Thursday, November 27, 2014: The Union government has asked for comments from states and UTs over the proposed amendments to the MSME Act for enabling the time bound exit and revival of loss making units among others. The MSME ministry said in a note that it has sent a written application to the Chief Secretaries of states and Union Territories in this regard to seek comments from them at the earliest.
The amendments were proposed to the Micro, Small and Medium Enterprises (MSMEs) Act with an aim of allowing time bound exit and revival of loss making units which will help them to consolidate their business and re-deploy capital in other ventures.
Since there was no legal framework till now for the reorganisation, winding up or exit of the small units, it leads to a huge wastage of human resources, capital and physical resources like plant, machinery, industrial land & buildings.
Under the proposed amendments, the revival and exit committee will be set up as an adjunct to MSME facilitation council and establishment and also an appellate authority will be established. Also if any losses accumulated by the enterprise are equivalent to half or more of its entire net worth within the last financial year then MSME can in itself file an application specifying about the revival plan or else can exit via liquidation proceedings.
Besides that, it is required to present the first appeal by an aggrieved enterprise/creditor before the appellate authority within the initial 30 days; while the second appeal against the appellate authority’s order would be presented before the Supreme Court.
The amendment also involves a proposal to review the definition of MSME for increasing the capital ceilings. It suggests to double the capital required for manufacturing units to 5 million from the present capital requirement of 2.5 million. Same for the small enterprises, it proposes to increase from 50 million to 100 million whereas for the medium enterprises it suggests to triple the capital requirement from Rs. 100 million to Rs. 300 million.
On the other hand, for the service sector, the amendments entail doubling the investment for micro enterprise from 1 million to 2 million whereas for small enterprise from 20 million to 50 million and for the medium enterprises, it proposes to increase from 50 million to 150 million.
