding through angel
funding, venture capital, private equity etc. as well as facilitating entry to
capital markets through Initial Public Offers (IPOs) and specialized exchanges

for SMEs is on the cards. The Government too proposes to attract investors to
the MSME sector by appropriate regulatory framework and other incentives.
Carbon Credits for MSMEs

Public awareness of the threat of climate change has risen sharply in the last
couple of years and an increasing number of businesses, organizations and
individuals are looking to minimize their impact on the climate. Reaping the
benefits of the new instruments like carbon credit, environment and ecological
balance have gained global significance. The MSME sector is required to be
empowered to face the future challenges.
The MSMEs can implement technological improvement programmes to avail
the benefits of carbon credits. However the MSMEs will need the help of
professionals in the field of carbon credits and environmental issues and
experts from Government sector to help them to get the benefit of carbon
credit.

Chapter 12
STARTUPS AND STARTUP ECO SYSTEM
The word startup is a noun and it means the action or process of setting
something in motion. The word startup as its use in business world was used
by the Forbes magazine in the year 1976.
A startup is a company or project initiated by an entrepreneur to seek,
effectively develop, and validate a scalable business model. While
entrepreneurship refers to all new businesses, including self-employment and
businesses that never intend to become registered, startups refer to the new
businesses that intend to grow large beyond the solo founder.
Difference between a new business/ Startup/any commercial activity
Any new idea that is conceived by a promoter which he wishes to take it for
commercially viable position is a new business. It is an idea which is born and
which is now commercially utilised to earn profits or income. In this sense any
new business or a commercial activity is a startup.
However, the term startup is associated with high risk and high profitability
with the ability to scale up in future. A startup usually has an intention to
register itself and intends to have a life beyond the life of its founder. The
novelty of the idea makes them risky enterprises with a potential to grow
rapidly.
Startup Eco system

An eco-system is defined as the community of various elements including living
and non-living elements that interact with each other in a specific
environment.
A startup ecosystem is formed by people, startups in their various stages and
various types of organizations in a location (physical or virtual), interacting as a
system to create and scale new startup companies. The startups in their
various stages also form a part of the ecosystem which grow and thrive by
interacting with other elements of the ecosystem. There is no limitation of
physical location and include virtual organisations as well. The organizations
which form a part of ecosystem include universities, funding organizations,
support organizations like incubators, accelerators, co-working spaces etc.,
research organizations, service provider organizations like legal, financial
services etc. and large corporations, Local Governments and Government
organizations such as Commerce / Industry / Trade departments. Different
organizations focus on specific parts of the ecosystem function of startups at
their specific development stage(s).
Business incubators are institutions that support entrepreneurs in developing
their businesses, especially in initial stages. These are organizations geared
towards speeding up the growth and success of start-ups and early stage
companies. Incubation is usually done by institutions which have experience in
the business and technology world.
Incubation support includes providing technological facilities and advices,
initial growth funds, network and linkages, co-working spaces, lab facilities,
mentoring and advisory support. They are often a good path to capital from
angel investors, government organizations, economic-development coalitions,
venture capitalists and other investors.
Most of the incubators have potential capital to invest in growth startups, or
have links to potential funding sources. They provide access to compliance
services from professionals such as accountants and lawyers; not to mention
the invaluable mentoring and networking support available at the incubation
centre, through the staff and other entrepreneurs at the incubator.
As early stage hand holders, incubators act as an integral part of the start-up
ecosystem. They act as a catalyst for both regional as well as national
economic development. There are different types of incubators: Academic
institutions; Non-profit development corporations; For-profit development
ventures; Venture capital firms, and combinations of the above.
Incubators vary in their strategies. Some are located in an actual physical space
meant to foster networking between incubate entrepreneurs and others in
entrepreneurial space. While others operate on a virtual basis. Incubators
sometimes call themselves accelerators instead, often when they are geared
towards jump-starting businesses that are more developed. Also, business
incubators differ from research and technology parks in their dedication
towards supporting start-ups and early-stage companies. Research and
technology parks tend to be large-scale projects that house organizations
ranging from government institutions, corporates, university labs to very small

companies. They seldom offer business assistance services, unlike business
incubators. Rather, it will be good to say that business assistance services are
the hallmark of business incubators.
A startup incubator is a collaborative program designed to help new startups
succeed. Incubators help entrepreneurs solve some of the problems commonly
associated with running a startup. the Most Common Startup Incubator
Services are
• Help with business basics
• Networking opportunities
• Marketing assistance
• High-speed Internet access
• Accounting/financial management assistance
• Access to bank loans, loan funds and guarantee programs
• Help with presentation skills
• Connections to higher education resources
• Connections to strategic partners
• Access to angel investors or venture capital
• Comprehensive business training programs
• Advisory boards and mentors
• Management team identification
• Help with business etiquette
• Technology commercialization assistance
• Help with regulatory compliance
• Intellectual property management and legal counsel
The sole purpose of a startup incubator is to help entrepreneurs grow their
business. Startup incubators are usually non-profit organizations, which are
usually run by both public and private entities. They may also be formed by
governments, industrialists and large businesses.
Accelerators

startup accelerators are organizations that help startups attain success. Startup
accelerators focus on providing startups with mentorship, advice, and
resources to help the startups succeed. Startup accelerators, are for a fixed
period and cohort-based programs. Which means that the programs are
focused at group of people and not individuals. The accelerators are either
privately or publicly funded and focus on a wide range of industries. Their
period culminates in a public pitch event or demo day
A seed investment in the startups is usually made, in exchange for equity. The
focus is on small teams, not on individual founders. Accelerators generally
consider that one person is insufficient to handle all the work associated with a
startup.
The startups must "graduate" by a given deadline, typically after 3 months.
During this time, they receive intensive mentoring and training, and they are
expected to iterate rapidly. Virtually all accelerators end their programs with a
"Demo Day", where the startups present to investors.
Startups are accepted and supported in cohort batches or classes.The peer
support and feedback that the classes provide is an important advantage. If the
accelerator doesn't offer a common workspace, the teams will meet
periodically.
The primary value to the entrepreneur is derived from the mentoring,
connections, and the recognition of being chosen to be a part of the
accelerator. The business model is based on generating venture style returns,
not rent, or fees for services.
Seed accelerators do not necessarily need to include a physical space, but
many do. The process that startups go through in the accelerator can be
separated into five distinct phases: awareness, application, program, demo
day, and post demo day

Setting up of business in India and choosing the right legal entity for your
business
A business is any activity which is undertaken with an aim to generate profits
in a legal way. A business may be started with a non-profit motive and hence
will not have any commercial angle to it. Here not for profit means not a
restriction with respect to earning profits, but with respect to not to
distribute the profits and use it for a larger good.
When any activity is started solely for earning profits, it becomes a
commercial activity. For example, a professional taking tuition to help
students pass their exam is a new activity, but starting a Tuition class is a
commercial activity.
One of the most important decisions an entrepreneur needs to take while
starting any business activity is to decide on the form of entity that the
business should take. This important because the form of entity defines the
process of registration of the business and its administration. It also defines
the laws that the business shall adhere to.
CHOOSING THE FORM OF LEGAL ENTITY
Legal Details Proprietorshi Partnershi Limited Private

p p Liability Limited
Company Company
(LLP)
Registration No formal Registratio Has to be Has to be
registration n is registered registered
required optional with the with the
Ministry of Ministry of
Corporate Corporate
Affairs under Affairs under
the LLP Act the
2008 Companies
Act 2013

