To make the professionals, businessman and entrepreneurs to have an introduction cum information about the legal provisions related to MSME, a new series is being launched in which all the relevant legal provisions and rules will be discussed along with legal references.

Efforts have been made to keep the language very simple so that even layman person can also understand the same and be benefited. Efforts have also been made to keep the articles small and interactive so that reader may enjoy reading along with learning.

A. Introduction:

  • MSME stands for Micro, Small and Medium Enterprises.
  • Many times a term MSE is being used instead of MSME. MSE stands for Micro and Small Enterprises. It does not include Medium Enterprises because a lot of benefits have been provided by government only to Micro and Small Enterprises. Medium Enterprises have not been covered therein.
  • In India, there is only one act which governs MSMEs. No other act other than this governs MSMEs. This act is – MSMED Act, 2006 i.e. Micro, Small and Medium Enterprises Act, 2006. (The same can be downloaded from the link given under References)
  • MSMED Act, 2006 got assent from President of India on 16.06.2006 that means MSMED Act, 2006 was approved by government on 16.06.2006.
  • But It got operational w.e.f. 02.10.2006 by a Notification No. S.O. 1154(E) by Ministry of Small Scale Industries. That means MSMED Act, 2006 was applicable in India w.e.f. 02.10.2006 only.
  • MSMED Act, 2006 has repealed “Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Act, 1993”.


  • The term SSI stands for “Small Scale Industries” which was defined under the provisions of Industries [Development and Regulation] Act, 1951.
  • However, after the introduction of MSMED, 2006, this term was replaced with MSE (Micro and Small Enterprises).
  • Here, it is to be noted that MSE replaced SSI. Medium Enterprises are not part of MSE. It covers only Micro and Small Enterprises.
  • Although a lot of people, documents, notifications etc. still uses the term SSI which is not valid now.
  • The same was clarified by Ministry of Micro, Small and Medium Enterprises vide Circular No. 5(1)/2011-MSME Pol. Dt. 14.06.2011.

C. MSMED Act, 2006:

  • MSMEs are governed by MSMED Act, 2006.
  • This Act is bifurcated into 6 Chapters and 32 Sections.

MSMD Act, 2006

D. Purpose of MSMED Act, 2006:

  • There was no specific act in the country which could cater the needs of small businesses and provide them a sense of security.
  • So MSMED Act, 2006 was created by Government of India to facilitate the Promotion and Development of MSMEs in India.
  • It also facilitate to enhance competitiveness among MSMEs so that they can sustain in the market and can boost the economy.

E. Conclusion:

  • Government has enacted MSMED Act, 2006 to provide a sense of security to small businessman and to promote them because small scale businesses have always been considered as backbone of the economy.
  • Use of term MSE instead of SSI, itself represents a positive attitude and impact.
  • MSMED with 6 chapters and 32 sections provides a very base to the Indian Economy and small entrepreneurs.

F. What Next:

  • In next article, efforts will be made to provide an insight into various chapters and sections of MSMED Act, 2006 from legal as well as practical point of view.

G. References:

  • MSMED Act, 2006.
  • Link for downloading MSMED Act, 2006 –
  • Various Notifications issued by Ministry of Micro, Small and Medium Enterprises.


Disclaimer : This material and the information contained herein is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser.

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Qualification: CA in Job / Business
Location: GHAZIABAD, Uttar Pradesh, IN
Member Since: 13 May 2020 | Total Posts: 7

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March 2021