Centre Initiates Talks to Ease MSME Compliance and Financing Issues
In a bid to alleviate the burdens faced by micro, small, and medium enterprises (MSMEs) in India, the Centre has commenced discussions regarding reforms aimed at reducing compliance requirements and addressing financing challenges within the sector. The talks are centered around easing the registration, mergers, acquisitions, and closures of MSMEs, as well as providing regulatory relaxations to facilitate their operations. These reforms are crucial for the sustainability and growth of over 50 million MSMEs that contribute significantly to the country’s annual gross value added (GVA) and employ millions of individuals.
Industry Demands and Government Response
During stakeholder consultations, the Ministry of Corporate Affairs initiated conversations with MSME industry associations to gather suggestions and proposals for enhancing the regulatory framework governing MSMEs. The industry’s demands include defining MSMEs under the Companies Act, decriminalizing independent directors’ conduct, rationalizing e-forms, and offering relaxations from filing fees in certain cases. These proposals aim to reduce compliance costs, attract more talent to MSMEs, and streamline operations for smaller businesses.
Addressing Funding Challenges and Delayed Payments
In addition to compliance issues, discussions have also focused on improving access to corporate bonds and debentures for MSMEs, simplifying regulatory compliance in mergers and acquisitions, and enhancing the exit mechanism for businesses. Notably, addressing the persistent problem of delayed payments to MSMEs is a key priority, with deliberations on potential amendments to the Arbitration and Conciliation Act to expedite dispute resolutions and enforce arbitral awards in favor of MSMEs.
Government Initiatives and Expert Insights
The Union government has previously introduced initiatives to support MSMEs, such as setting up e-commerce export hubs, providing enhanced insurance coverage, and reducing transaction costs on the Government e-Marketplace (GeM) portal. Krunal Modi, a founding member of Presolv360, emphasizes the far-reaching impacts of delayed payments on various stakeholders in the MSME ecosystem, highlighting the urgent need to address this issue for the sector’s overall growth and sustainability.
By engaging in meaningful dialogue and considering the diverse needs of MSMEs, the government aims to create a conducive environment for these businesses to thrive and contribute effectively to India’s economic landscape. Through collaborative efforts and targeted reforms, the Centre seeks to empower MSMEs and foster a more resilient and competitive business environment in the country.
