HANDBOOK FOR MSME ENTREPRENEURS - ICSI

1 HANDBOOK . FOR. msme . ENTREPRENEURS . June 2017. Price : Rs. 250/- (Excluding Postage). THE INSTITUTE OF COMPANY SECRETARIES OF INDIA. All rights reserved. No part of this publication may be translated or copied in any form or by any means without the prior written permission of The Institute of Company Secretaries of India. Published by : THE INSTITUTE OF COMPANY SECRETARIES OF INDIA. ICSI House, 22, Institutional Area, Lodi Road, New Delhi - 110 003. Phones : 41504444, 45341000, Fax : 24626727. Website : , E-mail : ISBN : 978-93-82207-97-9. Laser typesetting at AArushi Graphics Printed at : Chandu Press/100/June 2017. (ii). Foreword Micro, Small and Medium Enterprises (MSMEs) sector has emerged as a highly vibrant and dynamic sector of the Indian economy and is widely acclaimed as engine of economic growth, particularly in the context of Make in India initiative of the Government of India.

2 MSMEs play a noteworthy role in economic and social development, thereby providing fllip to entrepreneurship, as they have inherent characteristics of being innovative and responsive to changing market dynamics. Being complementary to large industries this sector contributes hugely to the socioeconomic development of the country. MSMEs not only play a crucial role in providing large employment opportunities at comparatively lower capital cost but also encourage entrepreneurial activities in rural and backward areas. I am happy to note that the Institute of Company Secretaries of India as part of its capacity building initiatives, and to support the skills development initiatives of the Government, is playing pivotal role in enhancing the compliance status for strengthening the Governance of MSMEs in India.

3 Apart from this, Institute is organizing seminars and workshops in promoting awareness about the role of MSMEs in the inclusive development of economy;. facilitating in establishing MSMEs and providing exacting solutions to issues being faced by this sector. I have gone through this HANDBOOK and found the contents very informative, written in simple language. The emphasizes on the role of MSMEs in the National progress, insight into the registration process of MSMEs, raising of finances, as well as compliances with various regulatory obligations would help msme ENTREPRENEURS in management and administration of their businesses in a sustainable manner.

4 I am confident that msme ENTREPRENEURS will find this HANDBOOK quite useful in ensuring Good Governance of their enterprises. K K Jalan 169, UDYOG BHAWAN, NEW DELHI - 110 011. Tel. : +91-11-23062107 Fax : 2306 3045, E-mail : (iii). (iv). Preface The Micro, Small and Medium Enterprises (MSMEs) play a significant role in the social, economic and political growth of the country. msme sector not only generate the global value of the products and services, it creates various employment opportunities in the country too. MSMEs receive more governmental focus as their role in the economic and social growth is inclusive, employment oriented. Since the first Industrial Policy Resolution, 1956 itself, priority was given to agricultural growth along with the establishment, growth and development of village and small scale industries.

5 Further, seeing the potential of growth in msme . and their contribution to Indian economy, the Parliament enacted the Micro, Small and Medium Enterprises Development Act, 2006 to facilitate the promotion, development and enhancing the competitiveness of micro, small and medium enterprises. In the current scenario of promoting MSMEs government is providing various facilities and credits to msme to ensure smooth working and eventual growth of MSMEs in India. Further, to ease the regulatory burden on the industry and assist MSMEs in complying with the legal requirements and mandatory disclosures, a single window compliances and online mechanism of registration and compliance has been initiated for MSMEs.

6 Under this backdrop, it is highly required that start-up ENTREPRENEURS of msme . sector as well as professionals assisting the compliances for MSMEs are acquainted with the facilities, ease, assistance and essential compliances afforded at the end of MSMEs. In this context, the Institute has initiated the publication titled HANDBOOK for msme ENTREPRENEURS to serve a clear understanding about compliances for MSMEs and operational mechanism. I commend the dedicated efforts put in by Mr. Chittaranjan Pal, Assistant Director, Directorate of Professional Development, Perspective Planning & Studies, ICSI in preparing the manuscript of this publication and CS Pankila Bhardwaj, Consultant for assistance in finalizing the publication for printing.

7 I am sure that this HANDBOOK would be an accommodating and guiding one stop document for the professionals to learn and understand the facts and facets of (v). various compliances required at the end of MSMEs along with the mechanism of adhering those legal and mandatory requirements while ensuring the smooth governance and growth of msme sector in India. New Delhi CS (Dr.) Shyam Agrawal 9 June, 2017 President The Institute of Company Secretaries of India (vi). CONTENTS. Section Topic Page I INTRODUCTION 1. II LEGAL FRAMEWORK-MSMES 5. Computation of Investment limit in Plants & 6. Machineries or in Equipments for the purpose of MSMED Act, 2006. Memorandum of Micro, Small and Medium Enterprises 7.

8 Udyog Aadhar Memorandum 8. Micro, Small and Medium Enterprises Development 16. (Furnishing of Information) Rules, 2016. III msme REGISTRATION 21. Benefits of Registration 21. IV HOW TO SET UP msme 23. V MASTER DIRECTION-RESERVE BANK OF INDIA 30. [LENDING TO MICRO, SMALL & MEDIUM. ENTERPRISES ( msme ) SECTOR] - DIRECTIONS, 2016. Targets/sub-targets for lending to Micro, Small and 33. Medium Enterprises ( msme ) sector by Domestic Commercial Banks and Foreign Banks operating in India Guidelines for Special Credit Linked Capital Subsidy 42. Scheme (SCLCSS) for SC/ST Micro & Small Enterprises Small Industries Development Bank of India (SIDBI) 50. [List of Primary Lending Institutions (PLI)].

9 Agreement for Financial Assistance under Special 54. Credit Linked Capital Subsidy Scheme (SCLCSS) for SC/ST Micro & Small Enterprises Application Form for assistance under Special Credit 58. Linked Capital Subsidy Scheme (SCLCSS) for SC/ST. Micro & Small Enterprises VI COMPLIANCE BASED ON FORMATION OF msme 61. Sole Proprietorship 62. Partnership Firm 63. One Person Company 66. Limited Liability Partnership 80. (vii). Public Company/Private Company 96. Listing of specified securities of small and Medium 112. Enterprises on the institutional trading platform in a SME Exchange without making an initial public offer VII LABOUR LAWS APPLICABLE FOR MSMES 119.

10 Employee's Provident funds and Miscellaneous 121. Provisions Act, 1952. Employees State Insurance Act, 1948 126. The Contract Labour (Regulation & Abolition) Act, 129. 1970. Employee's Compensation Act, 1923 132. The Minimum Wages Act, 1948 134. The Payment of Wages Act, 1936 136. Maternity Benefit Act, 1961 139. The Child and Adolescent Labour (Prohibition 141. and Regulation) Act, 1986. Equal Remuneration Act, 1976 142. The Factories Act, 1948 143. The Payment of Gratuity Act, 1972 147. The Payment of Bonus Act, 1965 148. The Apprentices Act, 1961 150. The Industrial Employment (Standing Orders) 151. Act, 1946. Labour Laws (Simplification of Procedure for 153.)