9 years of Modi govt: Decriminalisation of Companies Act to help particularly MSMEs, says FM Nirmala Sitharaman
Finance Minister Nirmala Sitharaman recently highlighted the measures introduced by the Modi government over the past nine years to improve the ease of doing business for Micro, Small, and Medium Enterprises (MSMEs). She specifically mentioned the decriminalization of offences under the Companies Act as a positive step that will benefit various industries, particularly MSMEs.
According to the minister, removing elements that treated individuals like criminals will alleviate business concerns. Decriminalizing the Companies Act is expected to provide relief and support to industries, especially MSMEs, by reducing unnecessary compliance burdens and creating a more favourable business environment.
In addition to decriminalising the Companies Act, Sitharaman emphasized that the government has undertaken significant efforts to reduce the compliance burden. Over 1,500 outdated laws have been repealed, and nearly 39,000 compliances have been eliminated. This streamlining of regulatory requirements aims to facilitate business operations and make it easier for enterprises, including MSMEs, to navigate the regulatory framework.
Furthermore, Sitharaman mentioned in her budget speech that over 3,400 legal provisions have been decriminalized. This indicates the government’s commitment to simplifying and rationalizing the legal framework to promote a conducive business environment, foster entrepreneurship, and encourage economic growth.
These measures are part of the government’s broader focus on improving the ease of doing business in India, enhancing competitiveness, and supporting the growth and development of MSMEs. Reducing unnecessary compliance burdens and eliminating archaic laws aims to create a more business-friendly ecosystem that encourages investment, innovation, and job creation.
Finance Minister Nirmala Sitharaman highlighted several schemes launched by the Modi government over the past nine years that are specifically targeted towards supporting Micro, Small, and Medium Enterprises (MSMEs). These schemes aim to provide financial assistance, enhance quality standards, improve performance, and simplify registration processes for MSMEs. Some of the key plans mentioned by the minister include:
- Emergency Credit Line Guarantee Scheme (ECLGS): This scheme was introduced to provide financial support to MSMEs during the COVID-19 pandemic. Under the ECLGS, collateral-free loans were made available to eligible MSMEs to help them meet their operational expenses and sustain their businesses during challenging times.
- ZED (Zero Defect, Zero Effect) scheme: The scheme focuses on improving the quality standards of products manufactured by MSMEs while promoting sustainable and environmentally friendly practices. It encourages MSMEs to adopt best practices and quality control mechanisms to achieve zero defects in their products and ensure minimal impact on the environment.
- Raising and Accelerating MSME Performance (RAMP) scheme: The RAMP scheme aims to enhance the performance and competitiveness of MSMEs by providing them with necessary support, training, and mentorship. It focuses on capacity building, skill development, technology adoption, and market linkages to enable MSMEs to scale up their operations and improve their overall performance.
- Udyam registration portal: The Udyam registration portal is an online platform introduced to simplify the registration process for MSMEs. It enables MSMEs to register themselves and obtain a unique Udyam Registration Number (URN) for availing of various benefits, schemes, and subsidies provided by the government. The portal also facilitates more accessible access to credit and other support services for MSMEs.
These schemes reflect the government’s commitment to promoting the growth and development of MSMEs by addressing their specific needs and challenges. By providing financial assistance, encouraging quality improvement, supporting performance enhancement, and simplifying processes, these initiatives aim to create a more conducive environment for MSMEs to thrive and contribute to India’s economy.
The Udyam portal has seen significant registration activity, with over 1.97 crore enterprises registering on the platform as of June 2023. This indicates the widespread adoption of the portal by MSMEs, reflecting their interest in availing the benefits provided through various schemes for MSMEs.
In 2022, the Modi government launched the Raising and Accelerating MSME Performance (RAMP) scheme with a budget of Rs 6,000 crore. The objective of this scheme is to enhance the performance and competitiveness of MSMEs by providing them with support and resources to improve their operations, scale up their businesses, and drive exports of products and services.
