The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises

es Development Act, 2006

2nd cover
3rd cover
WESTERN INDIA REGIONAL COUNCIL
— 2009-10
OFFICE BEARERS

Chairman Vice Chairman

CA. B. C. Jain CA. B. K. Rathi
Appendix 4
Secretary Treasurer List of useful websites
CA. Raju Shah CA. Ashok Pagariya
• http://msme.gov.in/Ministry of Micro, Small
MEMBERS and Medium Enterprises.
CA. Ashwin Nagar CA. Mangesh Kinare • http://dcmsme.gov.in/Development
CA. Atulkumar Parikh CA. N. C. Hegde Commissioner, MSME.
CA. B. M. Agarwal CA. Prafulla Chhajed
CA. Bhailal Patel CA. Rakesh Lahoti • http://www.fisme.org.in/index.htm
CA. Chandrakant Pawar CA. Sanjeev Lalan Federation of Indian Micro, Small and
CA. Dhiraj Khandelwal CA. Shardul Shah Medium Enterprises.
CA. Durgesh Kabra CA. Shriniwas Joshi • http://www.rbi.org.in Reserve Bank of
CA. Makarand Joshi CA. Sunil Kumar Patodia India.
• http://ssi.nic.in/Ministry of Small Scale
EX-OFFICIO MEMBERS
Industries (Now, Ministry of Micro, Small
CA. Atul Bheda CA. Nilesh Vikamsey and Medium Enterprises).
CA. Bhavna Doshi CA. Pankaj Jain
CA. Dhinal Shah CA. Rajkumar Adukia
CA. Jayant Gokhale CA. Sanjeev Maheshwari
CA. Jaydeep Shah CA. Shivaji Zaware
CA. Mahesh Sarda

RESEARCH & PUBLICATIONS COMMITTEE

Chairman Convenor
CA. Mangesh Kinare CA. Durgesh Kabra

OFFICE BEARERS
CA. B. C. Jain
CA. Raju Shah
 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006
2nd cover

WESTERN INDIA REGIONAL COUNCIL

— 2009-10 A
OFFICE BEARERS
HANDBOOK
Chairman Vice Chairman
CA. B. C. Jain CA. B. K. Rathi
ON
Secretary Treasurer
CA. Raju Shah CA. Ashok Pagariya THE MICRO, SMALL
MEMBERS
CA. Ashwin Nagar CA. Mangesh Kinare
AND
CA. Atulkumar Parikh CA. N. C. Hegde
CA. B. M. Agarwal CA. Prafulla Chhajed MEDIUM ENTERPRISE DEVELOPMENT
CA. Bhailal Patel CA. Rakesh Lahoti
CA. Chandrakant Pawar CA. Sanjeev Lalan ACT, 2006
CA. Dhiraj Khandelwal CA. Shardul Shah
CA. Durgesh Kabra CA. Shriniwas Joshi
CA. Makarand Joshi CA. Sunil Kumar Patodia

EX-OFFICIO MEMBERS
CA. Atul Bheda CA. Nilesh Vikamsey By
CA. Bhavna Doshi CA. Pankaj Jain CA. Abhay Vasant Arolkar
CA. Dhinal Shah CA. Rajkumar Adukia CA. Nirav Pajwani
CA. Jayant Gokhale CA. Sanjeev Maheshwari
CA. Jaydeep Shah CA. Shivaji Zaware
CA. Mahesh Sarda

RESEARCH & PUBLICATIONS COMMITTEE

Chairman Convenor
CA. Mangesh Kinare CA. Durgesh Kabra

OFFICE BEARERS
CA. B. C. Jain WESTERN INDIA REGIONAL COUNCIL OF
THE INSTITUTE OF CHARTERED ACCOUTANTS OF INDIA
CA. Raju Shah
 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

© Western India Regional Council of

The Institute of Chartered Accountants of India
FOREWORD
Mumbai

I am very pleased to present to you the latest publication by the

First Edition
Disclaimer
These materials and the information contained herein are provided by the
contributors/authors and are intended to provide general information on a
particular subject or subjects and are not an exhaustive treatment of such
subject(s).
Accordingly, the information in these materials is not intended to constitute
accounting, tax, legal, investment, consulting, or other professional advice or
services. The information is not intended to be relied upon as the sole basis for
any decision which may affect you or your business or any transaction. Before
making any decision or taking any action that might affect your personal
finances or business, you should consult a qualified professional adviser.
Neither the Publisher nor the authors shall be responsible for any loss
whatsoever sustained by any person who relies on these materials and the
information contained therein.
We take no responsibility to update the contents of this document.
Published by the Research & Publications Committee of
The Western India Regional Council of
the Institute of Chartered Accountants of India
Research and Publications Committee of WIRC of ICAI titled “A
Handbook on the Micro, Small and Medium Enterprises
Development Act 2006”.
It is commendable that this publication is being brought to
members as the Micro, Small and Medium Enterprises sector is
the backbone of the Indian economy whose importance cannot
be emphasized enough. This publication will go far in making
members aware of the large opportunities that exist in this sector
while also ensuring that they become the domain experts who
can advise this sector. This is indeed a creditable endeavour on
the part of the erudite authors as well as the Research and
Publications Committee of WIRC of ICAI.
I compliment the Chairman of the Research and Publications
Committee of WIRC, CA Mangesh Kinare who took the initiative
for this publication as well as CA Abhay Vasant Arolkar and CA
Nirav Pajwani who have jointly authored this excellent
handbook.

ICAI Bhavan, 27, Cuffe Parade, Colaba, Mumbai 400 005. CA. B C. JAIN
Tel. 39893989 • Fax: 39802954 • Email : WIRC: wirc@icai.in
Chairman, WIRC

Printed by
Finesse Graphics & Prints Pvt. Ltd.
309, Parvati Industrial Estate, Sunmill Compound,
Lower Parel (West), Mumbai 400 013
Tel.: 4036 4600 • Fax : 2496 2297

ii iii
 The Micro, Small and Medium Enterprises Development Act, 2006
PREFACE
Small and Medium Enterprises are back bone of Industrial or
Service Sectors; especially in our country. Therefore economic
development of our country is largely dependent on the proper
nurturing and development of these SMEs. However on one
hand SMEs face difficulties as regards requisite strength and
resources to handle their affairs whereas on the other hand they
face competition from Large Enterprises in same Industry or
Sector. Micro, Small and Medium Enterprises Development Act,
2006 (MSMED Act) was enacted to empower SMEs with
requisite legal backing so that they will not be squeezed by Big
Fish in the Industry/Sector.
Although this Act came into force from the year 2006, general
awareness about this Act is not as per expectation not only
among SMEs but also among professionals. We at Research and
Publications Committee of WIRC thought it is our social duty to
spread awareness about this very useful Legislation among
SMEs. This will also be useful to our professional colleagues in
advising their clients as Total Business Solution Providers.
I thank Chairman of WIRC CA. B.C. Jain for reposing faith in
‘Research and Publications Committee’ of WIRC and giving us
this opportunity to bring out this Publication. I also thank both
the authors CA. Abhay Arolkar and CA. Nirav Pajwani for
sparing their time and taking tireless efforts in preparing this
Publication.
CA. Mangesh P. Kinare
Chairman, Research &
Publications Committee of WIRC
iv
The Micro, Small and Medium Enterprises Development Act, 2006
CONTENTS
Chapter Particulars Page
No. No.
Chapter I : Preliminary ................................................................ 1
• Introduction .............................................................................. 1
• Salient Features ........................................................................ 2
• Objective of the Act ................................................................. 3
Chapter II: Constitution of National Board,
Advisory Committee and Facilitation Council .................... 4
• National Board for Micro Small and Medium
Enterprises ................................................................................ 4
• Advisory Committee ................................................................ 5
• Micro and Small Enterprise Facilitation Council ................. 6
Chapter III: Classification and Filing of Memorandum
by an Enterprise ............................................................................ 7
• Meaning of an Enterprise ........................................................ 7
• Classification of an Enterprise into Micro Small and
Medium Enterprises ................................................................. 8
• Computation of Investments in Plant & Machinery/
Equipments ............................................................................... 8
• Filing of Memorandum by Micro, Small and Medium
Enterprises ............................................................................. 11
• Authority to which Memorandum shall be filed ............... 12
• Procedure for Filing of Memorandum and
Other matters incidental thereto ......................................... 12
• Documents to be filed along with the EM .......................... 15
v
 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

