Micro Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades. MSMEs not only play crucial role in providing large employment opportunities at comparatively lower capital cost than large industries but also help in industrialization of rural & backward areas, thereby, reducing regional imbalances, assuring more equitable distribution of national income and wealth.
The primary responsibility of promotion and development of MSMEs is of the State Governments. However, the Government of India, supplements efforts of the State Governments through various initiatives. The role of the Mo MSME and its organizations is to assist the States in their efforts to encourage entrepreneurship, employment and livelihood opportunities and enhance the competitiveness of MSMEs in the changed economic scenario.
The Micro, Small and Medium Enterprises Development (MSMED) Act was notified in 2006 to address policy issues affecting MSMEs as well as the coverage and investment ceiling of the sector. As per MSME Act of 2006, all enterprises are expected to register with District Industries Centre (DIC) of their area and file Entrepreneurs Memorandum (EM) 1 for intention to start business if manufacturing or service and file EM 2 after starting production.
A large chunk of enterprises in India are simply not registered due to the cumbersome paperwork involved in the process and, therefore, can't tap the government schemes for them. The Ministry for Micro, Small and Medium Enterprises had in September 2015 notified Udyog Aadhaar to ensure ease of registration and wider coverage of MSMEs to avail the benefits under various Schemes of Central State governments. Hence, at present, filing of EM-I has been abolished. Udyog Aadhaar (UA) has been introduced for running units. No need to apply for upcoming units.