Govt proposes to decriminalize minor defaults on the part of MSMEs

The Union government is considering decriminalizing minor defaults under the Micro, Small, and Medium Enterprises Development (MSMED) Act.

- Manas Pimpalkhare & Rituraj Baruah

Ahead of the Union budget, the MSME ministry, as part of the consultation process, has recommended that the law ministry decriminalize acts such as submitting incorrect self-declaration memorandums and failure in disclosures, said two people in the know of the development.

The law also includes the failure of buyers to disclose MSME dues in their annual accounts. This plan of helping improve ease of doing business for MSMEs comes in the backdrop of these small businesses having low capital, with the Centre prioritizing Vivaad Se Vishwas scheme for settlement of disputes for such businesses.

The decriminalization will aid MSMEs, which lose valuable capital on minor penalties under Section 27 of the MSMED Act.