MSME is defined under which act?
|A. MSMED Act 2006|
B. MSMED Act 2001
C. MSMED Act 1999
D. MSMED Act 2004
The Correct Answer Is:
- A. MSMED Act 2006
The correct answer is A. MSMED Act 2006. This answer is correct because the Micro, Small, and Medium Enterprises Development (MSMED) Act of 2006 is the specific legislation in India that defines and regulates Micro, Small, and Medium Enterprises (MSMEs). This comprehensive and vital piece of legislation provides a legal framework for the promotion and growth of MSMEs in India.
Here is a detailed explanation of why this answer is correct and why the other options are not:
A. MSMED Act 2006:
The MSMED Act 2006, also known as the Micro, Small, and Medium Enterprises Development Act 2006, is the specific law enacted in India to address the needs and concerns of micro, small, and medium-sized enterprises.
The Act provides a legal framework for the classification of these enterprises, as well as guidelines for their registration, support, and promotion. It is a crucial piece of legislation that helps in the development and growth of MSMEs, which play a significant role in India’s economy.
Key features of the MSMED Act 2006:
1. Classification of Enterprises:
The Act categorizes MSMEs into micro, small, and medium enterprises based on their investment in plant and machinery or equipment. The criteria for classification are periodically revised to ensure that they remain relevant to the changing economic scenario.
2. Registration of Enterprises:
The Act allows for the voluntary registration of MSMEs, which can help them access various government schemes, incentives, and credit facilities. While registration is not mandatory, it is beneficial for MSMEs as it provides them with a formal recognition that can be used for various purposes.
3. Credit Facilities:
One of the significant advantages of being registered under the MSMED Act is the priority sector lending status. Banks and financial institutions are required to allocate a certain percentage of their lending to priority sectors, including MSMEs. This ensures that MSMEs have access to affordable credit, which is crucial for their growth and development.
4. Protection of Interest:
The Act includes provisions for delayed payment to MSMEs by buyers and provides for the payment of interest on delayed payments. This helps in addressing one of the major challenges faced by MSMEs – delayed payments by large corporations.
5. Promotion and Development:
The government, under this Act, has the responsibility of promoting and developing MSMEs through various measures, including the creation of technology centers, providing training and skill development, and facilitating access to markets, among others.
6. Procurement Policy:
The Act also mandates that a certain percentage of the products and services procured by the government be sourced from MSMEs. This policy encourages the participation of MSMEs in government contracts and projects.
In summary, the MSMED Act 2006 is the most recent and relevant legislation that defines and regulates MSMEs in India. It provides a comprehensive framework for the development and promotion of these enterprises and offers several benefits and protections to them.
Now, let’s explain why the other options are not correct:
B. MSMED Act 2001:
There is no such legislation as the “MSMED Act 2001.” This option is incorrect, as there was no specific MSMED Act in 2001. The MSMED Act came into existence in 2006, and it is the most comprehensive and up-to-date legislation related to MSMEs in India.
C. MSMED Act 1999:
Similar to the previous option, there is no “MSMED Act 1999.” This option is also incorrect because the MSMED Act was enacted in 2006. Any reference to an MSMED Act in 1999 is not accurate.
D. MSMED Act 2004:
Once again, there is no “MSMED Act 2004.” This option is incorrect because the MSMED Act was officially passed in 2006. There was no MSMED Act in 2004 or any other year except 2006.
In conclusion, the correct answer to the question is A. MSMED Act 2006. This legislation is essential for the development and growth of Micro, Small, and Medium Enterprises in India.
The other options (B, C, and D) are incorrect because there were no such Acts in those respective years. It is important to have a clear understanding of the legal framework governing MSMEs to ensure their protection and growth in the Indian economy.