New Delhi, Jun 30 (KNN) India’s manufacturing MSMEs are grappling with high compliance costs and complex regulatory demands, as highlighted in a recent report by TeamLease RegTech.
The study, titled ‘Decoding Compliance for Manufacturing MSMEs in India’, reveals that small and medium manufacturing units incur compliance costs of Rs 13–17 lakh annually.
According to the report, a typical MSME operating in a single state must adhere to over 1,450 regulatory obligations spanning seven legal categories.
These include maintaining 48 registers, dealing with 59 inspectors, and complying with 486 clauses that carry imprisonment risks — most linked to minor procedural lapses. Labour laws alone account for 66 per cent of these legal risks.
TeamLease RegTech CEO Rishi Agrawal stressed the urgent need for reforms, suggesting that compliance be integrated into India’s Digital Public Infrastructure (DPI), similar to what has been done with digital payments. “There’s an urgent need to unshackle India’s MSME entrepreneurs,” he said.
The report also pointed out the rapid pace of regulatory changes — 9,331 in FY 2024-25 alone — with nearly 90 per cent impacting MSMEs.
Entrepreneurs are increasingly raising concerns about challenges such as inefficient supply chains, lack of digital access, and inadequate R&D support.
On MSME Day, observed globally on June 27, business leaders called for stronger government intervention. Vasu Naren of Sona Machinery emphasised the need for smart trade infrastructure and digital outreach.
Others, like Shabnum Khan and Dinesh Chandra Pandey, cited issues such as skilled labour shortages and data privacy.
IT-based MSMEs also reported limited support from government-led incubators, with private incubators seen as offering more practical assistance.
The report underscores that unless regulatory burdens are reduced, the MSME sector’s potential to drive formal employment, innovation, and growth will remain underutilised.
(KNN Bureau)