Legal Status Not Not Is a separate Is a separate
recognised as recognised legal entity. legal entity.
a separate as a The The
entity and separate promoters of promoters of
promoter is entity and the LLP are the company
personally promoters not are not
responsible are personally personally
for all personally liable liable towards
liabilities responsibl towards the the company
e for all LLP
liabilities
Member Unlimited Unlimited Limited Limited
Liability liability liability liability to the Liability to the
extent of extent of
contribution share capital
towards to
the LLP
Number of Can only Minimum Minimum of Minimum of
Members have one of two two persons one person
Required person persons required to required to
required to start a LLP start a Private
start a Limited
Partnershi Company
p
Transferabilit Not Not Ownership Ownership
y transferable transferabl can be can be
e transferred transferred by
means of
share transfer
Taxation Taxed as Partnershi LLP profits Private
individual, p profits are taxed as Limited
based on are taxed per the slabs Company
total income as per the provided profits are
of proprietor slabs under Income taxed as per
provided Tax Act, 1961 the slabs

under plus provided
Income Tax surcharge under Income
Act, 1961 and cess as Tax Act, 1961
plus applicable plus surcharge
surcharge and cess as
and cess as applicable
applicable
Annual No No Must file Must file
Statutory requirement requireme Annual Annual
Meetings to file annual nt to file Statement of Statement of
report with annual Returns & Returns &
the Registrar report with Solvency and Solvency and
of the Annual Annual Return
Companies. Registrar Return with with the
Income tax to of the Registrar Registrar
be filed on Companies every year. every year.
the income of . Income Tax returns Tax returns
the tax to be must also be must also be
proprietorshi filed for filed annually filed annually
p the
partnershi
p
Existence or Proprietorshi Partnershi Existence not Existence not
Survivability p existence is p existence dependent dependent on
dependent is on partners. directors or
on proprietor dependent Can be shareholders.
on dissolved Can be
partners. voluntarily or dissolved
Can be by order of voluntarily or
dissolved the Company by Regulatory
at will or Law Board Authorities
upon on
the death
of
partner(s)
Foreign Foreigners Foreigners Foreigners Foreigners are

Ownership are not are not are allowed allowed to
allowed to be allowed to in invest invest
sole be part of with/without with/without
proprietors a the approval the approval
partnershi of the of RBI and
p Reserve Bank other
of India (RBI) applicable
and other permissions
applicable for the
permissions relevant
for the Government
relevant of India
Government authorities
of India depending on
authorities the category
depending on of business
the category they are
of business interested to
they are invest.
interested to
invest.
Chapter 13
Start-Up initiative
Startups are becoming very popular in India. In order to develop Indian
economy and attract talented entrepreneurs, the Government of India, has
started and promoted Startup India initiative to recognize and promote
startups.
The broad scope of Startup India’s programs is managed by a dedicated
Startup India Team, which reports to the Department for Industrial Policy and
Promotion (DPIIT). The 19-Point Action Plan envisages the following forms of
support for Startups, and more:
• Enhanced infrastructure including incubation centres
• Easier IPR facilitation, including easier patent filing

• A better regulatory environment including tax benefits, easier
compliance, improved of setting up a company, faster exit mechanisms and
more
• An economic stimulus in the form an INR 10,000 crore Fund of Funds
managed by SIDBI, with the goal of increasing funding opportunities
• This website, also known as the Startup India Portal www.startupindia.,
which offers a range of useful resources and a vast networking database for
entrepreneurs and other stakeholders in the Startup ecosystem-
• A toll-free helpline and quick email query resolution for startups The
Department for the Promotion of Industry and Internal Trade (DPIIT), which
comes under the Ministry of Industry and Commerce, has recognised over
27,916 startups, as of February 1, 2020.Wikipedia says it best with its opening
definition of startups “A startup company is an entrepreneurial venture
typically describing newly emerged, fast-growing business”….because fast
growing it is! By the time you are reading this, a zillion new startups would
have mushroomed or would be in the process of mushrooming somewhere.
Shopclues.com, Flipkart, Myntra (Now part of Flipkart), Team Indus, Instamojo,
OYO Rooms, Zoomcar, Foodys.in, CarlQ, LimeRoad, ShieldSquare, Grey Orange,
Edureka, redBus (taken over by ibibo group), Faircent.com, Bolt, EduKart….the
list of startups starting up in India and going on to become huge success stories
is endless. The underlying reason for success being the strengths these
Startups are creating in core areas.
Fast emerging as a business destination, India’s rankings in the field of business
and entrepreneurship is making it an attractive destination for startups:
 48nd Rank as per the INSEAD’s Global Innovation Index 2020
 68th Rank as per the GEN’s Global Entrepreneurship Index 2018
 77th Rank as per the World Bank’s Ease of Doing Business Report 2018
India has metamorphosized. Young educated professionals and uneducated

spirited individuals are together redefining the business landscape of India.
Business in India is no longer confined to mean patriarchal predominance in
specific sectors. It has now become a much larger word referring to infinite
possibilities.

Nowadays if you just have a workable business idea, determination and a gut
feeling about your proposal, then even if you don’t have the funds to begin a
venture – it is still possible to start a business in India and eventually make it
flourish. There are venture capitalists, angel investors, private equity firms etc.
all willing to place their money on your idea and make ‘it’ happen.
Therefore, technically a startup is a new venture starting with a very small
capital or with funds of angel investors.
With India’s growing economy and the ‘Startup India, Stand-up India’
programme announced by the Government, there are varied avenues which a
person can explore. Business has been created out of ideas as diverse as
specialized shoe washing services to custom-made image consultancy to high
net worth individuals.
START UP INDIA STAND UP INDIA INITIATIVE
The 'Start up India Stand up India' initiative was launched by the Government
of India on January 16, 2016. The initiative aims at fostering entrepreneurship
and promoting innovation by creating an ecosystem that is favourable for
growth of Start-ups. With a dedicated Start-up fund worth Rs. 10,000 crores
created for funding of Start-ups; the goal of the initiative is to make India a
nation of job creators instead of job seekers. In order to provide funding
support to Startups, a fund with an initial corpus of INR 2,500 crore and a total
corpus of INR 10,000 crore over a period 4 years (i.e. INR 2,500 crore per year)
had been set up. The Fund is in the nature of Fund of Funds, which means that
it does not invest directly into Startups, but shall participate in the capital of
Securities and Exchange Board of India (SEBI) registered Venture Funds.
A slew of incentives and schemes were put in place for start-up entities,
however there are some hurdles along the way that a startup must leap over
to take advantage of these benefits. A few of these incentives and schemes
include:
 A dedicated Mobile App, Portal and Start Up India Hub
 Startups shall be allowed to self-certify compliance (through the Startup
mobile app) under 6 labour laws and startups falling in the specified
category will not require environment clearance under 3 environment
acts