Chapter Particulars Page THE MICRO, SMALL AND

No. No.
Chapter IV: Measures for Promotion and Development
of Micro, Small and Medium Enterprise ................................
• Measures for Promotion & Development of Micro,
Small and Medium Enterprise: (Sections 9 to 14) ............
• Skill Development .................................................................
• Credit Facilities .....................................................................
• Procurement Preference Policy ............................................
• Government Grants ...............................................................
Chapter V: Privileges offered to Micro and
Small Enterprise .........................................................................
• Privileges to registered micro and small enterprises .........
• Buyer’s liability to make timely payment for
goods & services ....................................................................
• Interest for delayed payment by buyer ...............................
• Examples for calculation of interest ....................................
• Reference of Disputes to Micro and Small Enterprise
Facilitation Council ...............................................................
• Disclosure requirements to be fulfilled by ‘Buyer’ ............
Chapter VI: Miscellaneous ........................................................
• Simplified scheme for closure for micro, small
or medium enterprise ...........................................................
• Penal provisions ....................................................................
• Powers of Government to make Rules ................................
Appendices
1. MSME Registration Form ..................................................... 27
2. Sample confirmation letter ................................................... 43
3. List of addresses in Maharashtra, Gujarat & Goa. .............. 46
MEDIUM ENTERPRISES
16
DEVELOPMENT ACT, 2006
16
16
Chapter I
16
Preliminary
17
17 Introduction
The small scale industry is one of the leading contributory to the
economy of India. These units comprise about 95% of industrial
18 units, manufacturing more than 8,000 different products. It
18 contributes nearly 45% to the industrial employment and about
50% to the export of manufactured goods. However this sector is
18 grossly unorganized and faces hurdles in their growth. This
20 sector does not have access to the finance or the markets. It is
ill-treated by the large procurement companies who are better
20
placed in terms of supplies in quantity and offering competitive
price. They lack management skills and have to also face hurdles
23 in administrative/bureaucratic procedures. Being an unorganized
24 sector, the Government did not have accurate, reliable
information on the financial condition and performance of this
26 sector.
Prior to the enactment of this law, an attempt was made for the
26
protection for this sector by making provisions. However as the
26 attempt was ad hoc basis, the provisions were scattered in
26 various legislations, primary legislation of them being the
Industries (Development & Regulation) Act, 1951. Till the
enactment of the new law, a small scale undertaking, is defined
under Industries (Develeopment & Regulation) Act, 1951 as an
undertaking in which the investment in fixed assets in plant and
machinery whether held on ownership term, or on lease or on
hire purchase, does not exceed Rs. 100 lakhs and it is not the
subsidiary of or owned or controlled by any other undertaking. If

