Ministry of Micro, Small and Medium Enterprises, in partnership with Ministry of Law and Justice and the National Law School, Delhi has organised ‘Udyami Bharat’ event on the ‘International MSME Day’. The theme for the event was “Legal Reforms in the MSME Ecosystem.” It focussed on the reforms required in the MSMED Act., 2006 to ensure sustainable and holistic growth and development of the MSME ecosystem at Bhim Auditorium, Dr. Ambedkar International Centre, New Delhi on 27-06-2024.
The event started with the welcome address by Ateesh Kumar Singh, JS, MoMSME. He explained the minute to minute of the program. He said the Ministry is working on a delayed payment site. He further added that Samadhan portal is a tracker, and the Ministry intends to convert it into a full-scale online system. He also stated that the Ministry is also working with the Ministry of Law and Justice on legal aid.
He also gave an insight into the MSME amendment Bill to the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED, Act).
SESSION 1
REDUCING THE COST OF LITIGATION FOR MSMES
PANELISTS
Avnit Arora, Director, Department of Legal Affairs, Ministry of Law and Justice
Kirti Uppal, Senior Advocate
Dr. Prem Chand, Assistant Professor of Law, National Law University, Delhi
Vinod Kumar, President, India SME Forum
Purti Gupta, Advocate-On-Record, Supreme Court of India
MODERATOR
Radhika Bishwajit Dubey, Central Government Standing Counsel
Concerning the question that what legislative changes can be made to minimise the litigation cost for MSME and how mediation can be helpful, Avnit Arora Director, Department of Legal Affairs, MoL&J gave the background of how dispute resolution works for MSMEs. He said that now the mediation process by MSME is also bound to be governed by Mediation Act, 2023. He emphasized that the Mediation Act, 2023 provides for a statutory period for completion of mediation, and the cost of mediation has to be specified by the Mediation Council of India. He suggested that the MCI can propose a lower cost of mediation for MSMEs.
He said now the time and the manner for conducting mediation is now structured in a formal manner which was not there in conciliation.
Radhika Bishwajit Dubey, CGSC, added that training and the awareness of the stakeholders and having trained mediators who understand the problems of the sector is very important.
On the question regarding challenges of Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, and what reforms can be proposed, Kirti Uppal, Senior Advocate, said that “the best form of legal reform is to avoid lawyers and Courts.” He shared his mantra that he explains to the litigants, that “your litigation will make me rich, and will create a problem for you.”
He said that “as far as Section 34 is concerned the minimal Court interference becomes the ultimate Court’ s interference.”
He further added that Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 are the shortest and possible alternative to a long litigation but the practical situation is different.
On the question concerning the benefit from the IBC and MSE Act’s intersection, Purti Gupta, AoR, Supreme Court suggested that MSME should be treated as a separate class of creditors. A solution has to be seen from the perspective of the changes in the legislation vis- a -vis the IBC.
Vinod Kumar, President, India SME Forum talked about the possible amendments to be brought in the MSME Act to help the sector.
Dr. Prem Chand, Assistant Professor, NLU-D, stated that there is lack of awareness among MSMEs. He suggested that programs for creating awareness must be conducted. He emphasized that some seed funding should be provided to the research institutes to identify the issues and give practical solutions.
SESSION 2
Vinay Kumar Sanduja , Registrar, IIAC presented a presentation on the IIAC (Conduct of Micro and Small Enterprises Arbitration) Regulations, 2024.
SESSION 3:
Amitabh Nag, the CEO of Bhashini, presented on the ‘Use of Bhashini under the aegis of IIAC’ before the audience.
He said that “Bhashini has partnered with IIAC for providing live transcriptions, document translations from regional languages to English, and vice-versa, for greater accessibility of arbitration practice by the masses, specifically for MSME sector-related disputes. The platform is equipped with real-time translations of 22 Scheduled languages of India.”