 Intellectual Property Protection through fast-tracking of Startup patent
applications, panel of facilitators to assist in filing of IP applications
 Relaxed norms of Public Procurement
 Faster Exit process for Start-Ups
 Taxation Benefits - income tax exemption for 3 years, tax exemption on
capital gains and tax exemption on investments above fair market value.
 Credit Guarantee Fund for Startups
 Bio-incubators
 Seed Fund and Equity Funding
 7 new Research Parks,
 Atal Innovation Mission (AIM) with Self-Employment and Talent
Utilization (SETU) Program,
 Innovation Centres at National Institutes
 Startup Fests at national and international level
 Annual Incubator Grand Challenge
Chapter 14
STARTUP under the Ministry of Commerce and industry (Department for
Promotion of Industry and Internal Trade)
The Ministry of Commerce and industry (Department for Promotion of Industry
and Internal Trade) issued a notification on the 19th February, 2019 G.S.R.
127(E). This notification superseded the Gazette Notification No. G.S.R. 364(E)
dated April 11, 2018 as modified vide Gazette Notification No. G.S.R. 34 (E)
dated January 16, 2019. The Notification defines the term startup as:
An entity shall be considered as a Startup:

i. Up to a period of ten years from the date of incorporation/ registration, if it
is
incorporated as a private limited company (as defined in the Companies Act,
2013) or registered as a partnership firm (registered under section 59 of the
Indian Partnership Act, 1932) or a Limited Liability Partnership (under the
Limited Liability Partnership Act, 2008) in India.
ii. Turnover of the entity for any of the financial years since incorporation/
registration has not exceeded one hundred crore rupees.
iii. Entity is working towards innovation, development or improvement of
products or processes or services, or if it is a scalable business model with a
high potential of employment generation or wealth creation.
Provided that an entity formed by splitting up or reconstruction of an existing
business shall not be considered a ‘Startup’.
Explanation: An entity shall cease to be a Startup on completion of ten years
from the date of its incorporation/registration or if its turnover for any
previous year exceeds one hundred crore rupees.
Recognition of Startups
Under the Startup India Action Plan, startups that meet the definition as
prescribed under G.S.R. notification 127 (E) are eligible to apply for recognition
under the program.
Eligibility Criteria for Startup Recognition as given in the notification issued on
19th February 2020 are:
 The Startup should be incorporated as a private limited company or
registered as a partnership firm or a limited liability partnership
 Turnover should be less than INR 100 Crores in any of the previous
financial years
 An entity shall be considered as a startup up to 10 years from the date of
its incorporation
 The Startup should be working towards innovation/ improvement of
existing products, services and processes and should have the potential
to generate employment/ create wealth. An entity formed by splitting
up or reconstruction of an existing business shall not be considered a

"Startup"
Entity
Entities eligible as Start Up

 A private limited company (as defined in section 2(68) of the Companies
Act, 2013)
 A one-person company, being a private limited company is entitled to be
recognized as a 'startup'
 A registered partnership firm (registered under section 59 of the Indian
Partnership Act, 1932)
 A limited liability partnership (under the Limited Liability Partnership
Act, 2008)
Ineligible Entities
 A proprietorship firm
 A public limited company
 Entity formed by splitting up or reconstruction of a business already in
existence.
An entity shall be considered a “Startup” –

 Up to 10 years from the date of its incorporation/ registration, and
 If its turnover for any of the financial years has not exceeded INR
100crore, and
 It is working towards innovation, development, deployment or
commercialization of new products, processes or services driven by
technology or intellectual property.
Turnover
Turnover, shall be as defined under section 2(91) of the Companies Act, 2013
which means “the aggregate value of the realisation of amount made from the
sale, supply or distribution of goods or on account of services rendered, or
both, by the company during a financial year.”

Business Covered
An entity is considered to be working towards innovation, development,
deployment or commercialization of new products, processes or services
driven by technology or intellectual property if it aims to develop and
commercialize:
a. A new product or service or process, or
b. A significantly improved existing product or service or process, that will
create or add value for customers or workflow.
However, the following products/services/processes will not be covered in

Start-up initiative:
a. developing products or services or processes which do not have potential for
commercialization, or
b. developing undifferentiated products or services or processes, or
c. developing products or services or processes with no or limited incremental
value for customers or workflow
Recognition
A startup may apply to the DPIIT to get a recognition as “Startup entity which
fulfils all the criteria as a startup shall be as under: —
(i) A Startup can make an online application over the mobile app or portal set
up by the DPIIT.
(ii) The application should be accompanied by—
(a) a copy of Certificate of Incorporation or Registration, as the case may be,
and
(b) a write-up about the nature of business highlighting how it is working
towards
innovation, development or improvement of products or processes or services,
or its scalability in terms of employment generation or wealth creation.
The DPIIT may, call for such documents or information and making such
enquires, as it may deem fit. After obtaining all the information it may either

(a) recognise the eligible entity as Startup; or
(b) reject the application by providing reasons.
Not only new companies, even an existing entity that meets the criteria as
indicated above, can register itself as a “Startup” on the Startup India Portal
and Mobile App and get itself recognized for various benefits.
Benefits of being a “Recognised Startup”

There are various benefits for a startup recognised by the DPIIT
1.Self Certification
Self-certification resembles reducing the regulatory burden on the startups to
allow them to concentrate on their core business and also to keep their
compliance costs low.
Simple online procedure is provided for the startups to certify themselves for
the compliance of 6 Labour laws and 3 Environmental Laws.
For labour laws, no inspection will be carried out on the premises for 5 years
unless a written complaint of violation is filed and approved by a senior to the
inspection officer.
In case of environmental laws, startups certified as ‘White category’ by the
Central Pollution Control Board (CPCB), will be allowed to self-certify
compliance and few random inspections will be carried out here and there.
The recognized startups are allowed to self-certify (through the Startup mobile
app). The Startups may self-certify compliance in respect of following 9 Labour
Laws and Environmental Laws:
1. Other Constructions Workers’ (Regulation of Employment & Conditions
of Service) Act, 1996
2. The Inter-State Migrant Workmen (Regulation of Employment &
Conditions of Service) Act, 1979
3. The Payment of Gratuity Act, 1972
4. The Contract Labour (Regulation and Abolition) Act, 1970
5. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
6. The Employees’ State Insurance Act, 1948

