New govt to implement MSME definition based on turnover: Giriraj Singh

The Parliamentary Standing Committee on Commerce and Industry has recommended some improvements in the definition of Micro, Small and Medium Enterprises (MSMEs), said Giriraj Singh, Minister of State for MSME, according to a report by KNN India.

Speaking on the sidelines of the event ‘Cluster Conclave and 5th Responsible BMO Award: Innovate to Lead’, the minister added that these changes will be implemented by the new government that will be elected in May. At the event, he also launched a web portal and brochure for promoting market transformation for energy efficiency in MSMEs.

The MSME Ministry had earlier introduced a Bill in the Lok Sabha specifying that the turnover of a business entity would classify it as MSMEs. The MSME Development (Amendment) Bill proposes classifying MSMEs on the basis of annual turnover rather than current parameters of investment in plant and machinery or equipment. The report added that the matter was presently in the Lok Sabha, and will be passed further.

In 2018, the new proposed definition for MSMEs was criticised by the Karnataka Small Scale Industries Association (KASSIA). Basavraj S Javali, President, KASSIA, had said that considering turnover alone will not help the sector.

“The Union Cabinet has come up with a draft completely revising the definition of MSME. This uses turnover as the basis. However, as per the MSME Act 2006, they are defined on the basis of investment in plant and machinery,” he had said.

Javali’s primary concern was that the new definition will bring a large number of firms within the definition of SME. “This is a serious worry because the definition will likely crowd out a large number of small units from the benefits targeted at them, as there will be a higher demand for such benefits from a greater number of businesses,” he had said.

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