Emphasising on the objectives of Bhashini, Mr. Nag said that the aim is to bridge the language-gap, implement greater use of AI with adequate human supervision for accuratetranslation, and solve issues of auto-translations, text-to-speech, optical-character-recognition etc.
Mr. Nag lastly highlighted the curation of data for Bhashini, and shed light on ‘Bhashadaan’, which is a crowd-sourcing initiative for language data compilation, and informed the audience about the Bhashini App.
He concluded by stating that “speech as a medium transcends linguistic and literacy barriers.
Post their addresses, the Registrar, IIAC, and CEO, Bhashini, signed a Memorandum of Understanding (‘MoU’) between the two organisations.
PLENARY SESSION
Opening the dais for the plenary session, S.C.L. Das, Secretary of the Ministry of MSME congratulated the entire MSME fraternity on the International MSME Day and emphasised that this day marks tribute to the MSME sector. The Secretary further said that the history has stood witnessed to the testament that MSMEs have scripted the path for developed economies. It was also stated by the Secretary that MSMEs support the economy, employment, export, equity, environment, and energy transmission.
Dr. Rajneesh, Additional Secretary & Development Commissioner (AS&DC), MSME said that “the theme of the International MSME Day is resilience and sustainable development, that perfectly align with the vision of the Ministry of MSME”.
He also highlighted the contributions made by the MSME sector to the economy, such as- second-largest employer in the country, 30% contributor to GST collection etc.
He also mentioned the Trade Enabling and Marketing (TEAM) Initiative- dedicated to empowering MSME entrepreneurs with e-commerce facilities, and digital presence. The Yashasvini Campaign was also talked about, that is dedicated to women entrepreneurs’ contribution to the MSME sector.
While addressing the audience, (Retd.) Hemant Gupta, President of IIAC informed about the ability of the IIAC (Conduct of Micro and Small Enterprises Arbitration) Regulations, 2024 to contribute to the sustainable and holistic growth and development of the MSME sector by facilitating faster and efficient dispute resolutions in the sector.
Justice Gupta also emphasised on the present state of MSME sector being stressed, however, inspired confidence by stating that IIAC can offer an efficient and time-bound process of arbitration that will synergise the framework for the redressal of delayed payments to MSMEs. Former Justice also highlighted that every MSME grievance is important, irrespective of the amount subjected to the dispute.
Auguste Tano Kouame, Country Director, World Bank reiterated the events of the Covid-19 Pandemic, that affected the global economy, including India. During those times, MSMEs were instrumental for the Indian economy’s rapid recovery.
The Country Director also laid emphasis on the Raising and Accelerating MSME Performance (RAMP) project that supported 5,55,000 MSMEs and extended a support of $5 billion towards the Indian MSME sector.
The Director also highlighted the other collaborative programs between India and the World Bank, such as the Green Investment and Financing for Transformation Scheme (GIFT) and the Scheme for the Promotion of Invesment in Circular Economy (SPICE), aimed at supporting the Indian MSME sector. Lastly, he emphasises that MSMEs are the future of the Indian economy due to their agility, flexibility and ability of exporting.
Shobha Karandlaje, Minister of State, MSME highlighted the contribution that MSMEs can make towards reaching the goal of a “viksit Bharat” (developed Bharat), and further added that their aim is to make the MSME produce of the “international standard”.
Arjun Ram Meghwal, Minister of State, Law and Justice addressed the audience and shared that the current era of industrialisation is the Era of Industry 4.0, and stated that the 21st Century is India’s Century, and the greatest contributor to Indian success will be the MSMEs.
Following the Law Minister’s address, the Team Initiative and Yashasvi Campaign was launched by the Union Minister, MSME.
Concluding the plenary session Jitan Ram Manjhi, Union Minister, MSME talked about his roots and stated that he comes from the section of the population that is underprivileged and emphasised the potential of MSMEs to develop the majority of Indian population, in terms of economic, social, and technical upliftment.