Environment Laws:
1. The Water (Prevention & Control of Pollution) Act, 1974
2. The Water (Prevention & Control of Pollution) Cess (Amendment) Act,
2003
3. The Air (Prevention & Control of Pollution) Act, 1981
In order to self-certify compliance under labour laws, the recognized startup

shall log on to ‘Shram Suvidha Portal’(www.shramsuvidha.gov.in ) which is an
initiative of the Ministry of labour & Employment as a part of reforms for ‘Ease
of doing business. It is a single point of contact between employer, employee
and enforcement agencies to bring in transparency in day to day operations.
2.STARTUP PATENT APPLICATION & IPR APPLICATION:
Patents are the gold mine of startups as it preserves their innovative ideas and
offers a competitive edge over other companies, leading to an increase in the
value of the company.
The objective is to bring down the time and cost demanded to obtain a patent,
making it financially attainable to protect the innovation and encourage
further.
 Fast-track processing: Patent applications by startups are examined
faster to realise them sooner.
 Facilitator Panel to assist IP applications: An effective panel of facilitators
deployed by Controller General of Patents, Designs and Trademarks
(CGPDTM) will advise filling out Intellectual Property applications along
with promoting intellectual property in other countries.
 Only Statutory fees: The startup shall pay only the statutory fees while
all other facilitation charges will be borne by the government, for any
number of patent applications.
 Rebate for filling application: A refund of 80% will be provided in the
filing of patents.
3.TAX EXEMPTION UNDER 80IAC
A Startup being a private limited company or limited liability partnership,

which fulfils the conditions specified in sub-clause (i) and sub-clause (ii)

of the Explanation to section 80-IAC of the Income tax Act,1961 may,
obtain a certificate for the purposes of section 80-IAC of the Act. The
recognized startup entity has to make an application in Form-1 along
with documents specified therein to the Inter-Ministerial Board of
Certification (Board) and the Board may, after calling for such
documents or information and making such enquires, as it may deem fit,
—
(i) grant the certificate referred to in sub-clause (c) of clause (ii) of the
Explanation to section 80-IAC of the Income tax Act; or
(ii) reject the application by providing reasons.
4.Tax Exemption for the purpose of clause (viib) of sub-section (2) of section 56
of the Act
A Startup shall be eligible for notification under clause (ii) of the proviso to
clause (viib) of sub-section (2) of section 56 of the Act and consequent
exemption from the provisions of that clause, if it fulfils the following
conditions:
(i) it has been recognised by DPIIT
(ii) aggregate amount of paid up share capital and share premium of
the startup after issue or proposed issue of share, if any, does not
exceed, twenty five crore rupees:
Provided that in computing the aggregate amount of paid up share
capital, the amount of paid up share capital and share premium of
twenty-five crore rupees in respect of shares issued to any of the
following persons shall not be included─
(a) a non-resident; or
(b) a venture capital company or a venture capital fund;
Provided further that considerations received by such startup for shares
issued or proposed to be issued to a specified company shall also be
exempt and shall not be included in computing the aggregate amount of
paid up share capital and share premium of twenty-five crore rupees.
iii) It has not invested in any of the following assets, ─
(a) building or land appurtenant thereto, being a residential house, other
than that used by the Startup for the purposes of renting or held by it as
stock-in-trade, in the ordinary course of business;

(b) land or building, or both, not being a residential house, other than
that occupied by the Startup for its business or used by it for purposes of
renting or held by it as stock-in trade, in the ordinary course of business;
(c) loans and advances, other than loans or advances extended in the
ordinary course of business by the Startup where the lending of money
is substantial part of its business;
(d) capital contribution made to any other entity;
(e) shares and securities;
(f) a motor vehicle, aircraft, yacht or any other mode of transport, the
actual cost of which exceeds ten lakh rupees, other than that held by the
Startup for the purpose of plying, hiring, leasing or as stock-in-trade, in
the ordinary course of business;
(g) jewellery other than that held by the Startup as stock-in-trade in the
ordinary course of business;
(h) any other asset, whether in the nature of capital asset or otherwise,
of the nature specified in sub-clauses (iv) to (ix) of clause (d) of
Explanation to clause (vii) of sub-section (2) of section 56 of the Act.
Provided the Startup shall not invest in any of the assets specified in sub-
clauses (a) to (h) for the period of seven years from the end of the latest
financial year in which shares are issued at premium;
Explanation. ─ For the purposes of this paragraph, -
(i) “specified company” means a company whose shares are frequently
traded within the meaning of Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and
whose net worth on the last date of financial year preceding the year in
which shares are issued exceeds one hundred crore rupees or turnover
for the financial year preceding the year in which shares are issued
exceeds two hundred fifty crore rupees.
(ii) the expressions “venture capital company” and “venture capital
fund” shall have the same meanings as respectively assigned to them in
the explanation to clause (viib) of sub Section (2) of Section 56 of the
Act.
5. EASY WINDING UP OF COMPANY
Simplifies the process of shutting down or winding up operations to permit
entrepreneurs faster reallocation of resources and capital to more productive
avenues faster, in case of their capital being stuck in the business failure.

According to Insolvency and Bankruptcy Code,2016, a startup can be wound up
within 90 days of applying for insolvency (startup should have simple debt
structures or meet certain income specified criteria)
An insolvency professional will be appointed who will take over the company.
His duties are liquidation of assets and paying its creditors within six months.
Upon appointment of the insolvency professional, the liquidator shall be
responsible for the swift closure of the business, sale of assets and repayment
of creditors following the distribution waterfall set out in the IBC. This process
will respect the concept of limited liability.
6. EASIER PUBLIC PROCUREMENT NORMS:
Government bodies and state-owned entities will buy products from private
entities through Public Procurement. Government organisations constitute a
huge market for startups.
It makes easier participation in the public procurement process and opens up a
huge market opportunity
Listing product on Government e-Marketplace(GeM)( www.e-
startupindia.com):
GeM is a huge online marketplace allowing government departments to
procure products/services. DPIIT recognized startups are allowed to register as
a seller in GeM and sell their products/services to the government.
Exemption from Prior Experience/Turnover: In the context of promoting
startups, the government will exempt startups to have prior
experience/turnover, without any compromise on the quality.
EMD Exemption: DPIIT recognised startups will be exempted from submitting
Earnest Money Deposit (EMD) or bid security while filing government orders.
Chapter 15
REGISTRATION OF START UP
Step 1: Incorporate your business

You must first incorporate your business as a Private Limited Company or a
Partnership firm or a Limited Liability Partnership
You have to follow all the normal procedures for registration of any business
like obtaining the certificate of Incorporation/Partnership registration, PAN,
and other required compliances.
`Step 2: Register with Startup India
Then the business must be registered as a startup. The entire process is simple
and online. All you need to do is log on to the Startup India website and fill up
the form with details of your business and upload certain documents.
Step 3: Documents to be uploaded (in PDF format only)
a) Incorporation/Registration Certificate
You need to upload the certificate of incorporation of your company/LLP
(Registration Certificate in case of partnership)
b) Description of your business in brief
A brief description of the innovative nature of your products/services.
Step 4: Answer whether you would like to avail tax benefits
Startups are exempted from income tax for 3 years. But to avail these benefits,
they must be certified by the Inter-Ministerial Board (IMB). Start-ups
recognized by DPIIT; Govt. of India can now directly avail IPR related benefits
without requiring any additional certification from IMB.
Step 5: Finally, you must self-certify that you satisfy the following conditions
a) You must register your new company as a Private Limited Company,
Partnership firm or a Limited Liability Partnership
b) Your business must be incorporated/registered in India, not before 10 years.
c) Turnover must be less than 100 crores per year.
d) Innovation is a must– the business must be working towards innovating
something new or significantly improving the existing used technology.
e) Your business must not be as a result of splitting up or reconstruction of an
existing business.