vi 1
 The Micro, Small and Medium Enterprises Development Act, 2006
it manufactures the items specified in Appendix of Notification
SO 857 (E) dt. 10-12-1997, the limit is increased to Rs. 500
lakhs. As seen from above, only manufacturing activities were
covered as the entity has to be an industrial undertaking.
However a need was felt to evolve a comprehensive legislation
for this sector which constituted of micro, small and medium
enterprises. Thus was born, The Micro, Small and Medium
Enterprise Development Act, 2006, a landmark piece of
legislation, by the Central Government of India, for promotion
and development of micro, small and medium enterprise in
India.
The new law has shifted the base of registration from industry
component to enterprise component. This enabled even service
enterprises to be covered under the purview of the Act. An
enterprise has been defined as follows:
Enterprise means an industrial undertaking or a business
concern or any other establishment, by whatever name called,
engaged in manufacture or production of goods, in any manner,
pertaining to any industry specified in the First Schedule to the
Industries (Development & Regulation) Act, 1951 [IDRA, 1951] or
engaged in providing or rendering of any service or services.
The Salient features
The Salient features of the Act are
(a) The Act is a comprehensive legislation concerning this
sector and covers even service sector enterprises, which
were hitherto out of the purview. The emphasis is on
enterprise component rather than on industry component.
(b) The process of two-stage simplified registration of Micro and
Small Enterprise is dispensed with and replaced by filing of
memorandum. Filing of memorandum is optional except for
medium enterprises in manufacturing sector.
(c) The Act decisively defines Micro, Small and Medium
Enterprises by the level of their investment in Plant and
Machinery (P & M)/Equipments. This will eliminate any
2 3
The Micro, Small and Medium Enterprises Development Act, 2006
lingering confusion over the category to which a business
belongs.
(d) The Act has substantially strengthened the provisions to
check delayed payments by larger enterprises to micro and
small enterprises (that supply products to the larger
enterprises). The old “The Interest on Delayed Payment to
Small Scale & Ancillary Industrial Undertaking Act, 1993”
has been repealed. Notwithstanding such repeal, anything
done under the Act so repealed shall be deemed to have
been done or taken under the corresponding provisions of
this Act.
(e) The Act establishes the National Board for Micro, Small and
Medium Enterprises to provide the necessary structure for
overseeing and regulating the development of Micro, Small
and Medium Enterprises in India.
(f) The Act sets an agenda for specific policies that will be
created and implemented. One such policy is a Procurement
Preference Policy, which will guide government bodies on
how much of their supplies should be purchased from
micro, small and medium enterprises.
Objective of the Act
The primary objective of the Act is to facilitate:
• Promotion of micro, small and medium enterprise,
• Development of micro, small and medium enterprise and
• Enhancing the competitiveness of micro, small and medium
enterprise.
The Act aims to achieve these objectives through skill
development, technological upgradation and preference in
procurement by government departments and government aided
institutions, etc.
The Act containing six chapters and thirty two sections, though
a small piece of legislation, will go a long way to give the much
needed support to the micro, small and medium enterprises.
 The Micro, Small and Medium Enterprises Development Act, 2006
Chapter II
National Board, Advisory Committee
and Facilitation Council
National Board for Micro, Small and Medium Enterprises
Establishment of the Board: (Section 3)
The Central Government by notification has established a Board,
known as the National Board for Micro, Small and Medium
Enterprises with its head office at Delhi, for the purpose of this
Act. The constitution of the Board compromises of about 47
persons being diverse representatives from government, industry,
financial and civil society, some of whom shall be ex-officio
members. The term of the ex-officio members of the Board shall
be as long as that person holds the office, by virtue of which he
has become the member of the Board. As regards the other
members, the term would be as prescribed by the Government.
The Act also empowers the Board to invite persons, whose
advice it may desire and who shall take part in the discussions
but shall not have the right to vote. Besides the Board may also
invite concerned Ministers at its Meetings. One officer not below
the rank of Joint Secretary to the Government of India in the
ministry/department having administrative control of micro,
small and medium enterprises, appointed as the member of the
Board shall act as Member Secretary to the Board and shall have
such powers and shall perform such functions as may be
prescribed. The Board shall meet once in three months.
Functions of the Board: (Section 5)
The Board, subject to the general directions of the Central
Government, performs all or any of the following functions,
namely:—
1. To examine the factors affecting the promotion and
development of micro, small and medium enterprise and
review the policies and programmes of the Central
Government in that regard and enhancing the
competitiveness of such enterprises and the impact thereof.
4 5
The Micro, Small and Medium Enterprises Development Act, 2006
2. To make recommendations on any matters referred to it by
the Central Government relating to the promotion and
development of the micro, small and medium enterprises
and enhancing the competitiveness of such enterprises.
3. To advise the Central Government on the use of the Fund or
Funds constituted under section 12 of this Act.
The member of the Board may be removed, (Section 4) after
giving him an opportunity of being heard in the matter, if he:—
(i) is adjudged as insolvent.
(ii) is or becomes of unsound mind.
(iii) refuses to act or is incapable of acting as member of the
Board.
(iv) is convicted of an offence involving moral turpitude.
(v) renders his continuance in the Board detrimental to the
interests of the general public.
Advisory Committee (Section 7)
The Central Government by notification has established an
Advisory Committee for the purposes of this Act. The Committee
will have not more than ten members from government and
representatives from micro, small and medium industry
associations.
The Advisory Committee will perform the following functions:—
1. To examine and furnish recommendations on matters
referred to it by the National Board for Micro, Small and
Medium Enterprises;
2. To advise Central Government on matters specified in
sections 9, 10, 11, 12 or 14 of the Act; and
3. To advise State Governments on matters specified in the
rules made under section 30 of this Act.
The Advisory Committee shall advise and make
recommendations to the Central Government or the State
 The Micro, Small and Medium Enterprises Development Act, 2006
Government, as the case may be, after considering the following
matters
(a) the level of employment in a class or classes of enterprises.
(b) The level of investments in plant and machinery or
equipment in a class or classes of enterprises
(c) The need for higher investment plant and machinery or
equipment for technological upgradation, employment
generation and enhanced competitiveness of the class or
classes of enterprises.
(d) The possibility of promoting or diffusing entrepreneurship
in a micro, small or medium enterprises and
(e) The international standards for classification of small and
medium enterprises.
Micro and Small Enterprise Facilitation Council: (Sections 20
& 21)
The State Government by notification will establish Micro and
Small Enterprise Facilitation Council as a forum for resolution of
disputes between the buyers and suppliers covered by the Act.
The Micro and Small Enterprise Facilitation Council will have
not less than four members being diverse representatives from
government, industry, financial and civil society. The Director of
Industries or an officer, not below that rank shall be appointed
as a member of such facilitation Council and he shall as act as
its Chairman. The composition of the Council, the manner of
filling vacancies and procedure for discharge of duties by the
members of the Council shall be framed by the concerned State
Governments.
6 7
The Micro, Small and Medium Enterprises Development Act, 2006
Chapter III
Classification and Filing of Memorandum
by an Enterprise
Meaning of an Enterprise
The term ‘Enterprise’ has been defined under section 2(e) as an
industrial undertaking or a business concern or any other
establishment, by whatever name called, engaged in manufacture
or production of goods, in any manner, pertaining to any
industry specified in the First Schedule to the Industries
(Development & Regulation) Act, 1951 [IDRA, 1951] or engaged
in providing or rendering of any service or services.
“Industrial undertaking” is not defined under the MSMED Act,
2006, but the same is defined in IDRA, 1951 as
Industrial undertaking means any undertaking pertaining to a
scheduled industry carried on in one or more factories by any
person or authority including government.
Under IDRA, 1951 Factory means any premises including the
precincts thereof, in any part of which manufacturing process is
being carried on or is ordinarily carried on
(a) with the aid of power, provided that 50 or more workers are
or were working thereon on any day of the preceding twelve
months.
(b) without the aid of power, provided 100 or more workers,
are or were working thereon on any day preceding the
twelve months and provided that in no part of such
premises, any manufacturing process is being carried on
with the aid of power.
Business concern means a HUF, or a firm or an AOP or BOI or a
company or any commercial or industrial enterprise.
Thus the term ‘business concern’ as contained in section 7(1) of
the Act, envisages to include proprietorship, Hindu Undivided
family, association of persons, co-op. society, partnership firm,
 The Micro, Small and Medium Enterprises Development Act, 2006
company or undertaking by whatever name called, within the
scope of ‘enterprises’ covered under the Act.
Classification of an Enterprise
Enterprises have been broadly classified into:
1. Manufacturing enterprises are enterprises engaged in the
manufacture/production of goods pertaining to any industry
specified in the First Schedule to the Industries
(Development & Regulations) Act, 1951. Manufacturing
enterprises have been further classified into:
(a) Micro Enterprises — investment in plant & machinery
does not exceed Rs. 25 lakhs.
(b) Small Enterprises — investment in plant & machinery
is more than Rs. 25 lakhs but does not exceed Rs. 5
crores.
(c) Medium Enterprises — investment in plant &
machinery is more than Rs. 5 crores but does not
exceed Rs. 10 crores.
2. Service enterprises are Enterprises engaged in providing/
rendering of services. Service enterprises have been further
classified into:
(a) Micro Enterprises — investment in equipments does
not exceed Rs. 10 lakhs.
(b) Small Enterprises — investment in equipments is more
than Rs. 10 lakhs but does not exceed Rs. 2 crores.
(c) Medium Enterprises — investment in equipments is
more than Rs. 2 crores but does not exceed Rs. 5
crores.
Computation of Investments in Plant & Machinery/Equipments
The criterion for classifying an enterprise as a micro, small or
medium enterprise is the investment in plant and machinery in
case of manufacturers (and in equipments in the case of service
enterprises).
8 9
The Micro, Small and Medium Enterprises Development Act, 2006
The word ‘Plant” means an assembly of machinery equipment or
devices installed for the manufacturing or production
activity(ies). This it may include the factory itself as one
composite unit including building, machinery and apparatus
therein for the purpose of manufacture/production. The word
“Machinery” means mechanical devices or implements used for
manufacturing/production.
The word “Equipment” can be defined as an instrument, office
appliance, office machine and such other electro-mechanical or
electronic appliance that is directly related to the service
rendered. The word “Investment” means the utilization of
resources to increase income or production output in future.
For computing the value of investments in plant & machinery/
equipment, one should note the following:
1) Valuation to be based on Original Cost: While calculating
the investment in plant and machinery, the original price
thereof, irrespective of whether the plant and machinery are
new or second hand, shall be reckoned. In case the
enterprise is unable to assess the original investment
criteria, a certificate with regard to investment in plant,
machinery, equipment etc. should be obtained from a
Chartered Accountant.
2) Only plant and machinery/equipments used in the course of
manufacture or the service provided should be considered
for finding the value of investments. Thus equipments such
as refrigerator or an air-conditioner or furniture not
necessary for the manufacture/rendering of service cannot
be included.
3) In determining the value of plant and machinery, the
following items of cost are to be excluded:
(a) Pollution control, research and development, industrial
safety devices.
(b) Items notified vide Notification No. S.O. 1722(E) dated
5.10.2006 issued by the Ministry of Small Scale
Industries:
 The Micro, Small and Medium Enterprises Development Act, 2006
(i) Equipments such as tools, jigs, dies, moulds and
spare parts for maintenance and the cost of
consumable stores
(ii) Installations of plant & machinery
(iii) Research and development equipments and
pollution control equipments
(iv) Power generator sets and extra transformers
installed by the enterprise as per the regulations of
the state electricity board
(v) Bank charges & service charges paid to the
National Small Scale Industries Corporation or the
State Small Industries Corporation
(vi) Procurement or installation of cables, wiring, bars,
electrical control panels (not mounted on
individual machines), oil circuit breakers or
miniature be used for providing electrical power to
the plant and machinery or for safety measures
(vii) Gas producer plants
(viii) Transportation charges (excluding sales tax or
value added tax and excise duty) for indigenous
machinery from the place of their manufacture to
the site of the enterprise
(ix) Charges paid for technical know-how for erection
of plant and machinery
(x) Such storage tanks which store raw materials and
finished products only and finished products only
and are not linked with the manufacturing process
and
(xi) Fire-fighting equipment.
4) Imported Machinery: In case of imported machinery, its
value shall include:
(a) Import duty (excluding miscellaneous expenses such as
transportation from the port to the factory site,
demurrage paid);
10
The Micro, Small and Medium Enterprises Development Act, 2006
(b) Shipping charges;
(c) Customs clearance charges; and
(d) Sales tax or value added tax.
5) Although the Act specifies how the investment in plant and
machinery for manufacturing enterprises is to be calculated,
no such formula is provided for calculating investment in
equipments.
Filing of Entrepreneurs Memorandum by an Enterprise
The requirement for filing of Entrepreneurs Memorandum (see
Appendix 1) is summarized below:
• Filing of Entrepreneurs Memorandum is mandatory, in case
of the following: —
— Any person who intends to establish a manufacturing
medium enterprise in industry specified in the First
Schedule to IDRA, 1951.
— A prior manufacturing industry specified in the First
Schedule to IDRA, 1951 having investment in plant
and machinery or more than one crore rupees but not
exceeding ten crore rupees has filled an Industrial
Entrepreneurs Memorandum in pursuance of
Notification No. S. O. 477(E), dt. 25-7-1991.
• Filing of Entrepreneurs Memorandum is discretionary*, in
case of the following: —
— Any person who intends to establish
 A micro or small enterprise
 A medium enterprise for services or
— A person who has, before the commencement of this
Act, established a SSI and obtained a registration
certificate
*Note: It may be noted that even though it is optional/
discretionary to file the Entrepreneurs Memorandum in
11
 The Micro, Small and Medium Enterprises Development Act, 2006
some cases listed above, it is advisable, that all such
micro and small enterprises to file memorandum of
registration with prescribed authority, in order to avail of
the benefits accorded under the Act. Section 15 of the
Act provides protection to micro and small supplier
registered with appropriate authority, inter alia, making it
eligible for timely payment from the buyer.
Authority to which Memorandum shall be filed
The memorandum shall be filed by micro & small enterprise
with the authority notified by the State Government. The
memorandum shall be filed by medium enterprise with the
authority notified by the Central Government.
The Central Government has specified the General Manager,
District Industries Centre or any district level officer of
equivalent rank in the directorate or the department dealing with
micro, small, medium enterprise of State Government or Union
Territory administration as the authority with which the
memorandum is to be filed in case of medium enterprise (Min.
of S.S.I., Notification No. S.O. 1636 (E), dt. 29-9-2006). List of
offices in Maharashtra, Gujarat and Goa are given in Appendix 4.
In case of existing enterprises, to whom it is mandatory to
register, the Entrepreneurs Memorandum shall be filed within
180 days from commencement of the Act.
Procedure for filing Entrepreneurs Memorandum and other
matters incidental thereto
1. Form of the Entrepreneurs Memorandum can be
downloaded from the Internet, the address of which can be
obtained from Directorate dealing with Micro, Small &
Medium Enterprises of the State Governments/UTs. or the
hard copies of the same can be obtained from the District
Industries Centres. This form can also be downloaded from
the SIDCO website i.e., www.laghu-udyog.com or
www.smallindustryindia.com List of various useful websites
are contained in Appendix 5.
12
The Micro, Small and Medium Enterprises Development Act, 2006
2. The form of Memorandum is in two parts. Any person who
intends to establish a micro, small or medium enterprise
engaged in providing or rendering of services may file or
those who want to establish medium enterprise engaged in
the production or manufacture of products shall file Part 1
of the Entrepreneurs Memorandum with the District
Industries Centre. Once the above enterprises start
production or start providing or rendering services, they
should file Part II of the Entrepreneurs Memorandum with
the District Industries Centre.
In case of non-filing of Part II of the Entrepreneurs
Memorandum within two years of the filing of Part I, the
Memorandum (Part I) filed by the entrepreneur will become
invalid.
Existing units intending to register with the District
Industries Centre are to fill up only Part II of the form.
3. Before issuing the acknowledgement, the District Industries
Centres shall make sure that the form is complete in all
respects and particularly the form is signed and is
accompanied with an undertaking, which is a part of the
form of Entrepreneurs Memorandum.
4. The District Industries Centre shall fill all the codes in the
form of the Memorandum and issue an acknowledgement
after allotting an EM number, date of issue and category of
the unit within five days of the receipt of the form of
Memorandum by post or same day, if the form of
Memorandum is submitted in person as well as online.
5. The following shall form the basis of evaluation of the
application for registration:—
(a) The unit has obtained all necessary clearances whether
statutory or administrative. e.g. drug licence under
Drug Control Order, NOC from Pollution Control
Board, if required etc.
(b) Unit does not violate any locational restrictions in force
at the time of evaluation.
13
 The Micro, Small and Medium Enterprises Development Act, 2006
(c) Value of plant and machinery is within prescribed
limits.
(d) Unit is not owned, controlled or subsidiary of any
other industrial undertaking as per notification.
6. The District Industries Centre shall, in addition of keeping a
record, in writing, shall also maintain records electronically
on computer.
7. The District Industries Centre shall maintain record of all
the Entrepreneurs Memorandum so filed in respect of micro
and small enterprises and medium enterprises engaged in
providing and rendering services and forward a copy of the
Entrepreneurs Memorandum so filed with EM number
allotted to the Small Industries Service Institutes of their
State/Jurisdiction. The District Industries Centre shall also
maintain record of all the Entrepreneurs Memorandum so
filed in respect of medium enterprises engaged in
production/manufacturing of products and forward one
copy each of the Entrepreneurs Memorandum with EM
number allotted to Small Industries Service Institutes of
their State/Jurisdiction and to Joint Development
Commissioner (MSME Pol.) in the Office of the
Development Commissioner (Small Scale Industries).
8. The enterprise has to file the Entrepreneurs’ Memorandum
Part II again, in case, the status of the enterprise changes
from micro to small or small to medium or vice versa, as a
result of enhancement/decrease in the investment in plant
and machinery/equipments.
In case of change in the investment in plant and machinery
or in equipment, the enterprises who have already filed
Entrepreneurs Memorandum should inform the District
Industries Centre of the same in writing within one month
of the change in investment.
In case of change of products and that of services or
addition in products or services, the enterprises who have
already filed Entrepreneurs Memorandum should inform the
14
The Micro, Small and Medium Enterprises Development Act, 2006
District Industries Centre of the same in writing within one
month of the change.
In case of companies as defined in Companies Act, 1956,
(1 of 1956), co-operative society, societies, partnership firms
or trusts, the change of name of the enterprise, if any,
should be informed to District Industries Centre within the
prescribed time limit of such change along with an affidavit.
9. Effect of non-activity: The Acknowledged Entrepreneurs’
Memorandum shall be liable to be cancelled in case the
unit is found closed for more than 6 months or furnished
wrong information in the Entrepreneurs’ Memorandum filed
or fails to inform any change in the investment in plant and
machinery or in equipment (to be initiated based on any
complaint in writing followed by an enquiry under an
official not below the authority notified for accepting the
Entrepreneurs’ Memorandum under the provisions of sub-
sections (3) and (4) of section 8 of the said Act.
Documents to be filed along with the Entrepreneurs
Memorandum
A. The Entrepreneurs Memorandum in triplicate/quadruplicate
as the case may be.
B. Document of incorporation, namely, the partnership deed,
Memorandum and Articles of Association, Trust deed,
Byelaws etc.
C. The local shops and establishment registration certificate.
D. Copy of registration or the licence required under any
statute for the trade.
E. Certificate of Chartered Accountant in regard to the value of
plant & machinery/equipment, as the case may be.
F. Latest Audited final statement of accounts.
G. Factory unit address, if any and the factory permit
document, if any.
H. Any other additional form as may be required by the
concerned district office in the local language
15
 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

