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This document deals with MSME and LLP
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Small scale industry has a major role in the Indian Economy due to the following reasons:
The Small Scale Industry sector provides a panacea for less developed countries which aspires for higher growth in the face of shortage of capital, infrastructural bottlenecks, and a dearth of resources. The development of this sector hinges on the synchronized efforts of the governments, financial institutions and the entrepreneurs. There have been policy interventions undertaken by the state to promote this sector both in the pre-independence period and also after India secured its independence. Although some opportunities emerged for indigenous entrepreneurship in selected areas under the patronage of the colonial government however there was no systematic or deliberate approach on part of the British to revive, promote or develop Indian indigenous industries.^2
The MSMED Act, 2006 provided for the first ever legal framework for recognition of the concept of „enterprise‟ and integrated the three tiers of micro, small and medium enterprises. The Act aimed at imparting greater vitality and growth impetus to the three categories of enterprises in terms of output, employment and exports and instilling a competitive culture based on heightened technology awareness. The enactment of this historic MSMED Act represents a paradigm shift where the policy of protection has now been replaced by the policy of promotion of SSI sector. 3
(^2) Kr. Nath, S. (2014). Policy Intervention in Small Scale Industries: A Historical Perspective. Journal of Entrepreneurship & Organization Management, 03(02). 29/11/2017 3 Kr. Nath, S. (2014). Policy Intervention in Small Scale Industries: A Historical Perspective. Journal of Entrepreneurship & Organization Management, 03(02). 29/11/
It is also seen that some opportunities emerged for indigenous entrepreneurship where patronage of the colonial government was extended to those areas where the British had a vested interest.
How the system of small scale industry which itself is in a growing phase and the area targeted is phenomenal, would be able to tackle the issue of unemployment. The policy implication is to increase the market coverage in remote areas where, awareness and the proper implementation remains a challenge to address.
A micro enterprise is a type of small business that is often unregistered and run with small capital investment. Specifically a micro enterprise is defined as a business having five or fewer employees and a seed capital of not more than $35000. The terms micro enterprise and micro business have the same meaning, though traditionally when referring to a small business financed by micro credit the term micro enterprise is used. Broadly stated, a micro enterprise is a business started with as little capital as possible, or less capital than would be usual for a business. In most countries the term micro is used to refer to a business with a single owner.
The micro enterprise sector has a twenty year history in the United States. While the term “micro enterprise” was in common use internationally by the late 1970‟s, it came into domestic use about a decade later. In the United States, the micro enterprises are defined as the business with five or fewer employees. Many of these business enterprises have no employees other than the self-employed owners.
The SMEs are not uniform across the globe. The way they are defined depends on the stage of economic development and the broad policy purposes for which the definition is used. “There are said to be more than 60 definitions of the Small and Medium Enterprises used in 75 countries surveyed” In the European Union, small and medium enterprises are defined as enterprises with less than 500 employees.
CHINA : In China, the definition of the SMEs is less quantified and varies with the product. These industries are designed to mobilize the local raw materials, local skills, local finance and the local markets. Investment ceiling is 30 Million Yuan. GERMANY, SWEDEN, NORWAY AND DENMARK: There is no official definition of the SMEs in these countries. Units employing up to 300 workers are considered to be small.
There is no clear-cut definition of a small industry in the Scandinavian countries. However, such units that employ 10 to 100 workers are taken to be small – scale units.
UK : There is no demarcation between small and large industries. However, in books and treatises on industrial subjects, units employing less than 500 workers are generally referred to as small units; but this cannot be considered as a criterion of universal applicability.
USA : In the USA, the manufacturing firm is officially a small business for Government procurement purpose, if it is not dominant in its field of operations and if it has fewer than 500 employees, or if it is certified as small by the Small Business Administration.
In other countries, small and medium enterprises are defined on the basis of both quantitative and qualitative elements, such as, the number of workers employed and / or the annual turnover or the level of fixed investment. However, employment is an omnipresent criterion for determining the size of the unit in these countries. MSMEs IN INDIA
It will be relevant to make an assessment of the existing status of the Indian SMEs. The Indian experience of the development of the SMEs during the last decades has amply demonstrated that they do have both the capabilities as well as the resilience not only to survive global competition but also to improve their presence in the international markets, barring, of course, a few inefficient units. They are becoming increasingly adept at making the most through innovation and flexibility.
There is a perceptible change in the economic scenario all around and the role of the SMEs in all the economies has assumed greater prominence and dynamism. Technology is going to be the cutting edge in this competitive environment for the Small Scale Sector. The SMEs have a greater propensity towards global integration owing to their ability to adapt as a result of their smaller size and greater flexibility to adjust to the changes in design and technology. This would ensure the benefit of specialization and technology advancement.
A number of reports have confirmed that both in India and in the European countries, the SMEs are venturing into exports because of the inherent advantage of the easy adaptability to the new technologies.
succession and any change in the partners of a LLP shall not affect the existence, rights or liabilities of the LLP.^6
LLP AGREEMENT
Any written agreement between the partners of the LLP or between the LLP and its partners which determines the mutual rights and duties of the partners and their rights and duties in relation to that LLP. It is not necessary to enter into an LLP agreement as per LLP Act,2008. In the absence of LLP agreement, the mutual rights of part corporate, at least two individuals who are partners of such limited liability partnership or nominees of such bodies corporate shall act as designated partners.
