Panel proposes wide-ranging reforms to ease regulatory burden on small businesses

A high-level committee led by NITI Aayog member Rajiv Gauba has put forward a set of 17 reforms designed to ease both regulatory and financial pressures on India’s Micro, Small and Medium Enterprises (MSMEs). The recommendations — which span credit access, compliance norms, taxation, dispute resolution and CSR obligations — are now being reviewed by the concerned ministries and departments, along with suggested implementation timelines, reported TOI.

One of the committee’s central proposals focuses on improving the flow of credit to smaller businesses. It has suggested expanding the scope of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) so that manufacturing medium enterprises are also covered. It has also called for extending credit guarantee protection to receivables on the Trade Receivables Discounting System (TReDS) to speed up payments to MSMEs.

To address persistent issues arising from delayed payments by government entities — especially when arbitration awards are challenged or held up — the panel has recommended tightening provisions under the MSME Development Act. It has proposed strengthening the rule requiring a mandatory pre-appeal deposit equal to 75% of the arbitral award. Additionally, it has suggested amending the law to ensure that this pre-deposit is enforced through an actual cash deposit, and that at least 50% of the amount due be released to micro and small suppliers after six months. Appointment of a sole arbitrator has also been proposed to accelerate the resolution of disputes.


The committee has advised easing several compliance requirements under the Companies Act. It has recommended that all micro and small companies be exempted from mandatory Corporate Social Responsibility (CSR) contributions, suggesting amendments to the current thresholds that determine CSR applicability. It has also proposed reducing the number of compulsory board meetings for MSMEs from two annually to one.

In addition, the panel has backed the removal of mandatory auditor appointments for companies with turnover below ₹1 crore. It has further recommended increasing the tax audit exemption limit to ₹2 crore for companies with more than 5% cash receipts, up from the existing ₹1 crore threshold.

The proposed reforms, if adopted, are expected to substantially improve the ease of doing business for India’s smaller enterprises, reducing compliance costs while improving access to finance and timely payments.

With inputs from TOI