This Post has been Contributed By
CS Amit Todkar
Founder of AT and Associates

India is managing the effects of the global Covid-19 pandemic using unprecedented public health and economic measures.  Among the many parts of the economy that require immediate attention and succour, are the micro, small and medium enterprises. These MSMEs contribute nearly 30 percent of India’s gross domestic product and close to half of the country’s total exports.

Amongst the other supportive measures to MSME the reserve bank of India (RBI) decided to provide special refinance facilities for a amount of ₹15,000 crore to Small Industries Development Bank of India (SIDBI) which plays an important role in meeting the long-term funding requirements of small industries. SIDBI serves as the principal financial institution in the Micro, Small and Medium Enterprises (MSME)

Governments worldwide have been using various policy measures to soften the economic blow rendered to their MSME sectors. Likewise it is likely that Ministry of MSMEs draws up a policy framework with multiple scenarios .

What is MSME ?

Definition :

The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under:

(a) Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below:

(i) A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh;

(ii) A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore; and

(iii) A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.

Other Benefits available to MSME

Finance	Easy finance availability from Banks, without collateral requirement.
Preferential Treatment	Preference in procuring Government tenders.
Electricity bills	MSME can avail concessional payments of electricity bills
Stamp duty and Octroi benefits,	MSME can avail special benefits in Stamp Duty and Octori benefits.
Special Status for payments towards goods and services rendered by MSME units	There is Obligation on the  buyers availing services or goods from MSM Enterprises to pay within credit limit agreed upon between them.   Default : Interest shall be pay to the MSME unit from Day of acceptance which may extend to 3 times the bank rate.
Dispute Settlement	Time-bound resolution of disputes with Buyers through conciliation and arbitration.
Disallowance of interest under Income Tax Act, 1961	The amount of interest payable or paid by any buyer, for delayed payments to MSME  shall not be allowed as deduction.
Closure of Business	Special scheme to facilitate closure  of business