Our Bureau

New Delhi, May 13

THE Government has moved in Parliament the Small and Medium Enterprises Development Bill 2005 that seeks to raise the investment limit in the small-scale sector to Rs 5 crore.

The Bill also provides for a statutory definition of small and medium enterprises and the establishment of a national SME board. The Bill also seeks to provide for classification of SME on the basis of investment in plant and machinery or equipment.

The Bill has proposed that in the case of enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act 1951, a small enterprises will be the one, where the investment in plant and machinery does not exceed Rs 5 crore, while a medium enterprise will be the one, where the investment is more than Rs 5 crore but does not exceed Rs 10 crore.

However, in the case of enterprises engaged in providing or rendering of services in relation to any industry specified in the First Schedule to the Industries (Development and Regulation) Act 1951, a small enterprise will be the one, where the investment in equipment does not exceed Rs 2 crore.

However, if the investment in equipment is more than Rs 2 crore but does not exceed Rs 5 crore, then it will be called a medium enterprise.

Besides, in an effort to facilitate the graduation of small enterprises to medium scale, the Bill proposes to empower the State Governments to specify, by notification, that provisions of the labour laws specified in Clause 9(2) will not apply to SMEs employing up to 50 employees.

The Bill also makes provisions for ensuring timely and smooth flow of credit to SMEs to minimise the incidents of sickness and enhance the competitiveness.

The Bill empowers the Central and the State Governments to notify preferences policies in respect of procurement of goods and services, produced and provided by small enterprises, by the Ministries, departments and public sector enterprises.

It also seeks to empower the Central Government to create a fund or funds for facilitating promotion and development to enhance the competitiveness of SMEs.

(This article was published in the Business Line print edition dated May 14, 2005)
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