Chapter IV 3. Procurement Preference Policy: (Section 11)

Measures for Promotion and Development of For facilitating promotion and development of micro and
Micro, Small and Medium Enterprise small enterprise, the Central Government or a State
Government may notify preference policies in respect of
procurement of goods and services, produced and provided
Measures for Promotion & Development of Micro, Small and
by micro and small enterprise, by its Ministries,
Medium Enterprise: (Sections 9 to 14)
departments or its aided institutions and public sector
Sections 9 to 14 of the Act provide for various measures for
enterprises. This is valid only for Micro and Small
promotion, development and enhancement of competitiveness of
Enterprises and not for Medium Enterprises.
micro, small and medium enterprise to be undertaken by Central
Government, State Government and Reserve Bank of India. These
4. Government Grants: (Sections 12, 13 & 14)
measures are briefly discussed as under:
To facilitate promotion and development of such enterprise
the Central Government
1. Skill Development — Programmes and Guidelines for
micro, small and medium enterprise: (Section 9) (a) by notification, constitute one or more Funds,
The Central Government may from time to time notify
(b) credit to the Fund or Funds, such sums as the
programmes & guidelines:
Government may provide after due appropriation made
(a) to facilitate development of skill in the employees, by Parliament by law in this behalf, and
management and entrepreneurs,
(c) administer the Fund or Funds and ensure timely
(b) for providing technological upgradation, utilization and release of sums with such criteria, as
may be prescribed.
(c) to provide infrastructure facility and marketing
assistance, and
(d) to have cluster development of micro, small and
medium enterprises.

2. Credit Facilities: (Section 10)

The policies and practices in respect of credit to the micro,
small and medium enterprises shall be progressive and such
as may be specified by the Reserve Bank of India, with the
aims of:
(a) Ensuring smooth credit flow to the micro, small and
medium enterprises,
(b) Minimizing sickness among them, and
(c) Ensuring enhancement of their competitiveness.