ACCOUNTS AND AUDIT
LLP is required to maintain books of accounts for each year on cash basis or on accrual basis. Accounts shall be audited by Auditors appointed by the LLP. Audit of accounts is compulsory if turnover exceeds Rs. 40 lakhs in any financial year or contribution by partners exceeds Rs. 25 lakhs. The Statement of Accounts and Solvency for the year ended 31 March is required to be filed with the Registrar before 30 October in each year.
Any person guilty of an offence under this Act for which no punishment is expressly provided shall be liable to a fine which may extend to five lakh rupees but which shall not be less than five thousand rupees and which may extend to fifty rupees for every day after the first day after which the default continues. But, history of the manufacturing sector had been replete with many instances of policy interventions which had not resulted in the expected outcome. Thus in the coming days effective execution of these policy packages constitutes a serious challenge to the planners and the respective central and state governments.
(^6) "The Limited Liability Partnership Act, 2008". 2017. En.Wikipedia.Org. Accessed November 29 2017. https://en.wikipedia.org/wiki/The_Limited_Liability_Partnership_Act,_2008.
The Limited Liability Partnership is a 'fantastic opportunity' for the micro, small and medium enterprises (MSMEs) and it would inevitably give a whole new profile to the sector, according to the Minister of Corporate Affairs Addressing the conference on "Limited Liability Partnership (LLP)- A platform for SMEs", organized by the Indian Institute of Corporate Affairs, the minister said, "I think that today is the magic moment. People can make the right choice by switching from the proprietorship to LLPs."
"It will be possible for the sector to reach out to venture capital. This can be the stepping stone for becoming much larger industrialists and have bigger growth, taking LLP to the people is something very useful and I hope many people of the first generation want to get into. This will provide them with uncomplicated and a friendly platform. This is a fantastic new opportunity and this will inevitably give a whole new profile to the MSME sector. We will get better financial inputs. We will presume the greater allow for interaction and opportunity, Limited Liability Partnership (LLP) is a legal form which is governed by the Limited Liability Partnership Act, 2008. It (LLP) is basically a partnership in which few or all partners (depending on the jurisdiction) have limited liability It (LLP) is a structure where people come together to work in a consensual manner. They agree upon their responsibilities, their constitution and then they decide to work together,"
The MSME registration is not statutory. However, the MSME registration process in India has been conceptualized to provide maximum benefits to all types of enterprises. After registration, any enterprise becomes qualified to reap the benefits offered under the MSMED Act. Some of the benefits from Central Government include easy sanction of bank loans (Priority sector lending), lower rates of interest, excise exemption scheme, exemption under Direct Tax Laws and statutory support such as reservation and the interest on Delayed Payments Act.
State Government and Union Territories also have complied their own package of facilities and incentives for MSMEs. Some of the benefits provided by State Govenement for MSMEs include development of specialized industrial estates, tax subsidies, power tariff subsidies, capital investment subsidies and other support. Both the Centre and the State, whether under law or otherwise, target their incentives and support packages generally to units registered with them.
Thus, State intervention in the development of small sector industries after independence may be broadly divided into the pre-liberalization period (1948 to 1991) and the post- liberalization period (1991 onwards). Although a kind of restrictive and protective policy was maintained for more than half of a century for the country‟s industrial sector until the process of economic liberalization was initiated in 1991, the small scale industry sector was always given due importance in all the industrial policy resolutions. The Industries (Development and Regulation) Act, 1951, which provided the basic framework for the post-independence industrialization strategy clearly put a high priority on small scale industry sector. This had been maintained in the New Industrial Policy of 1991. Since 1991, Indian economy slowly witnessed a paradigm shift from a centrally planned economy towards a strategy of promoting privatization, liberalization ad globalization though a process of economic reforms. In that scenario, the small-scale sector has been offered ample opportunities to grow and promote themselves so as to attain competitive efficiency enabling them to coexist with the larger industries. The enactment of MSMED Act, 2006 has been another milestone in the history of India‟s industrialization which focused on micro, small and medium enterprises. Here there had been a paradigm shift where the policy of protection has now been replaced by the policy of promotion of SSI sector, which now also covers medium scale enterprises. The MSMEs are widely considered to be a panacea for a number of burning problems given their immense potential in the promotion of output, employment and export earnings.
2017. Shodhganga.Inflibnet.Ac.In. Accessed November 29 2017.
http://shodhganga.inflibnet.ac.in/bitstream/10603/19765/11/11_chapter2.pdf.
1 Kr. Nath, S. (2014). Policy Intervention in Small Scale Industries: A Historical
Perspective. Journal of Entrepreneurship & Organization Management, 03(02). 29/11/
1 its notification No.S.O.1722(E) dated October 5, 2006.
1 "Q.1. What Is The Definition Of MSME? | Ministry Of Micro, Small & Medium
Enterprises". 2017. Msme.Gov.In. Accessed November 29 2017. http://msme.gov.in/faqs/q1-what-definition-msme.
2017. Udyogaadhaar.Gov.In. Accessed November 30 2017.
http://udyogaadhaar.gov.in/UA/UAM_Registration.aspx.
"MSME Registration Benefits In India". 2017. Indiafilings.Com. Accessed December
7 2017. https://www.indiafilings.com/learn/msme-registration-benefits-in-india/.
