Micro Small and Medium Enterprises Development (MSMED) Act 2006


Entrepreneur Memorandum

The Micro Small & Medium Enterprises Development (MSMED) Act 2006 was become operational from 2nd October 2006.  The Act replaces the concept of “Industry” with “Enterprises”.

Consequent to the implementation of this act, SSI Registration process has been dispensed with. The entrepreneur files the Entrepreneur Memorandum and gets an acknowledgement..

 Micro Small and Medium enterprises are defined as below:


Micro Enterprises     -   Investment in Plant and Machinery does not exceed Rs.25 lakhs

Small enterprises    -    Investment in Plant and Machinery is more then Rs.25 lakhs but does not exceed Rs.5.00 crores

Medium enterprises    - Investment in Plant and Machinery is more than Rs.5.00 crores but does not exceed Es.10 crores


Micro Enterprises       -            Investment in equipment  does not exceed Rs.10 lakhs

Small enterprises       -           Investment in equipment is more then Rs.10 lakhs but does not exceed Rs.2.00 crores

Medium enterprises      -              Investment in equipment is more than Rs.2.00 crores but does not exceed Rs.5 crores

 Filing of Memoranda by MSMEs                                      

  •          Process of two - stage registration of Micro & Small Enterprises dispensed with & replaced by filing of memoranda.

•           Filing of memorandum optional for all Micro & Small Enterprises.

•          Filing of memorandum   optional   for  service  sector  Medium Enterprises.

•          Filing of memorandum mandatory for  manufacturing  sector Medium Enterprises

 Apex Consultative Body with Wide Representation of Stakeholders

 National  Board for Micro, Small and Medium  Enterprises (MSME) headed by the Central Minister i/c of MSMEs and consisting of 47 members from among

•          MPs

•          representatives of Central Ministries,

•          State Governments,

•          UT Administration,

•           RBI, SIDBI, NABARD,

•          Associations of MSMEs including women,

•          persons of eminence and

•          Central Trade Union Organisations

•          National Board to be now statutory, as against non-statutory SSI Board

•          Quarterly meetings of National Board made mandatory


The policies and practices in respect of  credit to the MSMEs shall be progressive and such as may be specified in the guidelines or instructions issued by the Reserve Bank of India, with the aims of :

•          ensuring smooth  credit flow to the MSMEs,

•          minimising sickness among them and ensuring enhancement of their competitiveness.

Procurement Policies

•          Central Government or a State Government  to notify preference  policies in respect of procurement of  goods and services,  produced  and provided  by MSEs, by  its  Ministries,  departments  or  its aided  institutions and public sector enterprises (non-statutory till now).

Provisions to Check Delayed Payments  

•          Provisions related to delayed payments to micro & small enterprises (MSEs) strengthened

•          Period of payment to MSEs by the buyers reduced  to forty five days   Rate of interest on outstanding amount increased to three times the prevailing bank rate of Reserve Bank of India compounded on monthly basis  

•          MSE  Facilitation  Council  may  utilise      the services of any Institution or Centre  for conciliation and alternate dispute resolution services

•          Reference made to the Council to be decided within  ninety days from the date of reference

•          Declaration of payment outstanding to MSE supplier mandatory for buyers in their annual statement of accounts

•          Interest (paid or payable to buyer) disallowed to supplier for deduction for income tax purposes

•          No appeal against order of Facilitation Council to be entertained by any Court without deposit of 75% of the decreed amount payable by buyer

•          Appellate Court may order payment of a part of the deposit to the supplier MSE

•          Facilitating Closure of Business

•          Central  Government   may   (within  one      year of the commencement  of  the Act)  notify  a   scheme  for facilitating closure  of  business by a micro, small or medium enterprises

MSE Facilitation  Councils

 The problem of delay in payment of bills for supplies made by Small Scale Industries was seriously considered by the Government of India and to protect the seller units in getting payments in time, the Interest on Delayed Payment to Small Scale Industrial Undertakings, Act, 1993 was introduced. As provided under 17(a) of the amendment Act, the State Government constituted Regional Industrial Facilitation Councils in the state.

Now, consequent to the implementation of MSMED Act 2006, the Government   of Tamilnadu in the G.O.Ms.No.63, Small Industries Department, dated 8.12.2006 have issued orders constituting four MSE Facilitation  Councils as follows:





Area of Jurisdiction


Chennai, Kancheepuram, Thiruvallur, Vellore, Tiruvannamalai, Viluppuram and Cuddalore districts


Trichy, Perambalur, Pudukottai, Thanjavur, Nagappattinam and Thiruvarur.


Madurai, Vkirudhunagar, Dindigul, Theni, Tirunelveli, Tuticorin, Kanyakumari, Sivaganga and Ramanathapuram districts


Coimbatore, Erode, Salem, Dharmapuri, Namakkal, Karur ,Krishnagiru and Uthagamandalam districts


The Council consists the following members:

1.Industries Commissioner & Director of Industries & Commerce         -            Chairman

2. Representative from TIIC      -                                               Member

3. One representative nominated from time to time by the Tamilnadu Small and Tiny Industries Association(TANSTIA)     -            Member

4. A representative of the Lead Bank                -                       Member          

5. One representative nominated from time to time by the Chamber of Commerce /  Association of the District -            Member