16 17
 The Micro, Small and Medium Enterprises Development Act, 2006
Chapter V
Privileges offered to Micro and Small Enterprises
Privileges to the Registered Micro or Small Enterprises
The Act has substantially strengthened the provisions to check
delayed payments by larger enterprises to micro and small
enterprise (that supply products to the larger enterprises).
Sections 15 to 23 of the Act confers following privileges on
micro and small enterprises:
1. Buyer’s liability to make timely payment for goods &
services.
2. Mandatory interest @ three times the bank rate for delayed
payment by the buyer.
3. The interest so paid will not be allowed as deduction to the
buyer under the Income-tax Act, 1961.
4. Reference of Disputes to Micro and Small Enterprise
Facilitation Council.
5. Disclosure requirements to be fulfilled by the ‘Buyer’.
Section 24 of this Act specifically states that sections 15 to 23 of
the Act will have overriding effect over any other law for time
being in force. The Buyer has to identify whether the supplier is
registered under the Act. A draft of correspondence between the
buyer and the supplier is given Appendix 2.
As a reference, a list of possible legislations which may be
applicable to such micro, small and medium enterprises is
contained in Appendix 3.
Buyer’s liability to make timely payment for goods and
services: (Section 15)
Section 15 of the Act casts an obligation upon the buyer of any
goods or service, to make payment to the supplier by the
specified date as follows:
1. Where there is an agreement in writing
On or before the date agreed upon between them in writing.
Further in no case the period so agreed shall exceed 45 days
from the day of acceptance or day of deemed acceptance.
18
The Micro, Small and Medium Enterprises Development Act, 2006
2. Where there is no agreement
Before the appointed date, which means the day following
immediately after the expiry of 15 days from the day of
acceptance or day of deemed acceptance.
Who is eligible for protection?
The micro and small suppliers registered with appropriate
authority will be eligible for timely payment from the buyer.
Thus, those who are not so registered will not be eligible for
such protection. The eligible enterprise may register itself at any
time. No time frame is prescribed. The protection is accorded to
an enterprise, immediately after the same is registered and the
transaction prior to such registration shall also be covered for
such protection.
The terms buyer, supplier, day of acceptance and day of deemed
acceptance have been defined in the Act as under:
Buyer
As per section 2(d) of the Act, Buyer means whoever buys any
goods or receives any services from a supplier for consideration.
Supplier
As per section 2(n) of the Act, Supplier means a micro or small
enterprise which has filed a memorandum u/s. 8(1) and includes
1. National Small Industries Corporation,
2. Small Industries Corporation of a State/Union Territory,
3. A registered company, co-operative society, trust or body,
selling goods or services produced or provided by micro or
small enterprise.
Appointed Day means —
The day following immediately after the expiry of 15 days from
the day of acceptance or the day of deemed acceptance of any
goods or any services by a buyer from a supplier.
Day of acceptance means —
1. The day of actual delivery of goods or rendering services,
19
 The Micro, Small and Medium Enterprises Development Act, 2006
2. Where the buyer makes an objection (in writing) within 15
days from the day of delivery of goods or rendering services,
day of acceptance will be the day on which the supplier
removes such objection.
Day of deemed acceptance means —
Where the buyer makes no objection (in writing) within 15 days
from the day of actual delivery of goods or rendering of services,
the day of deemed acceptance will be day of actual delivery of
goods or rendering of services.
Interest for delayed payment by buyer: (Sections 16, 17 & 23)
Where a buyer fails to make payment as required under
section 15 :
1. He shall be liable to pay the amount with interest thereon.
(Section 17)
2. The interest shall be payable for the period of delay from
the appointed day or date immediately following the agreed
date. (Section 16)
3. The interest shall be payable at a rate three times the bank
rate and compounded at monthly rests. (Section 16)
4. The interest paid or payable by the buyer shall not be
deducted in computing his taxable income under the
provisions of the Income-tax Act.
Section 23 of the MSMED Act, 2006, states
“Notwithstanding anything contained in the Income-tax Act, 1961
the amount of interest payable or paid by any buyer, under or in
accordance with the provisions of this Act, shall not be allowed as
deduction for the purpose of computation income under the I.T.
Act, 1961”.
Some examples for calculation of interest under the Act.
Example 1: (No credit period/no objection)
• Date of Order : October 3, 2009
• No credit period
20
The Micro, Small and Medium Enterprises Development Act, 2006
• Date of Supply : November 3, 2009
• No objection in writing from buyer
• Day of acceptance : November 3, 2009
• Appointed Day : November 18, 2009
• Interest will be applicable if the payment is made after
November 18, 2009
Example 2: (No credit period/objection within 15 days)
• Date of Order : October 3, 2009
• No credit period
• Date of Supply : November 3, 2009
• Objection in writing from buyer received : November 15,
2009
• Date of removal of objection: November 20, 2009
• Day of acceptance : November 20, 2009
• Appointed Day : December 5, 2009
• Interest will be applicable if the payment is made after
December 5, 2009.
Example 3: (No credit period/objection beyond 15 days)
• Date of Order : October 3, 2009
• No credit period
• Date of Supply : November 3, 2009
• Objection in writing from buyer received : November 25,
2009
• Date of removal of objection: November 30, 2009
• Date of payment as per agreement between the parties:
December 15, 2009
• Day of acceptance : November 3, 2009
• Appointed Day : November 18, 2009
21
 The Micro, Small and Medium Enterprises Development Act, 2006
• Interest will be applicable if the payment is made after
November 18, 2009, even though the date of payment as
agreed between the parties is December 15, 2010.
Example 4: (Credit period/no objection)
• Date of Order : October 3, 2009
• Credit period : 60 days
• Date of Supply : November 3, 2009
• No objection in writing from buyer
• Date of payment as per agreement : January 2, 2010
• Day of acceptance : November 3, 2009
• Appointed Day : December 18, 2009
• Interest will be applicable, if the payment is made after
December 18, 2009, even though the date of payment as
agreed between the parties is January 2, 2010.
Example 5: (Credit period/objection within 15 days)
• Date of Order : October 3, 2009
• Credit period : 60 days
• Date of Supply : November 3, 2009
• Objection in writing from buyer received : November 16,
2009
• Date of removal of objection: November 20, 2009
• Date of payment as per agreement between the parties:
January 19, 2010
• Day of acceptance : November 20, 2009
• Appointed Day : January 4, 2010
• Interest will be applicable if the payment is made after
January 4, 2010, even though the date of payment as agreed
between the parties is January 19, 2010.
22
The Micro, Small and Medium Enterprises Development Act, 2006
Example 6: (Credit period/objection beyond 15 days)
• Date of Order : October 3, 2009
• Credit period : 60 days
• Date of Supply : November 3, 2009
• Objection in writing from buyer received : November 25,
2009
• Date of removal of objection: November 30, 2009
• Date of payment as per agreement between the parties :
January 19, 2010
• Day of acceptance : November 3, 2009
• Appointed Day : December 18, 2009
• Interest will be applicable if the payment is made after
December 18, 2009, even though the date of payment as
agreed between the parties is January 19, 2010.
Reference of Disputes to Micro and Small Enterprise
Facilitation Council: (Sections 18 to 21)
Who can make a Reference?
Any party to a dispute relating to amount payable for goods or
services and any interest thereon, may make a reference to Micro
and Small Enterprise Facilitation Council.
Proceedings by the Micro and Small Enterprise Facilitation
Council
On receiving a reference, the Micro and Small Enterprise
Facilitation Council may itself conduct conciliation into the
matter or seek assistance from any institution or centre providing
alternate dispute resolution service for conducting such
conciliation.
If conciliation is not successful and stands terminated without
any settlement between the parties, the Micro and Small
Enterprise Facilitation Council shall either itself take up the
dispute for arbitration or refer it to any institution or centre
providing alternate dispute resolution service for such
arbitration.
23
 The Micro, Small and Medium Enterprises Development Act, 2006
Jurisdiction of Micro and Small Enterprise Facilitation Council
The Micro and Small Enterprise Facilitation Council or the
centre providing alternate dispute resolution services shall have
jurisdiction to act as an Arbitrator or conciliator in a dispute
between the supplier located within its jurisdiction and a buyer
located anywhere in India. Thus the jurisdiction is fixed on the
basis of location of the supplier.
Time limit for deciding the matter
Every reference made under this section shall be decided within
90 days from date of making such a reference.
If an appellant (not being a supplier) wants to make an
application for setting aside any decree, award or order passed
by Micro and Small Enterprise Facilitation Council or any
institution or centre providing alternate dispute resolution
service, the application shall not be entertained by any court
unless the appellant has deposited with it 75% of the amount in
terms of decree, award or order, in manner directed by such
court. The appellate court may order payment of a part of the
deposit to the supplier (micro or small) enterprise.
Disclosure requirement to be fulfilled in audit of ‘Buyers’ — to
specify unpaid amount with interest in his annual statement of
accounts (section 22)
A ‘buyer’, who is required to get his accounts audited under any
law for time being in force, shall furnish the following additional
information in his annual statement of accounts:
1. The principal amount and interest due thereon (to be shown
separately) due to any supplier at the end of each
accounting year.
2. The amount of payment made to the supplier, beyond the
appointed day, and interest thereon during an accounting
year.
3. The amount of interest due & payable for the period of
delay in making the payment (which has been paid but
beyond the appointed day during the year) but without
adding interest specified under this Act.
24
The Micro, Small and Medium Enterprises Development Act, 2006
4. The amount of interest accrued and remaining unpaid at the
end of each accounting year.
5. The amount of further interest remaining due and payable
even in the succeeding year, until the date such interest is
actually paid, for purpose of disallowance as a deductible
expenditure in terms of section 23.
The buyer will be required to make necessary changes in his
accounting package so as to have a separate group of suppliers
for micro and small enterprises, have a separate account for
interest paid to them, calculate interest paid to them at three
times the bank rate, compounded quarterly at monthly rest and
credit the same to suppliers account till the date of payment.
Micro and Small enterprise will be required to mention/get
printed on their letter heads, supply order sheets, invoices, bills
and other relevant documents, the Entrepreneurs Memorandum
(EM) Number as allotted after filing of the said Memorandum, by
the District Industries Centre (DIC) or competent authority.
While finalizing/carrying out audit of financial statements of any
entity the auditor will now have to take note of the disclosure
requirement in annual statement of accounts of the buyer as well
as provisions of interest for late payment of dues of micro/small
enterprises.
Besides, vide the Income-tax (Tenth Amendment) Rules, 2009
Income, Form 3CD has been amended by insertion of a new
Entry No. 17A which reads as follows:
• “17A. Amount of interest inadmissible under section 23 of the
Micro, Small and Medium Enterprises Development Act,
2006.”
25
 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