BUSINESS IDEAS
A business idea is a concept which can be used for commercial purposes. It
typically centres around a commodity or service that can be sold for money,
according to a unique model. There are several methods for developing and
testing a business idea. The ability to come up with a business idea can be
transformed into a viable business, where ideas supported by feasibility and a
business plan can then be sold to interested investors, firms, and interested
parties for a lump sum or a management contract, or as agreed. Business
ideas, if introduced at the right time, when demand for such service or a
product introduced by the idea is expected to surge, can lead to a very
profitable business. Business ideas are always available through different
sources; however, it is the application applied on these ideas, and timing
makes all the difference in failure or success. The business ideas may be in the
form of:
i. Service
Service is a transaction in which no physical goods are transferred from the
seller to the buyer. But a need of the person seeking the service is met by the
service provider. Examples are services of range from professional services like
that of doctors, chartered accountants, company secretaries, Cost
accountants, advocates, tax consultants to the internet service providers,
telecommunication etc. A business idea may either be tangible like goods or
intangible like services. Providing a day facility is a service, providing home
cooked food is service.
Startups like Zomato, UrbanClap, uber, ola, eatsome were all started to
provide service.
ii. Manufacturing
Manufacturing is the process of converting raw materials into new products
which are then sold in the market. A business idea may involve production of a
new product which can be of use to the larger section of people. Newer and
newer products have come into market to serve the needs of urban as well as
rural population.
iii. Trading
Trading companies are businesses working with different kinds of products
which are sold for consumer, business, or government purposes. Trading

companies buy a specialized range of products, maintain a stock or a shop, and
deliver products to customers. Different kinds of practical conditions make for
many kinds of business. Usually two kinds of businesses are defined in trading.
Importers or wholesalers maintain a stock and deliver products to shops or
large end customers. They work in a large geographical area, while their
customers, the shops, work in smaller areas and often in just a small
neighbourhood. Today "trading company" mainly refers to global B2B traders,
highly specialized in one goods category and with a strong logistic organization.
Changes in practical conditions such as faster distribution, computing and
modern marketing have led to changes in their business models.
iv. Exports:
When businesses that sell their goods and services to customers in other
countries are exporting them. They are producing them in one country and
shipping them to another. Exporting is one way that businesses can rapidly
expand their potential market. An idea to export a product can come from the
market research and determining the demand for our products in either a new
market or a new product in the same market. Exports bring into the precious
foreign exchange and is encouraged by the government of India.
INCORPORATION AND INITIAL REGISTRATIONS SPICE (PAN, TAN, GST)

A business can be incorporated in various forms as mentioned earlier. In case
the entrepreneur decides to incorporate a company, a partnership firm or a
limited liability partnership firm or a co-operative society the same needs to be
registered with the authorities that have been designated by the respective
authorities under the legislations that govern them.
A company is incorporated by making an application to the ministry of
Corporate Affairs through www.mca.gov.in . the limited liability can also be
registered through the same portal. The partnership firms are required to be
registered through the registrar of firms of the respective states.
The registered entities are required to obtain a PAN, TAN and GST number
where ever applicable.
LAWS APPLICABLE
Once an entity is registered, there are various laws that are applicable to the
business ness entity depending up on the form of business. Following are the
laws applicable to the startups which have some exemptions under the startup
India Program.
Labour laws:
(Ministry of labour & Employment www.labour.gov.in )
Labour laws which deal with the employer-Employee relationships form an
integral part of business which employee people to run their business. The
applicability of the labour laws is dependent upon the number of persons
employed as worker in any business organisation.
The labour laws have undergone a complete reform with the proposed labour
code which is divided into 4 codes.
Proposed four labour codes – merging 28 legislations out of 40 current
legislations
The second National Commission on Labour (NCL) was set up on 15 October
1999 under the chairmanship of Ravindra Varma which submitted its report to
the then Prime Minister Atal Bihari Vajpayee on 29 June 2002.The commission
recommended various labour reforms and the process of codification of the
existing central labour laws is under progress. As per the recommendations of
the commission 28 laws have been codified into 4 labour codes. These four
codes are:
1. The Code on Wages, 2019
The code on wages, 2019 which was introduced in the Lok Sabha on 10
August 2017 and was referred to a Parliamentary Standing Committee on
21 August 2017. The Committee submitted its report on 18 December
2018. The bill lapsed following the dissolution of the 16th Lok Sabha ahead
of the 2019 general elections. The Code on Wages Bill, 2019 was re-
introduced in the House on 23 July 2019.The bill was passed by the Lok
Sabha on 30 July 2019.The bill was passed by the Rajya Sabha on 2 August
2019. The bill received assent from President Ram Nath Kovind on 8
August, and was notified in The Gazette of India on the same date. The
following Four legislations were subsumed into the Code on wages, 2019.
i.The Minimum Wages Act, 1948
ii.The Payment of Wages Act, 1936;
iii.The Payment of Bonus Act, 1965; and

