NITI Aayog’s 17 Reforms to Boost MSMEs: A Game-Changer for Small Businesses!
A high-level committee led by NITI Aayog member Rajiv Gauba has proposed a comprehensive package of at least 17 reforms aimed at easing the regulatory and financial burden on Micro, Small, and Medium Enterprises (MSMEs).
The recommendations are being reviewed by government ministries and departments. Proposed reforms include changes to improve credit access, such as potentially expanding the Credit Guarantee Fund Trust. Other suggestions aim to provide compliance relief, including exempting micro and small companies from mandatory CSR and reducing board meetings under the Companies Act. The panel also recommended increasing the tax audit exemption limit and simplifying dispute resolution. Further proposals involve transitioning to simpler, trust-based regulatory systems.
A high-level committee led by NITI Aayog has proposed 17 reforms to ease regulatory and financial burdens on Micro, Small, and Medium Enterprises (MSMEs). These reforms aim to improve credit access, reduce delays, and make operations smoother for small businesses.
Key Recommendations:
Credit Access:
– Expansion of Credit Guarantee Fund Trust for Micro and Small Enterprises
– Introduction of a working capital financing scheme linked to enterprise turnover
– â‚ą5 crore credit card facility at market rates
Compliance Ease:
– Exemption of micro and small companies from mandatory Corporate Social Responsibility (CSR) obligations
– Removal of mandate for auditor appointment for small companies with turnover less than â‚ą1 crore
– Reduction of mandatory board meetings for MSMEs from two per year to one per year.
Taxation:
– Raising tax audit exemption limit for companies with more than 5% cash receipts to â‚ą2 crore from â‚ą1 crore
– Lower penalties for small errors by micro enterprises under GST
Dispute Resolution:
– Strengthening rules for faster payment of arbitration awards
– Mandatory pre-deposit of 75% arbitral award value under the MSME Development Act.
Other Reforms:
– Exemption of all micro and small companies from mandatory CSR obligations.
– Lower interest rates for MSMEs
These reforms are expected to significantly improve the business environment for small enterprises, promoting growth, employment, and economic development.
Team: Credit Money Finance