Chapter VI Appendix 1
Miscellaneous MSME REGISTRATION FORM
The Gazette of India
Simplified Scheme for Closure: (Section 25)
Extraordinary
With a view to facilitate closure of business of micro, small or
Part II — Section 3 — Sub-section (ii)
medium enterprises (not being a company registered under the
PUBLISHED BY AUTHORITY
Companies Act, 1956) the Central Government may notify a
scheme within one year from the date of commencement of this Ministry of Small Scale Industries
Act. NOTIFICATION
New Delhi, the 30th September, 2006
Penal Provisions: (Section 27)
The penal provisions for contravention of sections 8, 22 & 26 of S.O. 1643 (E)— In exercise of the powers conferred by sub-
the Act are as under: section (2) of section 8 of the Micro, Small and Medium
Enterprises Development Act, 2006 (27 of 2006) herein referred
1. Penalty for contravention of section 8 or 26 of the Act:
to as the said Act, the Central Government, after obtaining the
Penalty for non-filing of memorandum with the prescribed
recommendations of the Advisory Committee in this behalf,
authority as required under section 8(1) of the Act or non-
hereby provides for the format of memorandum and procedure of
furnishing of any information to the officers appointed
its filing and other matters incidental thereto for the purpose of
under section 26(1) of the Act will be:
the said Act, namely:—
(a) In case of first conviction, a fine which may extend to
Rs. 1,000. Schedule I
Form No. ——————
(b) In case of any subsequent conviction, a fine which ENTREPRENEURS MEMORANDUM
shall not be less than Rs. 1,000 but may extend to FOR
Rs. 10,000. SETTING UP MICRO, SMALL OR MEDIUM ENTERPRISE
2. Penalty for contravention of section 22 of the Act: A buyer
GENERAL INSTRUCTIONS
failing to specify unpaid amount with interest in his annual
1. MEMORANDUM IS TO BE FILED WITH THE DISTRICT
statements of account as required under section 22 of the
INDUSTRIES CENTRE* BY A MICRO, SMALL OR MEDIUM
Act, will be liable for a fine of not less than Rs. 10,000.
ENTERPRISE, AS THE CASE MAY BE, UNDER SUB-
SECTION (1) OF SECTION 8 OF THE MICRO, SMALL AND
Powers to make Rules: (Sections 29 & 30)
MEDIUM ENTERPRISES DEVELOPMENT (MSMED) ACT,
• The Central Government/The State Government may, by
2006.
notification, make rules to carryout the provision of this
Act. 2. FOUR COPIES OF THE MEMORANDUM SHOULD BE
FILED.
3. THERE IS NO FEE FOR PROCESSING THE
MEMORANDUM.

26 27
 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

4. EXISTING UNITS SHOULD FILL UP ONLY PART II OF Form No. ——————

THE MEMORANDUM.
PART I
5. IN CASE OF ANY CHANGE IN THE INFORMATION, AT
(To be filled in as expression of intent)
ANY POINT OF TIME, PLEASE INFORM THE DETAILS
WITHIN THREE MONTHS TO DISTRICT INDUSTRIES 1. NAME OF APPLICANT
CENTRE.
6. WRITE/TYPE IN BLOCK (CAPITAL) LETTERS.
7. LEAVE ONE BLANK BOX AFTER EACH WORD.
2. (a) ADDRESS OF COMMUNICATION
8. FILL UP WHICHEVER IS APPLICABLE.
9. ALL CODES OTHER THAN PIN CODE SHALL BE FILLED
BY THE OFFICE.
PIN
10. FORM WILL BE MACHINE NUMBERED BY THE DISTRICT
INDUSTRIES CENTRE.
(i) TELEPHONE NUMBER
* To be filed at the District Industries Centre under whose
jurisdiction the enterprise is proposed to be located. (ii) FAX NUMBER
(iii) CELL PHONE NUMBER
Form No. —————— (iv) E-MAIL
FOR OFFICE USE ONLY
DDMMYYYY (v) WEB-SITE
DATE OF ISSUE
CATEGORY OF ENTERPRISE
(b) PERMANENT RESIDENTIAL ADDRESS
(MANUFACTURING-1, SERVICE-2)
(MAIN APPLICANT)
(MICRO-1, SMALL-2, MEDIUM-3)
ENTREPRENEURS
MEMORANDUM NUMBER
PIN
(First two boxes are for State/Union Territory code, next three
boxes are for District code, sixth and seventh boxes are for (i) TELEPHONE NUMBER
category of enterprise (sixth box for indicting manufacturing or
service and seventh box for indicating micro or small or (ii) FAX NUMBER
medium) and last five boxes are for Entrepreneurs’ Memorandum
(iii) CELL PHONE NUMBER
number)

28 29
 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

(iv) E-MAIL In case of others, please specify

———————————————————————————
(v) WEB-SITE ———————————————————————————
———————————————————————————
———————————————————————————
3. NAME OF PROPOSED ENTERPRISE (if decided) ———————————————————————————
———————————————————————————
7. NATURE OF OPERATION
4. PROPOSED LOCATION OF ENTERPRISE (Perennial-1, Seasonal-2, Casual-3)
(i) VILLAGE/TOWN 8. WHETHER THE UNIT WILL BE AN ANCILLARY
(Yes-1, No-2)
CODE MMYYYY
(ii) TAHSIL/TALUK/ 9. PROPOSED SCHEDULE OF
MANDAL INSTALLATION OF PLANT AND
MACHINERY
CODE
(iii) DISTRICT 10. TYPE OF ORGANIZATION
(PROPRIETARY-1, HINDU UNDIVIDED
FAMILY-2, PARTNERSHIP-3, CO-OPERATIVE-4,
CODE PRIVATE LIMITED COMPANY-5, PUBLIC LIMITED
(iv) STATE COMPANY-6, SELF-HELF GROUP-7, OTHERS-8)
11. (a) MAIN MANUFACTURING/SERVICE ACTIVITY
CODE NAME
(v) PIN CODE CODE (NIC 98*)
(vi) AREA (RURAL-1, URBAN-2)
(b) PRODUCTS TO BE MANUFACTURED/SERVICE TO
5. CATEGORY OF ENTERPRISE BE PROVIDED
(MICRO-1, SMALL-2, MEDIUM-3) (i) NAME
6. NATURE OF ACTIVITY [Tick Appropriate Box(es)] CODE (ASICC2000*)
(i) MANUFACTURE (ii) NAME
(ii) SERVICE CODE (ASICC2000*)
(iii) OTHERS
(iii) NAME
CODE (ASICC2000*)
30 31
 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

(iv) NAME 14. POWER LOAD (ANTICIPATED) H.P./K.W.

