New Delhi: The Government of India is actively working on a comprehensive grievance redressal system and legal reform package for the Micro, Small and Medium Enterprises (MSME) sector, Union MSME Secretary S.C.L. Das said on Tuesday, underlining efforts to tackle persistent bottlenecks faced by small businesses across the country.
Addressing a national conference on strengthening the legal and regulatory framework for MSME growth, jointly organised by the Federation of Indian Micro and Small & Medium Enterprises (FISME) and Friends of MSMEs in Parliament, Mr. Das said that the multi-pronged initiative aims to simplify dispute resolution and enhance ease of doing business for over 6 crore MSMEs that form the backbone of India’s manufacturing and services ecosystem.
“The government is consulting industry stakeholders on a new framework that will overhaul existing grievance mechanisms and bring needed reforms in MSME legislation,” the Secretary said, without sharing a specific timeline for the legal overhaul.
Das also emphasised ongoing discussions on reforming insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) to secure timely and equitable recovery for MSME creditors, particularly unsecured and operational creditors, who traditionally receive minimal payouts in corporate insolvency proceedings. “MSMEs often get a pittance in the so-called waterfall mechanism; we are pushing for a fairer treatment through inter-ministerial coordination involving the Finance Ministry and the Ministry of Corporate Affairs,” he added.
FISME President Sandeep K. Jain welcomed the government’s thrust but urged the adoption of an AI-driven, integrated redressal platform that can capture grievances at both Central and State levels, intelligently route them to appropriate authorities — including regulators and banks — and track compliance timelines with escalation triggers. Such a system, he said, could significantly cut delays and improve transparency in complaint resolution.
Industry representatives also flagged GST-related procedural hassles, especially notices on minor interpretational issues that often burden small entrepreneurs, calling for institutional mechanisms to ensure that broader GST reforms are fully reflected on the ground.
As MSMEs continue to contend with structural and regulatory challenges even as credit flows and export support expand, policymakers say a strengthened grievance redressal architecture could be transformative in unlocking the sector’s full potential.