MSME Samadhaan - Objectives, Features, Impact & Payment Rules

MSME Samadhaan is an online portal of the Ministry of Micro, Small & Medium Enterprises (MSME). The online portal Samadhaan allows MSMEs to file their complaints online regarding delayed payments. The MSME Samadhaan portal was launched on 30th October 2017 by Union Minister of State Shri Giriraj Singh. The main objective of this portal is to empower micro and small enterprises across the country to directly register their cases relating to delayed payments by Central Ministries /Departments/ CPSEs/State Governments.

This initiative related to MSME is very important for the UPSC Civil services exam under the General Studies (GS- 3) paper. This article on MSME Samadhaan will help you to prepare for the Prelims and the Mains stage of the UPSC IAS/IPS exam.

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Latest News Related to MSME SAMADHAAN

Report released by Global Alliance for Mass Entrepreneurship (GAME) on the annual delayed payments –

• According to the latest report by GAME, the current mechanisms of annual delayed payments involve informal follow-ups. It has a share of less than 1% of the eligible enterprises and represents only 1.3% of the delayed payments pool using the MSME Samadhaan portal.
• This report has proposed Online Dispute Resolution (ODR) to ensure faster and more effective resolution of payment-related disputes.

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New Platform launched by Chamber of Indian Micro, Small and Medium Enterprises (CIMSME) –

• CIMSME is a non-profit organization that represents the interest of the MSME sector and aims to promote bilateral dialogue for the benefit of MSMEs. It represents more than 1 Lakh MSMEs in the country.
• Recently, it launched an online portal, nodefaulters.com, for businesses to report payment defaults after 45 days by private or government buyers.
• Unlike the MSME Samadhaan, which does not display the amount owed by specific buyers. CIMSME’s No Defaulters makes the amount owed public for transparency.

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What is the MSME SAMADHAAN?

MSME SAMADHAAN is a platform initiated by the Government of India. It addresses delayed payment issues faced by Micro, Small, and Medium Enterprises (MSMEs). It aims to provide a mechanism for MSMEs to file their grievances related to delayed payments and seek redressal. It thus ensures timely payment to MSMEs and promotes their financial stability.

Launch

• Former Union Minister of State Mr. Giriraj Singh launched MSME Delayed Payment Portal – MSME Samadhaan on 30th October 2017.

• This portal was launched under the provisions of the Micro, Small, and Medium Enterprise Development (MSMED) Act, 2006.

Fig.2 – Launch of MSME Samadhaan by Union Minister

Source – Ministry of Rural & Development

Nodal Ministry

• The nodal ministry of the MSME Samadhaan portal is the Ministry of Micro Small and Medium Enterprises, Government of India.

• The Ministry of MSME is the top body for the administration of rules, regulations, initiatives, and laws related to micro, small and medium enterprises in the country.

Vision

• To empower micro and small enterprises (MSE) across the country by facilitating them to directly register their complaints related to delayed payments by Central Ministries/Departments/CPSEs/State Governments.

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About MSMED Act 2006

The Parliament of India enacted the MSMED Act on June 16, 2006. The Act provides for the promotion and development of the competitiveness of micro, small, and medium enterprises (MSMEs).

• It defines an MSME as an enterprise with investment in plant and machinery or equipment not exceeding:
  • ₹1 crore for a micro-enterprise.
  • ₹5 crores for a small enterprise.
  • ₹10 crores for a medium enterprise.
• The Act provides for many measures to promote and develop MSMEs, including:
  • Credit facilities
  • Procurement preference policy
  • Funds
  • Technology upgradation
  • Skill development
  • Export promotion
• The Act also provides measures to enhance the competitiveness of MSMEs, including:
  • Research and development
  • Quality improvement
  • Productivity improvement
  • Environmental protection
• The Act has been amended many times since it was enacted.

The MSMED Act 2006 is a significant piece of legislation. It has the potential to play a major role in the promotion and development of MSMEs in India. The Act provides many measures that can be used to help MSMEs grow and become more competitive. 

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MSME SAMADHAAN: Objectives

The objectives of the MSME Samadhaan are as follows –

• To provide a single window platform for MSMEs to register their complaints regarding delayed payments.
• To monitor the progress of complaints and ensure that they are resolved in a timely manner.
• To create awareness among MSMEs about their rights and the grievance redressal mechanisms available to them.
• To promote a culture of timely payments in the MSME sector.

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MSME SAMADHAAN: Features of the Portal

Here are some of the key features of the MSME Samadhaan portal:

Single window platform

The portal provides a single window platform for MSMEs to register their complaints. This makes it easy for MSMEs to file their complaints and to track the progress of their cases.

Online registration

MSMEs can register their complaints online through the portal. This is a convenient and easy way to file a complaint.

Tracking of complaint status

MSMEs can track the status of their complaints through the portal. This helps MSMEs to stay informed about the progress of their cases.

Information about grievance redressal mechanisms

The portal provides information about the grievance redressal mechanisms available to MSMEs. This helps MSMEs know their rights and know how to get their grievances redressed.

Raise awareness about delayed payments

The portal can help raise awareness about the issue of delayed payments. This can help put pressure on buyers to make timely payments.

Source: Ministry of MSME

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MSME SAMADHAAN: Payment Rules

The payment rules of the MSME Samadhaan are given below –

• There is a limit of three Purchase and Sales invoices that can be posted.
• If the buyer does not make payment to the MSME supplier for the supplies of goods or services within 45 days of the day of acceptance of the goods or service, the buyer is liable to the MSME supplier to pay an interest rate for delayed payment.
• The interest rate will be a compound interest on the amount at three times the bank rate, which the Reserve Bank of India notifies.
• According to section 19 of the act, The buyer can also file an appeal against the decision of MSEFC, but the appeal shall be entertained by any court of the country unless the appellant has deposited 75% of the award amount.

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The Impact created by MSME SAMADHAAN

The impact of the MSME Samadhaan can be understood from the following official infographic –

Fig.4 Impact of MSME Samadhan

Source: Ministry of MSME

What are the Challenges in Delayed Payment Monitoring System?

• Absence from Hearings – The defaulters do not attend the hearings because there is no penalty for not attending the hearings. This leads to a delay in the resolution. Hence, a settlement within a 90 days time period rarely happens.
• Digital Illiteracy – Most of the MSME units are not well-versed with digital platforms and portals of government initiatives. There is a lack of digital awareness in the country.
• Poor Disposal rate – The actual case disposal rate of the samadhaan portal is poor. The total pending amount of delayed payments is about Rs 25,000 crore.
• Complex Paperwork – The paperwork for each case is so complex that it would take a highly experienced official to go through and examine each document before making a judgment on the case. Thus, it requires a larger skilled workforce which is currently not present.

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MSME SAMADHAAN: Facts and figures for UPSC

Facts and figures related to Government initiatives are very important for the UPSC exam. So, some of the noteworthy facts related to MSME SAMADHAAN are given below in the following table:

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Way Forward

• The MSME Samadhaan initiative is an effective step that will assist in securing speedier payments to MSME suppliers, allowing them to keep their business and cash flow cycles rotating.
• A few changes in strategic focus and the smart use of new technologies might make Samadhaan considerably more effective in achieving its goals, paving the way for continued growth for crores of Indian MSMEs.

UPSC Previous Year Questions(PYQs) – MSME

Q Among several factors for India’s potential growth, the savings rate is the most effective one. Do you agree? What are the other factors available for growth potential? [UPSC Civil Services Mains 2017]

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