An Act to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto.

National Board for Micro, Small and Medium Enterprises

With effect of the Act, the Central Government appoints, a Board to be known as the National Board for Micro, Small and Medium Enterprises.

The Board shall, perform all or any of the following functions, namely:

  1. examine the factors affecting the promotion and development and enhances the competitiveness of enterprises and review the policies and programmes of the Central Government.
  2. make recommendations on matters referred to it by the Central Government, which, is necessary .
  3. advise the Central Government on the use of the Funds.

The head office of the Board shall be at Delhi and they shall meet at least once in every three months in a year.

Classification of enterprises

The Central Government may, classify classes of enterprises, whether proprietorship, Hindu undivided family, association of persons, co-operative society, partnership firm, company or undertaking, by whatever name called,

In the case of the enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries as:

  1. a micro enterprise, where the investment in plant and machinery does not exceed twenty-five lakh rupees.
  2. a small enterprise, where the investment in plant and machinery is more than twenty-five lakh rupees but does not exceed five crore rupees.
  3. a medium enterprise, where the investment in plant and machinery is more than five crore rupees but does not exceed ten crore rupees.
  4. Any person who intends to establish, a enterprise, shall file the memorandum.
  5. The Central Government shall, prior to classifying any classes of enterprises obtain the recommendations of the Advisory Committee.
  6. The Central Government shall have the power to administer the Funds and shall be responsible for the coordination and ensuring timely utilisation and release of sums.
  7. The State Government shall, establish one or more Micro and Small Enterprises Facilitation Councils, exercising such jurisdiction as specified.
  8. The policies and practices in respect of credit to the micro, small and medium enterprises shall be progressive and from time to time, it also ensures timely and smooth flow of credit.

Buyer and Supplier                                                     

Where any supplier, supplies any goods to a buyer, the buyer shall make payment therefore on or before the date agreed upon in writing.

Where any buyer fails to make payment of the amount to the supplier, the buyer shall, be liable to pay compound interest with monthly rests to the supplier.

Power to remove difficulties:-

  1. If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act as may appear to be necessary for removing the difficulty: Provided that no order shall be made under this section after the expiry of two years from the commencement of this Act.
  2. Every order made under this section shall, as soon as may be after it is made, be laid before each House of Parliament.