Policy

Govt proposes easier exit norms for MSMEs

The move aims to help MSMEs consolidate their businesses and re-deploy capital in other ventures.
Govt proposes easier exit norms for MSMEs

The government of India has proposed changes to the MSME Act with the objectives of easier exit and revival of the sick units. The move aims to help MSMEs consolidate their businesses and re-deploy capital in other ventures.

The government has invited views and suggestions regarding the proposed changes in order to formulate a concrete policy.

MSMEs that seek early assistance to tide over difficult financial times and provide a framework where a viable MSME can seek standard as well as customised relief and concession to revive. To provide MSMEs a smooth exit procedure for the benefit of promoters and guarantors through liquidation and change in management. It is proposed that a separate chapter on Restructuring & Exit of MSME can be added to the MSME Act, which mandates scheme for closure of sick MSMEs," said the MSME Ministry.

The PTI report further states that the MSMEs can also file an application, if accumulated losses of the enterprise equals to half or more of its entire net worth for last financial year.

"The MSME facing insolvency/bankruptcy should be provided legal opportunities to revive its unit. This could be by way of re-organisation and rehabilitation scheme with comfort to creditors and a mechanism for interim suspension of enforcement rights," added the MSME Ministry.

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