iv.The Equal Renumeration Act, 1976.
2.The Industrial Relations Code 2019(bill): The Industrial relations code bill
2019 was introduced in Lok Sabha on 28th November 2019. It was referred to
the standing committee on 24th December 2019. The standing committee
submitted its report on 23rd April 2020. The Bill consolidates essential elements
of three laws—
1. The Trade Unions Act, 1926,
2. The Industrial Employment (Standing Orders) Act, 1946, and
3. The Industrial Disputes Act, 1947
The Social Security Code 2019 (bill): The Code on Social Security was
introduced in the Lok Sabha on 11th December 2019. It was referred to the
standing committee on 24th December 2019. The Proposed Code on Social
Security will subsume eight Central Labour Acts namely
1. The Employees ‘Provident Funds and Miscellaneous Provisions Act, 1952;
2. The Employees ‘State Insurance Act, 1948;
3. The Payment of Gratuity Act, 1972;
4. The Employees ‘Compensation Act, 1923;
5. The Maternity Benefit Act, 1961;
6. The Cine Workers Welfare Fund Act, 1981;
7. The Building and Other Construction Workers Cess Act, 1996;
8. The Unorganized Workers ‘Social Security Act, 2008.
The Occupational Safety, health and Working conditions Code 2019(bill): It was
introduced in Lok Sabha on 23rd July 2019. It was referred to the standing
committee on 9th oct 2019. The standing committee has given its report on 11th
February 2020.The cabinet note for withdrawal of the OSH code 2019 and
introduction of the OSH code 2020 has been sent to the cabinet Secretariat on
13th April 2020. It subsumes and replaces 13 labour laws relating to safety,
health and working conditions. These laws include:
1. The Factories Act, 1948;
2. The Mines Act, 1952;
3. The Dock Workers (Safety, Health and Welfare) Act, 1986;
4. The Building and Other Construction Workers (Regulation of Employment
and Conditions of Service) Act, 1996;
5.The Plantations Labour Act, 1951;
6. The Contract Labour (Regulation and Abolition) Act, 1970;
7. The Inter-State Migrant workmen (Regulation of Employment and
Conditions of Service) Act, 1979;
8. The Working Journalist and other News Paper Employees (Conditions of
Service and Miscellaneous Provision) Act, 1955;
9.The Working Journalist (Fixation of rates of wages) Act, 1958;
10. The Motor Transport Workers Act, 1961;
11.The Sales Promotion Employees (Conditions of Service) Act, 1976;
12.The Beedi and Cigar Workers (Conditions of Employment) Act, 1966;
13. The Cine Workers and Cinema Theatre Workers Act, 1981.
Among the four codes, the Code on Wages 2019, is being passed and
converted into an act. Other Code bills have not yet been passed by the both
houses of parliament. Although the code on wages, 2019 is an act now it is yet
to be effective. Therefore, till the time the codes are made effective the
existing laws are to be complied by the businesses.
The following laws were not merged under any code
1. The Working Journalists and Other Newspapers Employees (Conditions of
Service) and Miscellaneous Provisions Act, 1955
2. The Working Journalists (Fixation of rates of Wages) Act, 1958
3. The Employment Exchange (Compulsory Notification of Vacancies) Act,
1959
4. The Motor Transport Workers Act, 1961
5. The Limestone and Dolomite Mines Labour Welfare Fund Act, 1972
6. The Bonded Labour System (Abolition) Act, 1976
7. The Sales Promotion Employees (Conditions of Service) Act, 1976
8. The Bonded Labour System (Abolition) Act, 1976

Under the self-certification benefit extended to the recognised startups under
the Startup India program. The recognized startups are allowed to self-certify
(through the Startup mobile app). The Startups may self-certify compliance in
respect of following 6 Labour Laws:
1. Other Constructions Workers’ (Regulation of Employment & Conditions
of Service) Act, 1996
2. The Inter-State Migrant Workmen (Regulation of Employment &
Conditions of Service) Act, 1979
3. The Payment of Gratuity Act, 1972
4. The Contract Labour (Regulation and Abolition) Act, 1970
5. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
6. The Employees’ State Insurance Act, 1948
Environment laws: Self Certification is also allowed under the following

environmental laws.
1. The Water (Prevention & Control of Pollution) Act, 1974
2. The Water (Prevention & Control of Pollution) Cess (Amendment) Act,
2003
3. The Air (Prevention & Control of Pollution) Act, 1981
Startup schemes in India

1. The Venture Capital Assistance Scheme implemented through
www.sfacindia.com small farmer’s Agri-business Consortium
Ministry of Agriculture and Farmers Welfare
Venture Capital Assistance is financial support in the form of an interest free
loan provided by SFAC to qualifying projects to meet shortfall in the capital
requirement for implementation of the project.
2. Support for International Patent Protection in Electronics and &
Information Technology (SIP-EIT)

3. Single Point Registration Scheme implemented through www.nsic.co.in
NSIC registers Micro & small Enterprises (MSEs) under Single Point
Registration scheme (SPRS) for participation in Government Purchases.
4. Extra Mural Research or Core Research Grant implemented through
www.nsic.co.in Extramural Research (EMR) funding scheme of SERB to
academic institution, research laboratories and other R&D organizations
to carry out basic research in all frontier areas of Science and
Engineering
5. Multiplier Grants Scheme

Chapter 16
List of all websites related to MSME and Startups
1. www.startupindia.gov.in website by Ministry of commerce and trade
2. www.standupmitra.in list of all schemes by central and state
governments
3. www.indiainvestmentgrid.gov.in The Government of India, Ministry of
Commerce and trade, Department for promotion of industry and trade-
Infrastructures projects undertaken by government
4. www.agnii.gov.in AGNIi – Accelerating Growth of New India’s
Innovations – is a programme of the Office of the Principal Scientific
Adviser to the Government of India, and a Mission under the Prime
Minister's Science, Technology, and Innovation Advisory Council (PM-
STIAC). AGNIi helps commercialise Indian technological innovation
5. www.makeinindia.com
6. www.investindia.gov.in
7. www.samadhaan.msme.gov.in
8. www.champions.gov.in Creation of harmonious application of Modern
processes for increasing the output and national strength
9. www.digitalindia.gov.in
10. www.nsic.co.in
11. www.udyamimitra.in
12. www.skillindia.gov.in
13. www.sagarmala.gov.in
14. www.gem.gov.in (Online market place for
15. www.ivca.in (India private equity and venture capital Association)
16. www.mudra.org.in
17. www.cgtmse.in (UDAAN Credit guarantee Fund trust for micro and
small enterprises)
18. www.msme.gov.in
19. www.enam.gov.in e national agriculture market

20. www.nsda.gov.in
21. www.ipindia.nic.in
22. www.dgft.gov.in
23. www.gst.gov.in
24. www.mca.gov.in
25. www.sezindia.nic.in
26. www.mscs.dac.gov.in
27 www.aim.gov.in Attal innovation mission
28. www.smartcities.gov.in
29. www.pmsvanidhi.mohua.gov.in
30. www.sambandh.msme.gov.in
31. www.msmedatabank.in
32. www.ncgtc.in
National Credit Guarantee Trustee Company Ltd [NCGTC] was set up
by the Department of Financial Services, Ministry of Finance,
Government of India to, inter alia, act as a common trustee company to
manage and operate various credit guarantee trust funds.
33. www.msmemart.com
B2B Web Portal for MSMEs offering Infomediary Services which is a
one-stop, one-window bouquet of aids that will provide information on
business & technology and also exhibit the core competence of Indian
MSMEs
34. www.scsthub.in The Hub supports existing SC/ST entrepreneurs
and enterprises in technological upgradation and capacity building
thereby enabling them to effectively participate in government.
procurement process.

Know your Author
CA(Dr.) Rajkumar S Adukia
CA (Dr.) Rajkumar S Adukia

Global Life and Business Transformation Guru
Author of 300 plus books,
B.Com (Hons.), FCA, FCS, FCMA, LL.B, MBA, MBF, M.Com, Dip IFRS (UK),
DLL&LW, DIPR, Dip in Criminology, Ph.D. IP(IBBI),UNODC Advanced
Anti-corruption: Prevention of Corruption
Mobile: 09820061049
Email:cadrrajkumaradukia@gmail.com
Introduction
CA (Dr.) Adukia left no stone unturned during his career span expanding to
more than 37 years. He is chairman of Meridian Business Consultants
Private Limited. The company is involved in providing A to Z services
required by any business. CA (Dr.) Adukia is a legendary example of
seeking ways to explore new areas of business and profession. He is a
pioneer of many areas of practice which were never thought before by
professionals. His mantra is to provide services to clients that help them in
building better and sustainable businesses. He is a knowledge seeker and
believes that knowledge needs to be ingrained and used for the benefit of
society at large. He strongly believes that professionals have to go beyond
the traditional areas of practice like audit and direct and indirect taxation.