LEGAL REFORMS IN THE MSMED ACT, 2006
PANELISTS
Avnit Arora, Director, Department of Legal Affairs, Ministry of Law and Justice
Anil Bharadwaj, Secretary General, FISME
Dr. Navneet Sharma, Director General, CIRC
Prof. (Dr.) Ritu Gupta, National Law University, Delhi
Ramni Taneja, Advocate & Solicitor of the England & Wales Supreme Court
MODERATOR
Anant Vijay Maria, Advocate-on-Record, Supreme Court of India said that “this panel session includes a basic understanding of the reforms that the Act requires”. He asked what emerging challenges are coming out of the MSME Act.
Avnit Arora, Director, Department of Legal Affairs, MoL&J said that “the Act is very well structured. The Mediation Act also in the year 2023 has recognized various stakeholders for enabling social mediation. The role of the MSCFC’s is to facilitate the dispute resolution. The seller is a micro small enterprise, so the facilitation councils and the liberty available under the Act to not do something which is best left to be done by an expert is where the recognition could improve the function of the entire ecosystem. The idea is to enable capacity building, enable more institutions to be well equipped, take up mediation and arbitration which is again recognized under law without being requirement of clause which is otherwise the premise for alternative dispute resolution.”
Prof. (Dr.) Ritu Gupta, NLU-D pointed out the payments as another issue that we can flag with our Acts. So, these MSMEs basically lack all those kinds of skills we need in all those outreach programs, those initiatives. MSN Media has been a very historic, very important development and it has been able to settle several important questions. One of course was definition. Earlier as you know, only small-scale industries were defined.
She also discussed that the attention of the policymakers is sort of drawn to specific segments of micro foreign media and that’s why we could create certain provisions only for migrants, for enterprises having defined.
Navneet Sharma, Director General, CIRC said that the growth opportunity which is arising in the Indian economy is on the digital side. We are already at about 16-17%, going to be 20% in two years’ time. So, the primary engine of growth particularly for Micro small enterprises is going to be digital economy. Now, when it comes to digital economy, what is the bridge between micro and small enterprises, all startups and digital? Basically, two bridges. Number one is market access. So, the market access is happening through Flipkart and Amazon and Snapdeal and now on that bridge, are there any irritations is the pertinent question today to ask? Another question that is posed is for some of you as business owners and the ability to conduct business and basically promote it. He also discussed the role of the DPDP Act 2043.
Ramni Taneja, Advocate & Solicitor of the England & Wales Supreme Court said that the only issue is that the Act is a very slender Act, and streamlining and making it more holistic and comprehensive would help.
The Moderator posed a question that whether it be the access to market or the new legislations or challenges that have come forward with respect to definitions.
Avnit Arora pointed out that the facilitation or the ease of flow of credit is the most important facet for the smooth functioning of the MSMEs. He suggested that the focus should be on possibly promoting micro enterprises first. Interface becomes a small enterprise, a small enterprise becomes a medium enterprise, and a medium enterprise becomes a larger enterprise.
Anil Bharadwaj, Secretary General, FISME said that the creditors are clumped together with operational creditors. The giants guaranteed the full payment and not only the principal, but also the interest. Ultimately, they are taken care of, and nothing is left once you have the waterfall mechanism. The definitional changes require the goods to be changed to include immovable goods as well from that and then inclusion of medium enterprises. For example, if you are migrants, more enterprises you are entitled to mean you can partake in 25% set aside that is given by them by the act and the moment you are out then all those benefits are taken away from you.
Ritu Gupta said that it is the right time to incentivize the policies being adopted in manufacturing, branding, and marketing every time.
Navneet Sharma highlighted the two important concepts for the Ministry to consider. One is the incentive structure because that influences a company’s behavior tremendously. If there is an incentive to remain warm, why should I go? So therefore, the first point you raised in your introductory remarks about the graduation rate from micro and small to medium that is heavily skewed heavily or 85 to 90% is micro.