CODE (ASICC2000*) 15. (a) (i) OTHER SOURCE OF ENERGY/
POWER [IF REQUIRED]
(v) NAME
(NO POWER NEEDED-1, COAL-2, OIL-3, LIQUID
CODE (ASICC2000*) PETROLEUM GAS-4, ELECTRICITY FROM GRID-5,
10. (*)Codes for activities and products/services as per ELECTRICITY FROM GENERATOR- 6, NON
classification specified from time to time by the CONVENTIONAL ENERGY-7, TRADITIONAL
Development Commissioner (Small Scale Industries), ENERGY/FIREWOOD-8)
Government of India to be filled in by the District Industries (ii) If no power required, specify reasons;
Centre or the office where the Entrepreneurs’ Memorandum
is submitted. (b) INDICATE ANNUAL REQUIREMENT
SOURCE OF ENERGY QTY. UNIT
(ADD ADDITIONAL SHEET FOR MORE PRODUCTS)
........................................
12. (a) PROPOSED INVESTMENT IN FIXED ASSETS
[Rupees in lakh] ........................................
(i) LAND (OWNED-01/RENTED-02/ ........................................
LEASED-03)
16. EXPECTED EMPLOYMENT (Nos.)
APPROXIMATE VALUE*
(i) MANAGEMENT AND OFFICE STAFF
(ii) BUILDING (OWNED-01/RENTED-02/
LEASED-03) (ii) SUPERVISORY
APPROXIMATE VALUE* (iii) WORKERS
(iii) PLANT AND MACHINERY VALUE* 17. ENTREPRENEURS’ PROFILE (OF ALL PARTNERS/
(In case of manufacturing enterprise) DIRECTORS OF THE ORGANISATION — USE SEPARATE
SHEETS, IF NEEDED)
(iv) EQUIPMENT VALUE*
(In case of service enterprise) (a) NAME
(v) FOREIGN EQUITY, IF ANY VALUE* (i) MALE (M)/FEMALE (F)
(ii) SC (1)/ST (2)/OBC (3)/OTHERS (4)
[*The value in the boxes should be filled in from the right PHYSICALLY CHALLENGED (5)
side, e.g., if the value is Rupees 10 lakhs it should be
written as . This will also apply to all other items (iii) KNOWLEDGE LEVEL
(rows) where quantity, number, etc., to be given.] 1 0 [TECHNICAL GRADUATE-1,
MANAGEMENT GRADUATE-2,
13. INSTALLED CAPACITY (proposed) QTY. UNIT POST GRADUATE-3, OTHER
PER ANNUM GRADUATE-4, UNDER-GRADUATE-5,
ANY OTHER LOWER-6]
32 33
 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

(iv) EQUITY PARTICIPATION Form No. ——————

(in Rupees)
(Percentage of total equity) ACKNOWLEDGEMENT
(v) STAKE IN OTHER MANUFACTURING M/s………………………………………………………………. HAS
FILED MEMORANDUM EXPRESSING ITS INTENT TO SET UP
ENTERPRISES
AN……………………………………………………………….
(Yes-1, No-2)
(MANUFACTURING/SERVICE) ENTERPRISE AT THE
[ADD ADDITIONAL SHEET, IF NEEDED]
ADDRESS……………………………………………………………….
18. EXPECTED SCHEDULE OF COMMENCEMENT ………………………………………………………………………………………………………………………….
OF PRODUCTION/ACTIVITY PIN ………………… STATED IN FORM NO. …………………...
MMYYYY AND ALLOCATED ENTREPRENEURS’ MEMORANDUM NO. AS
BELOW

DATE: DDMMYYYY
DATE OF ISSUE
PLACE:
CATEGORY OF THE UNIT
[SIGNATURE OF THE APPLICANT/AUTHORISED PERSON]
NAME OF THE PROPRIETOR/ (MANUFACTURING-1, SERVICES-2)
PARTNER/MANAGING DIRECTOR (MICRO-1, SMALL-2, MEDIUM-3 )
(a) Enclose a self-certified copy of Power of Attorney/Board
ENTREPRENEURS’
Resolution/Society Resolution, wherever applicable, while
MEMORANDUM NUMBER
signing as Partner/Managing Director or Authorised Person.
(b) Enclose a certified/notarized copy of the Partnership Deed/ (First two boxes are for State/Union Territory code, next three
Memorandum of Association/Articles of Association in case boxes are for District code, sixth and seventh boxes are for
of Medium Enterprises. category of enterprise (sixth box for indicting manufacturing or
service and seventh box for indicating micro or small or
Undertaking medium) and last five boxes are for Entrepreneurs’ Memorandum
number)
This is to certify that the information furnished in the
memorandum in Form No. …………………. is true and correct to DATE:
the best of my knowledge and belief.
PLACE:
DATE:
SIGNATURE
PLACE:
WITH OFFICE SEAL
[SIGNATURE OF THE APPLICANT/
AUTHORISED PERSON]

34 35
 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

PART II (b) PERMANENT RESIDENTIAL ADDRESS

Form No. —————— (MAIN APPLICANT)

(To be filled up and submitted to the District Industries Centre

after commencement of production/activity)
PIN
[THE ROWS WHICH HAVE BEEN REPEATED NEED TO BE
FILLED ONLY TO THE EXTENT THAT THE ACTUAL DETAILS
(i) TELEPHONE NUMBER
ON COMMENCEMENT VARY FROM THOSE IN PART I]
(ii) FAX NUMBER
I. ENTREPRENEURS
MEMORANDUM NUMBER (Part I) (iii) CELL PHONE NUMBER
DDMMYYYY (iv) E-MAIL

II. DATE OF ISSUE

MMYYYY (v) WEB-SITE

III. MONTH OF COMMENCEMENT

OF PRODUCTION/ ACTIVITY 3. NAME OF ENTERPRISE
1. NAME OF APPLICANT

4. LOCATION OF ENTERPRISE
2. (a) ADDRESS OF COMMUNICATION (i) VILLAGE/TOWN

CODE
PIN
(ii) TAHSIL/TALUK/
(i) TELEPHONE NUMBER MANDAL

(ii) FAX NUMBER CODE

(iii) CELL PHONE NUMBER (iii) DISTRICT

(iv) E-MAIL
CODE

(v) WEB-SITE (iv) STATE

CODE
36 37
 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

(v) PIN CODE 12. (a) MAIN MANUFACTURING/SERVICE ACTIVITY

(vi) AREA (RURAL-1, URBAN-2) NAME
5. CATEGORY OF ENTERPRISE CODE (NIC 98*)
(MICRO-1, SMALL-2, MEDIUM-3) (b) PRODUCTS TO BE MANUFACTURED/SERVICE TO
BE PROVIDED
6. NATURE OF ACTIVITY [Tick Appropriate Box(es)]
(i) NAME
(i) MANUFACTURE
CODE (ASICC2000*)
(ii) SERVICE
(ii) NAME
(iii) OTHERS
CODE (ASICC2000*)
In case of others, please specify
(iii) NAME
———————————————————————————
CODE (ASICC2000*)
———————————————————————————
——————————————————————————— (iv) NAME
———————————————————————————
CODE (ASICC2000*)
———————————————————————————
——————————————————————————— (v) NAME
7. NATURE OF OPERATION CODE (ASICC2000*)
(Perennial-1, Seasonal-2, Casual-3) (*) Codes for activities and products/services as per
classification specified from time to time by the
8. WHETHER THE UNIT IS AN ANCILLARY Development Commissioner (Small Scale Industries),
(Yes-1, No-2) Government of India to be filled in by the District Industries
MMYYYY Centre or the office where the Entrepreneurs’ Memorandum
is submitted.
9. MONTH OF INSTALLATION OF
PLANT AND MACHINERY (ADD ADDITIONAL SHEET FOR MORE PRODUCTS)
10. WHETHER THE UNIT IS REGISTERED 13. (a) INVESTMENT IN FIXED ASSETS [Rupees in lakh]
UNDER FACTORY ACT (i) LAND (OWNED-01/RENTED-02/
(Under Section 2m(i)/2m(ii)-1, 85)I)/85(ii)-2, LEASED-03)
not registered-3)
VALUE*
11. TYPE OF ORGANIZATION
[PROPRIETARY-1, HINDU UNDIVIDED FAMILY-2, (ii) BUILDING (OWNED-01/RENTED-02/
PARTNERSHIP-3, CO-OPERATIVE-4, PRIVATE LEASED-03)
LIMITED COMPANY-5, PUBLIC LIMITED VALUE*
COMPANY-6, SELF-HELP GROUP-7, OTHERS-8]
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 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