These are least rewarded areas in comparison to the knowledge and
expertise we have as chartered accountants. He feels that one must expand
himself to serve better and not settle for less whether in terms of rewards
or the various kinds of assignments. Being an adherent follower of the
“Science of getting Rich, he believes the pie gets bigger and bigger so that it
can cater to every individual’s need. We contribute in creating abundant
universe by asking for more riches. And he desires better remuneration for
assignments not just for himself but for all his fellow professionals.
He achieves this by mentoring the professionals, handholding them

through various workshops, webinars and lectures he conducts for
professionals who wish to enter into new areas of practice. He has
mentored 1000 professionals for passing the Insolvency Exam and
Valuation Exam.
Professional Areas of Expertise
He has been a well know professional exhibiting expertise and providing

services in the following areas:
 Taxation
 Corporate Advisory & Compliance
 Corporate Insolvency& Bankruptcy
 Civil And Commercial Litigation
 Alternative Dispute Resolution (ADR)
 Intellectual Property Rights
 Anti-trust & Competition
 Real Estate

 Family Law
 Criminal Laws
 Labour &Employment Laws
 Banking & Finance
 Charitable Organizations
 Forensic Services
 Entertainment, Media & Broadcasting
 Pharmaceuticals, Food & Drug
 Antidumping, International Trade Law& WTO
 Telecommunication
 Information Technology
 Infrastructure Projects
 Insurance Law
 Cooperative Sector
 Environment Law
He represents clients at Debt recovery tribunals and has filed applications

under Insolvency and Bankruptcy Code 2016 for recovery of debts through
National Company Law Tribunal (NCLT). He has also represented clients at
various commercial tribunals like The Appellate tribunal under The
Prevention of Money Laundering Act 2002, The National Company Law
Appellate Tribunal for cases under Companies Act 2013 and the
Competition Act 2002, the Telecom Disputes settlement and Appellate
tribunal for cases under the Information Technology Act 2000.
Experience

His vast experience includes training and professional services to banks,
financial institutions, Corporate, Government Departments, and Regulators
and as:
 An eminent Speaker and Business Advisor,
 An expert on Business laws, cyber laws, cyber security, International
Forensic Expert
 Faculty at Insolvency and Bankruptcy Board of India
 Author of more than 300 books on a wide variety of topics ranging
from those dealing with Trade, Taxation, Finance, Real Estate, the
Insolvency & Bankruptcy Code, Intellectual Property Rights, Banking
laws, Emerging technologies like AI and Blockchain to topics relating
to personal and professional growth. He is the winner of National
Book Honor Awards 2018
 He has been conducting seminars and lectures across various
countries.
 Authority on Banking Laws, Insolvency Laws, Insurance Laws,
Intellectual property laws, Indian GAAP, IFRS and Ind-AS.
 Business advisor for various companies on varied subjects
 Travelled across the globe for his professional work and knowledge
sharing. He has widely travelled three fourth of globe addressing
international conferences and seminar on various international
issues like Corporate Social Responsibility, Corporate Governance,
Business Ethics etc.
Education
Having graduated from Sydenham College of Commerce & Economics in
1980 as 5th rank holder in Bombay University and he has also received a
Gold Medal for highest marks in Accountancy & Auditing. He cleared the
Chartered Accountancy Examination with 1st Rank in Intermediate and 6th
Rank in Final. He also secured 3rd Rank in the Final Cost Accountancy
Course. He has been awarded G.P. Kapadia prize for best student of the year
1981. He also holds a Degree in law, PhD in Corporate Governance in
Mutual Funds, MBA, Diploma in IFRS (UK), and Diploma in Labour law and
Labour welfare, Diploma in IPR, Diploma in Criminology.
He has done Master in Business Finance, a one-year post
qualification course by ICAI. He has also done Certificate Courses
conducted by ICAI on

 Arbitration
 Forensic Audit and Fraud prevention
 Concurrent Audit
Significant Professional Achievements:

He is member of International Bar Association. The International Bar
Association, established in 1947, is the world's leading international
organization of legal practitioners, bar associations and law societies. The
IBA influences the development of international law reform and shapes the
future of the legal profession throughout the world.
He served as President of GST Research foundation, a society registered

under Societies Registration Act, 1860.
He is the Chairman of Association of Indian Investors, a Section 8
Company wherein its main thrust is to educate the layman about the
principles of safe investment, the complexity of capital market, changing
rules of market operations, designing and implementing effective Internal
Financial Control framework, the frame work on enhancing the Cyber
security of the organizations and implementation of ISO 27000 framework
and provide Corporate Governance Services.
He is also Vice President of All India Insolvency Professionals.All India
Insolvency professionals is an organization providing services in the field
of insolvency and bankruptcy, corporate restructuring etc. The
Organization is currently having 200 professionals all over India as its
members.
Current& Past Memberships:
 International Financial Reporting Standards (IFRS) Foundation SME
Group
 Insol India National Committee for Regional Affairs.
 Membership of the following committees of International Bar
Association
 Asia Pacific Regional Forum
 Forum for Barristers and Advocates
 Arbitration Committee

 Bar Issues Commission (BIC)
 Member of INSOL India
 CAG Advisory Committee
 Quality Review Board, Government of India
Professional Service
CA (Dr.). Adukia’s service and contribution to the profession
 Chairman of WIRC of ICAI in 1997-98
 International Member of Professional Accountants in Business
Committee (PAIB) of International Federation of Accountants
(IFAC)from 2001 to 2004
 Member of Inspection Panel of Reserve Bank of India
 Member of J.J. Irani committee (which drafted Companies Bill 2008)
 Member of Secretarial Standards Board of ICSI
 Member of Working Group of Competition Commission of India,
National Housing Bank, NABARD, RBI, CBI etc.
 Independent Director of Mutual Fund Company and Asset
Management Company.
 Worked closely with the Ministry of Corporate Affairs on the drafting
of various enactments.
 Served as Independent Director of SBI Funds Management Private
limited and Bank of India asset management co. ltd
 Served as Independent director at ICAI accounting research
foundation section 8 company
 Actively involved with ICAI as a Central Council Member during the
period when the convergence to IFRS was conceptualized in India
and has been instrumental in materializing the idea.
 Address to Insolvency and Bankruptcy Board of India
 Address to Institute of Chartered Accountants of India
 Address to Institute of Company Secretaries of India
 Address to Institute of Cost Accountants of India
 Address to Chamber of Indian Micro Small & Medium Enterprises
 Speaker in IIA’s 2013 International Conference in Orlando on
Green Audit.
 Faculty at Indian Institute of Corporate Affairs for courses on
Insolvency Laws and Corporate laws.

