Amendment to Companies Act to ease fund flow to MSMEs: FM Arun Jaitley

Minister of State for MSME Giriraj Singh said that the GST would go a long way in strengthening the MSME sector

Acknowledging that credit availability is a challenge for the micro, small and medium enterprises (MSMEs) sector, Finance Minister Arun Jaitley on Thursday said amendments to the Companies Act, 2013, which is being considered by Parliament, will help ease institutional fund flow to the sector.

One of the key challenges for the MSME sector, which can be termed as the backbone of the Indian economy, is credit flow, he said, after launching MSME Database portal and Finance Facilitation portal here.

"In the Companies Act passed in 2013, there were provisions like related party transactions, which resulted in difficulties for the MSME sector. The amendment to the Act is before Parliament and it is considering that amendment Bill. Despite this, the sector is growing," he said.

Earlier this year, the government introduced a Bill to further amend the Companies Act as part of efforts to address difficulties faced by stakeholders and improve the the ease of doing business in the country.

Noting that MSMEs creates several times more jobs than the organised and large corporates, the finance minister said, "It is effort of the government to create conducive environment for the sector to grow."

"The government is committed to ease of doing business and passing of the goods and services tax (GST) will also be a step towards this direction," he added.

"The constitutional amendment Bill on GST passed by both Houses of Parliament was by consensus," he said, adding "This has sent the right signal to the global community and changed the global perception of India."

Despite slowdown in the global economy, he said that India is growing rapidly.

"There were questions on what's India's appetite for reforms and to keep pace of reforms but various initiative taken by the government like formation Monetary Policy Committee, enactment of Aadhaar Act and Bankruptcy code have sent an important signal to the world," he added.

Speaking at the occasion, MSME Minister Kalraj Mishra said, "MSME Database portal will not only help save the efforts and money required for physical census but will also enable the MSME units and the various association to furnish data on a clock of the button and sitting in their units."

"It will provide real time information on various types of the MSMEs registered on the databank," he said, adding that a decision has been taken that no grant or subsidy will be given to any MSME unless the data is captured in the portal.

Minister of State for MSME Giriraj Singh said, "The passage of GST will go a long way in ease of doing business and strengthen the MSME sector."