1 month ago
MSME Bill Addresses Some Challenges but Misses Key Issues
The MSME Development Amendment Bill is being discussed in Parliament to help small and medium businesses.
It tries to solve problems like late payments and makes it easier to resolve disputes.
However, it doesn't address bigger issues like getting affordable loans, following many rules, and using better technology.
Anil Bharadwaj, who works with a group representing these businesses, says the bill is a start but not enough.
He suggests more help is needed, like easier loans for women, better rules for businesses that fail, and special programs to help businesses use new technology.
He also thinks the government should give more support to medium-sized businesses so they can compete globally.
The MSME Development Amendment Bill addresses delayed payments and dispute resolution but misses key structural challenges.
Major challenges for MSMEs include delayed payments, lack of affordable finance, rising compliance burden, and inadequate technology adoption.
The Bill introduces Online Dispute Resolution (ODR) to make dispute settlement faster but implementation remains a concern.
Access to finance is a major issue as banks insist on physical collateral, affecting women entrepreneurs who lack assets.
Compliance burden from GST, labour, environmental, and tax laws remains outside the scope of the MSME Act.
- Who
- Anil Bharadwaj, Secretary General of the Federation of Indian Micro and Small & Medium Enterprises (FISME)
- What
- The MSME Development Amendment Bill addresses some challenges but misses key issues faced by MSMEs
- Where
- Chennai
- When
- The Bill is being presented in Parliament
- Why
- To address challenges faced by MSMEs such as delayed payments, dispute resolution, and easing compliance burden
Government Perspective
Industry Perspective
Effectiveness of the Bill
Government Perspective
The Bill addresses key issues like delayed payments and dispute resolution, providing significant relief to MSMEs.
Industry Perspective
The Bill fails to address major structural challenges and implementation remains a major concern.
Access to Finance
Government Perspective
Schemes like CGTMSE and TReDS provide adequate financing options for MSMEs.
Industry Perspective
Banks still insist on physical collateral, making it difficult for smaller enterprises to secure affordable credit.
Compliance Burden
Government Perspective
The Bill simplifies data sharing and reduces penalties for procedural lapses, easing the compliance burden.
Industry Perspective
The larger compliance burden from GST, labour, environmental, and tax laws remains outside the scope of the MSME Act.
Key facts
- Key Challenges Faced by MSMEs
- Delayed payments, lack of affordable finance, rising compliance burden, inadequate technology adoption
- MSME Act Provisions
- Legal obligation for buyers to pay within 45 days, penal interest on delays, Online Dispute Resolution (ODR)
- Access to Finance Issues
- Banks insist on physical collateral, loan recovery is lengthy, women entrepreneurs struggle to secure loans
- Compliance Relief
- Statutory backing to Udyam portal, simplified data sharing, reduced penalties for procedural lapses
- Technology Upgradation
- Cluster-based technology upgradation involving industry, IITs, CSIR laboratories, machinery manufacturers
- Insolvency Reforms
- Need for reforms tailored to proprietorships and partnerships, which account for 97% of MSMEs
- Emergency Credit Framework
- Permanent emergency credit framework to provide crucial liquidity during crises
- PLI-like Incentives
- Need for incentives to reach medium-sized enterprises to become part of global value chains
Quotes
Anil Bharadwaj
Secretary General, Federation of Indian Micro and Small & Medium Enterprises (FISME)
“"The MSME sector continues to grapple with four major challenges—delayed payments, lack of affordable finance, rising compliance burden and inadequate technology adoption."”
deccanchronicle.com
“"The amendments also introduce Online Dispute Resolution (ODR), which is expected to make dispute settlement faster by digitising hearings."”
deccanchronicle.com
Sources
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