Introduction
In accordance with the provision of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are defined according to their annual revenue (i.e. sales) of business. As approved by the Union Cabinet, Micro Enterprise is an enterprise whose annual turnover does not exceed ₹ 5 Crore; Small Enterprise is an enterprise whose\ annual turnover exceeds ₹ 5 Crore but does not exceed ₹ 75 Crore; Medium Enterprise is an enterprise whose annual turnover exceeds ₹ 75 Crore, but does not exceed ₹ 250 Crore.
The MSME sector contributes significantly to the national economy and is the largest employment provider besides being a breeding ground for entrepreneurship and skill development. The number of MSME is more than 30 million employing around 100 million people.
In spite of having the potential and inherent capabilities to grow, MSMEs in India have been facing a number of problems like sub-optimal scale of operations, technological obsolescence, supply chain inefficiencies, increasing domestic and global competition, fund shortages, change in manufacturing strategies and turbulent and uncertain market scenario.
To survive in such a scenario and compete with large and global enterprises MSMEs need to be supported and assisted to ensure sustained growth and development of these enterprises in the existing competitive arena. In terms of GST, the compliance in terms of time, cost as well as energy is much higher for MSMEs vis-à-vis the bigger companies. This impacts them much more as compared to the bigger companies. Therefore, some relaxation benefits are necessary in order to help them cope with sudden increase / change in compliance challenges.
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