 Faculty Speaker in Workshop on Commodity Risk Management for
Bankers organized by CAFRAL (Centre for Advanced Financial
Research and Learning)
 Faculty at National Institute of Securities Management (NISM)and
Indian Institute of Corporate Affairs (IICA)
 Addressed the Program for Principal Inspecting Officers & Inspecting
Officers by Reserve Bank of India- Department of Non-Banking
Supervision.
 Addressed the National apex Chamber of Commerce and State apex
Chamber of Commerce including his address to ASSOCHAM,
Confederation of Indian Industry (CII), Federation of Indian Chamber
of Commerce and Industry (FICCI), and All India Manufacturers
Organisation (AIMO).
 Addressed the CBI officers, officers of Serious Fraud Investigation
Office (SFIO), and various State Police Academies.
 Addressed the SCOPE- Standing Conference of Public Enterprises
which is an apex professional organization representing the Central
Government Public Enterprises. It has also some State Enterprises,
Banks and other Institutions as its members.
 Addressed the National Academy of Audit and Accounts (NAAA)
He has been a panel member at the following Arbitral

Institutions/Forums:
 International Bar Association
 Bombay High Court
 Indian Council of Arbitration
 The International Centre of Alternate Dispute Resolution
 The Institute of Chartered Accountants of India
 Bombay stock exchange
 National stock exchange
 Western Region - Ministry of corporate Affairs, Government of India
 South Eastern region - Ministry of corporate Affairs, Government of
India
 North Western Region - Ministry of corporate Affairs, Government of
India
 India International ADR Association
 International and Domestic Arbitration Centre India
 ASSOCHAM ICADR
 Mumbai Centre for International Arbitration
 Main Mediation Centre Maharashtra & Goa
 Airports Authority of India (AII)
 Bharat Sanchar Nigam Limited (BSNL)
Global Life and Business Transformation Guru

CA (Dr.) Adukia is a motivational speaker, Growth Coach, and Life and
business coach. He has done various Self developments from India and USA.
CA (Dr.) Adukia has done a graduate course from Landmark worldwide
which is a personal and professional growth, training and development
company focusing on people achieving success and fulfillment. His
exposure to advanced programs and introduction to leadership programs
has made him the most sought-after trainer in the areas of business
development and personal development. He has been a trainer at many
corporates which has resulted in positive and permanent shifts in the
quality and life of people.
He is adherent follower of “Think and Grow Rich” by Napoleon Hill . He is
also trained by Bob Proctor series on “Thinking into results”. His
experience from his international trainings has been penned down in his
various books on self-development. Some of his books on Self-development
are
1. Magical Formula for Success
2. Strike Gold
3. Reinvent your Mind
4. Self-Empowerment
5. Genius is Universal
6. How to be super successful professional
7. Hoe to be super super successful person
8. Zooming your business and profession
9. Time management
10. Stress management

11. Goal setting
CA (Dr.) Adukia is very passionate about learning new things and believes
self-improvement is a permanent process. His zeal is infectious to any
person who meets him either for professional growth advise, business
growth advise or for personal growth advise. CA (Dr.) Adukia has given
solutions of growth to everyone.
He has done courses on:
 Winner
 Time management
 Stress management
He has mastered programs on:

 Siddha Samadhi Yoga
 Silva mind control
 Alternative therapy
 Think and Grow Rich
 Art of living
 Reiki
Awards and Accolades

He has been felicitated with awards like
 The Jeejeebhoy Cup for proficiency and character,
 State Trainer by the Indian Junior Chamber,
 “Rajasthan Shree” by Rajasthan Udgosh, a noted Social Organization
of Rajasthan and
 Several other awards as a successful leader in various fields.
 National Book Honors Award 2018
CA (Dr.) Adukia continuously endeavors to help the clients achieve the

desired results through customized and innovative solutions which involve
focusing on exploring opportunities and leveraging them to enhance the
growth and expansion of his clients.

Sharing the knowledge is enhancing the knowledge. CA (Dr.) Adukia
encourages the precise energies in research, training, seminars, and books
writing in the field, the one has passion.
You can reach me on 9820061049 or email me on

cadrrajkumaradukia@gmail.com.

Kindly Whatsapp On 9820061049 or Email at For Assistance

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Kindly Whatsapp On 9820061049 or Email at For Assistance

Uploaded by

Copyright:

Available Formats

Encyclopaedia of MSME, Non MSME, Startups (including the law,

subsidy schemes by government of India)

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 1

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 2

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 3

In the world of the industries, two major inventions, Programmable Logic

In manufacturing environments, robots have historically performed dangerous,

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 5

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 6

A three-pillar strategy has been suggested to achieve required expansion of

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 7

Services sector include improving rail connectivity and seamless connectivity to

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 8

The Government is working hard to realise Prime Minister Narendra Modi’s

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 9

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 10

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 11

(a) promoting in a harmonious manner the industrial economy of the country

specify, having regard to the factors mentioned in sub-section (2), by notified

Provided that no industrial undertaking shall be regarded as an ancillary

(i) the manufacture of parts, components, sub-assemblies, toolings or

(a) the investment by the industrial undertaking in—

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 14

(ii) land, buildings, plant and machinery;

(b) the nature of ownership of the industrial undertaking;

(c) the smallness of the number of workers employed in the industrial

(f) such other relevant factors as may be prescribed.

(4) Notwithstanding anything contained in sub-section (1), an industrial

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 15

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 16

(b) providing for the establishment of a National Small and Medium

(d) empowering the Central Government to notify programmes, guidelines or

(e) empowering the State Governments to specify, by notification, that

(g) empowering the Central and State Governments to notify preference

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 17

(i) empowering to prescribe harmonised, simpler and streamlined procedures

(k) making further improvements in the Interest on Delayed Payments to Small

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 18

It is a highly heterogeneous sector and according to the National Sample

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 19

Recognizing the importance of MSME sector in India, the Government of India

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 20

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 21

Common Problems faced by the MSME sector:

• Lack of availability of adequate and timely credit;

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 22

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 23

Startup India, Standup India Initiative

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 25

The MSMED Act 2006 comprises of VI Chapters divided into 32 sections:

CHAPTER I –PRELIMINARY (sections 1 & 2)

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 26

CLASSIFICATION OF ENTERPRISES AS MICRO, SMALL OR MEDIUM ENTERPRISE

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 27

Industries mentioned under Schedule I of the Industries (Development and

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 28

The present ceiling on investment in plant and machinery / equipment for

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 29

B. In case of enterprises engaged in providing or rendering of services, the

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 30

While calculating the investment in plant and machinery referred to in

Kindly whatsapp on 9820061049 or email at cadrrajkumaradukia@gmail.com for assistance Page 31

Any enterprises, whether proprietorship, Hindu undivided family, association