The MSME sector has emerged as a dynamic sector of the Indian economy over the last five decades. MSMEs contribute enormously to the socio-economic development of the country. MSME have an outsized share of jobs, production and exports. The primary responsibility of promotion and development of MSMEs is of the State Governments. However, the govt of India, supplements the efforts of the State Governments through various initiatives.
Ministry of Agro and Rural Industries and Ministry of Small Scale Industries are merged into one Ministry, namely, “MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES” to direct and govern the establishment, registration and functioning of MSMEs.
As per the report of Ministry of Micro Small and Medium Enterprises, Government of India; MSME sector is serving numerous benefits towards the inclusive growth of Indian economy. Major contribution of MSMEs is as follows:
1. It provides opportunities at comparatively lower cost;
2. It helps in industrialization of rural and backward areas;
3. Reduce Regional imbalances through the optimum utilization of their resources;
4. More equitable distribution of value and wealth;
5. Major partner within the process of inclusive growth.

Definition of MSME:
The Micro Small and Medium Enterprises are defined under MSME Act, 2006. According to the Act, MSME are broadly classified in two categories:
1. Enterprises engaged within the manufacturing and production of products concerning any industry;
2. Enterprises engaged in providing or rendering services
The manufacturing enterprises have been further defined in terms of investment in plants and machinery wherein the service enterprises have been defined in terms of their investment in equipment. The further classification of producing and repair enterprises are often seen below.

Legal Framework on MSMEs

The conceptual and legal framework for little scale and ancillary industrial undertakings springs from the Industries Development and Regulation Act, 1951. The Act provided the required powers to the Central Government to amend the provisions of this act from time to time so on encourage small scale and ancillary undertakings. The Small and Medium Enterprises Development Bill 2005 which was enacted in June 2006 was renamed as “Micro, Small & Medium Enterprises Development Act, 2006” aims at facilitating the promotion and development of small and medium enterprises. Various notifications issued by the Central Government from time to time relating to increase in slap rate of investments in plant & Machinery for manufacturing enterprises and equipments in service enterprises provides a transparent cut proof that the economy of our country is striving towards achieving the economies of scale by increasing the quantity of production of products . The Micro, Small and Medium Enterprise Development Act, 2006 (MSMEDA) extends the scope to accomplishes many long -standing goals of the govt and stakeholders within the MSME sector including the service sector.
Micro, Small and Medium Enterprises (MSME) contribute nearly 8 percent of the country’s GDP, 45 percent of the manufacturing output and 40 percent of the exports. They provide the most important share of employment after agriculture. They are the nurseries for entrepreneurship and innovation. They are widely dispersed across the country and produce a various range of products and services to satisfy the requirements of the local markets, the worldwide market and therefore the national and international value chains.

Computation of Investment limit in plants & machineries or in equipments for the aim of MSMED Act, 2006.

As per Ministry of Small Scale industries notification dated 5th day of October, 2006, the investment in Plant and Machinery mentioned in respective limits is that the Original Price, regardless of whether the plant and machinery are new or second handed, shall be taken under consideration as long as within the case of imported machinery, the subsequent shall be included in calculating the worth , namely;

i. duty (excluding miscellaneous expenses like transportation from the port to the location of the factory, demurrage paid at the port); ii. Shipping charges; iii. Customs clearance charges; and iv. nuisance tax or value added tax.

Further, as per the said notification, the subsequent are excluded while calculating the investment in Plant and Machinery:-

i. Equipment like tools, jigs, dyes, moulds and spare parts for maintenance and therefore the cost of consumables stores;

Computation of Investment limit in plants & machineries or in equipments for the aim of MSMED Act, 2006

ii. Installation of plant and machinery;

iii. Research and development equipment and pollution controlled equipment

iv. Power generation set and additional transformer installed by the enterprise as per regulations of the State Electricity Board;

v. Bank charges and repair charges paid to the National Small Industries Corporation or the State Small Industries Corporation;

vi. Procurement or installation of cables, wiring, bus bars, electrical control panels (not mounded on individual machines), oil circuit breakers or miniature circuit breakers which are necessarily to be used for providing electric power to the plant and machinery or for safety measures;

vii Gas producers plants;

viii. Transportation charges (excluding sales-tax or value added tax and excise duty) for indigenous machinery from the place of the manufacture to the location of the enterprise;

ix. Charges purchased technical know-how for erection of plant and machinery;

x. Such storage tanks which store staple and finished produces and aren't linked with the manufacturing process; and

xi. Fire fighting equipment.

Further, investment in Land, Building, Vehicles, Furniture and fixtures, Office Equipment etc shall not be considered in determining the edge limit of plant and machinery or Equipment because the case could also be .

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