(iii) PLANT AND MACHINERY 18. TOTAL ANNUAL TURNOVER

VALUE* (in Rupees)
(In case of manufacturing enterprise) (If less than one year of operation,
(iv) EQUIPMENT then expected turnover)
VALUE* 19. EXPORT (if any) (in Rupees)
(In case of service enterprise) 20. ENTREPRENEURS’ PROFILE (OF ALL PARTNERS/
(v) FOREIGN EQUITY, IF ANY VALUE* DIRECTORS OF THE ORGANISATION — USE SEPARATE
SHEETS, IF NEEDED)
[*The value in the boxes should be filled in from the right
side, e.g., if the value is Rupees 10 lakhs it should be (a) NAME
written as . This will also apply to all other items (i) MALE (M)/FEMALE (F)
(rows) where quantity, number, etc., to be given.] 1 0
(ii) SC (1)/ST (2)/OBC (3)/OTHERS (4)
14. INSTALLED CAPACITY PER ANNUM QTY. UNIT PHYSICALLY CHALLENGED (5)
UNIT (iii) KNOWLEDGE LEVEL
15. POWER LOAD H.P./K.W. [TECHNICAL GRADUATE-1,
16. (a) (i) OTHER SOURCE OF ENERGY/ MANAGEMENT GRADUATE-2,
POWER [IF REQUIRED] POST GRADUATE-3,OTHER
(NO POWER NEEDED-1, COAL-2, OIL-3, LIQUID GRADUATE-4, UNDER-GRADUATE-5,
PETROLEUM GAS-4, ELECTRICITY FROM GRID-5, ANY OTHER LOWER-6]
ELECTRICITY FROM GENERATOR- 6, NON- (iv) EQUITY PARTICIPATION
CONVENTIONAL ENERGY-7, TRADITIONAL (in Rupees)
ENERGY/FIREWOOD-8) (Percentage of total equity)
(ii) If no power required, specify reasons.
(v) STAKE IN OTHER MANUFACTURING
(b) INDICATE ANNUAL REQUIREMENT ENTERPRISES
SOURCE OF ENERGY QTY. UNIT (Yes-1, No-2)
........................................ [ADD ADDITIONAL SHEET, IF NEEDED]
........................................ 21. DATE OF COMMENCEMENT OF
........................................ PRODUCTION/ACTIVITY
17. EMPLOYMENT DDMMYYYY
MALE FEMALE
(Nos.) (Nos.)
DATE:
(i) MANAGEMENT AND OFFICE STAFF
PLACE:
(ii) SUPERVISORY
[SIGNATURE OF THE APPLICANT/
(iii) WORKERS AUTHORISED PERSON]
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 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

NAME OF THE PROPRIETOR/PARTNER/MANAGING DIRECTOR ENTREPRENEURS

(a) Enclose a self-certified copy of Power of Attorney/Board MEMORANDUM NUMBER
Resolution/Society Resolution, wherever applicable, while
(First two boxes are for State/Union Territory code, next three
signing as Partner/Managing Director or Authorised Person.
boxes are for District code, sixth and seventh boxes are for
(b) Enclose a certified/notarized copy of the Partnership Deed/ category of enterprise (sixth box for indicting manufacturing or
Memorandum of Association/Articles of Association in case of service and seventh box for indicating micro or small or
Medium Enterprises. medium) and last five boxes are for Entrepreneurs’ Memorandum
number)
Undertaking
This is to certify that the information furnished in the
memorandum in Form No. …………………. is true and correct to DATE:
the best of my knowledge and belief.
PLACE:
DATE: SIGNATURE
PLACE: WITH OFFICE SEAL
[SIGNATURE OF THE APPLICANT/
AUTHORISED PERSON] Appendix 2
(Sample confirmation letter)
Form No. —————— (To be sent by Buyer to Suppliers for confirming their status)

ACKNOWLEDGEMENT Date
M/s……………………………………………………………….HAS
To
FILED MEMORANDUM FOR A ………………………………….
(MANUFACTURING/SERVICE) ENTERPRISE WHICH HAS BEEN _______________
SET UP AT THE ADDRESS…………………………………………… _______________
……………………………………………………………………………………… Subject : Confirmation regarding Category of Enterprise for the
……………………………………………………………………………………………… Purpose of the Micro, Small and Medium Enterprises
PIN……………………… STATED IN FORM NO. ………………... Development Act, 2006
AND ALLOCATED EM NO. AS BELOW Dear Sir,
DDMMYYYY In view of the newly enacted, Micro, Small and Medium
Enterprises Development Act, 2006 the enterprises has been
DATE OF ISSUE classified into three categories, i.e., micro, small and medium
CATEGORY OF THE UNIT enterprise, based on the amount of investment in Plant &
Machinery. The basis of classification is reproduced below:
(MANUFACTURING-1, SERVICES-2)
I. In the case of the enterprises engaged in the manufacture or
(MICRO-1, SMALL-2, MEDIUM-3 ) production of goods pertaining to any industry specified in
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 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

the First Schedule to the Industries (Development and Subject: Confirmation regarding Category of Enterprise for the
Regulation) Act, 1951: Purpose of the Micro, Small and Medium Enterprises
(a) Micro Enterprise: where the investment in plant and Development Act, 2006
machinery is up to Rs. 25 lakhs. Dear Sir,
(b) Small Enterprise: where the investment in plant & With reference to your letter dated ________ I/we confirm as
machinery exceeds Rs. 25 lakhs but up to Rs. 5 crores. under:
(c) Medium Enterprise: where the investment in plant & 1. My/Our enterprise falls in category against which I/we have
machinery exceeds Rs. 5 crores but up to Rs. 10 crores. put tick mark (✓) in the table below.
II. In the case of the enterprises engaged in providing or Sr. Category Enterprise engaged Enterprise
rendering of services: No. of in manufacturing providing
(a) Micro Enterprise: where the investment in plant and Enterprise goods services
machinery is up to Rs. 10 lakhs. (i) Micro
(b) Small Enterprise: where the investment in plant & (ii) Small
machinery exceeds Rs. 10 lakhs but up to Rs. 2 crores.
(iii) Medium
(c) Medium Enterprise: where the investment in plant &
machinery exceeds Rs. 2 crores but up to Rs. 5 crores. (iv) None of
the above
Please provide us the status of your enterprise in the enclosed
format. 2. The status with reference to Registration/Recognition of my/
our enterprise is as under
Thanking you,
(a) Memorandum filed with specified Authority: Yes/No/
Yours faithfully,
Applied for.
For XYZ Limited
(b) Registration/recognition received from the specified
Authority: Yes/No.
(Authorised Signatory) I certify that the above stated information is true to the best of
Encl: as above my knowledge and belief.
(Sample reply to be sent by the Supplier to Buyer confirming For ______________(company/enterprise name)
their status)
Sign
Date Name
Authorised signatory
To Official Stamp/Seal of the enterprise
XYZ Limited (the buyer)
Accounts Department,

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 The Micro, Small and Medium Enterprises Development Act, 2006 The Micro, Small and Medium Enterprises Development Act, 2006

3rd cover
Appendix 3
List of Addresses in Maharashtra, Gujarat and Goa
In the State of Maharashtra
• Development Commissioner of Industries*
Government of Maharashtra
Department of Industries
New Administrative Building, Opp. Mantralaya Appendix 4
Mumbai-400 032 List of useful websites
Phone : (022) 2202 8616
• http://msme.gov.in/Ministry of Micro, Small
• In Mumbai and Medium Enterprises.
o Director of Industries
• http://dcmsme.gov.in/Development
Institute for Design of Electrical Measuring
Commissioner, MSME.
Instruments (IDEMI)
Opp. Tata Nagar, Swantantryaveer Tatya Tope Marg, • http://www.fisme.org.in/index.htm
Chunabhatti, Sion P.O., Mumbai-400 022. Federation of Indian Micro, Small and
In the State of Gujarat Medium Enterprises.
• Commissioner of Industries* • http://www.rbi.org.in Reserve Bank of
Government of Gujarat, India.
Block No. 1, 2nd Floor, Udyog Bhawan,
Gandhinagar – 382 011 • http://ssi.nic.in/Ministry of Small Scale
Phone : (079) 2325 2524 Industries (Now, Ministry of Micro, Small
and Medium Enterprises).
In the State of Goa
• Director of Industries, Trade and Commerce*
Government of Goa,
Udyog Bhawan, Secretariat, Panaji-403 001
Phone: (0832) 243 2826
In the Union Territory of Daman & Diu, and Dadra & Nagar Haveli
• Director, Department of Industries*,
Collectorate of Admn. of UT of Daman & Diu,
Daman – 396 220
Phone: (0260) 223 0689
• Districtwise addresses may be obtained from the above
offices.


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