Additionally, the Capacity Building of First-Time MSME Exporters (CBFTE) scheme was also introduced to encourage MSMEs to venture into the export market. This scheme provides support and assistance to first-time exporters in areas such as market research, training, capacity building, and financial support to facilitate their entry into international markets.
The government has also taken steps to promote intellectual property rights (IPR) among MSMEs. Under the MSME Innovative Scheme, over seven Intellectual Property (IP) Facilitation Centres have been approved to support MSMEs in protecting and managing their intellectual property. In the first nine months of the scheme, 126 patents were granted, and the cost of 1,387 trademarks was reimbursed under the IPR component. These initiatives aim to foster innovation, protect intellectual property, and enable MSMEs to leverage their creative and innovative capabilities.
Overall, the various schemes and initiatives introduced by the government, such as RAMP, CBFTE, and support for intellectual property, demonstrate its commitment to promoting the growth and development of MSMEs. By providing financial assistance, capacity building, and support for exports and intellectual property, the government aims to create an enabling ecosystem for MSMEs to thrive and contribute to India’s economy.Finance Minister Nirmala Sitharaman highlighted the success of the Public Procurement Policy for Micro and Small Enterprises (MSMEs) scheme introduced by the Modi Government. According to the minister, this policy has resulted in 33 per cent of total procurement made by 158 Central Public Sector Enterprises (CPSEs) being from MSMEs. This procurement share is the highest ever achieved thus far.
The Public Procurement Policy for MSMEs is designed to promote and support the participation of MSMEs in public procurement processes. By setting aside a specific percentage of procurement for MSMEs, the policy aims to create opportunities for these enterprises, boost their growth, and enhance their contribution to the economy.
The achievement of 33 per cent procurement from MSMEs by 158 CPSEs indicates the success of the policy in creating a more inclusive and supportive procurement environment. This increased procurement share provides MSMEs with increased access to government contracts and the associated benefits, including revenue generation, market visibility, and business expansion opportunities.
By encouraging CPSEs to procure from MSMEs, the policy contributes to the growth and development of the MSME sector. It helps in fostering a more vibrant and competitive business landscape where MSMEs can play a significant role in contributing to economic growth and employment generation.
The success of the Public Procurement Policy for MSMEs is a positive development for the sector and demonstrates the government’s commitment to supporting MSMEs by providing them with access to public procurement opportunities. This policy is expected to continue driving the growth and resilience of the MSME sector, enabling these enterprises to thrive and contribute to India’s economic development.Finance Minister Nirmala Sitharaman highlighted two important schemes introduced by the Modi government to support MSMEs in overcoming liquidity challenges and enhancing their marketing capabilities:
- TReDS platform (Trade Receivables Discounting System): The TReDS platform was launched to address the issue of delayed payments faced by MSMEs and other corporations. This platform allows MSMEs to discount their trade receivables, i.e., unpaid invoices, with financial institutions or banks, thereby providing them with immediate funds. By availing this system, MSMEs can mitigate the liquidity crunch caused by non-payment from their buyers and ensure smooth cash flow for their operations.
- Procurement and Marketing Support (PMS) Scheme: Under the PMS Scheme, 5,100 Micro and Small Enterprises (MSEs) across the country, including 205 from Scheduled Castes (SC) and Scheduled Tribes (ST), have been supported. The scheme provides subsidies to MSEs for their participation in trade fairs and exhibitions. This support enables MSEs to showcase their products, expand their market reach, and connect with potential buyers. By assisting MSEs, including those from marginalized sections of society, in participating in trade fairs and exhibitions, the government aims to promote their visibility, market access, and business growth opportunities.
These initiatives demonstrate the government’s focus on addressing the specific challenges faced by MSMEs, including liquidity constraints and limited marketing capabilities. By launching the TReDS platform, the government has provided a mechanism for MSMEs to unlock working capital and manage their cash flow effectively. Additionally, the PMS Scheme supports MSEs by subsidizing their participation in trade fairs and exhibitions, thereby facilitating marketing and business development opportunities.
These measures are intended to enhance the resilience and competitiveness of MSMEs, promote their growth, and contribute to job creation and economic development in India.
