The Chapter II, Section 3 to Section 6 of the MSMED Act-2006 provides for establishment of National Board for Micro, Small & Medium Enterprises (NBMSME) and its functions etc. Accordingly, to give effect to the formation of NBMSME, Rules were notified on 26th September 2006 which provided procedure of establishment of the Board, term of the members other than ex-officio members limited to two years, manner of filling the vacancies, procedure to be followed for convening of meetings and discharge of functions by the members of the Board, etc.

The National Board for Micro, Small & Medium Enterprises (NBMSME) was established / notified for the first time on 15th May 2007 consisting of 47 members including Chairman, Vice Chairman and Member Secretary in accordance with the Sub Section 1 of Section 3 of MSMED Act, 2006 and National Board for Micro, Small & Medium Enterprises Rules, 2006. The Minister in-charge of Ministry of MSME is ex-officio Chairman of the National Board.

Salient Features of the NBMSME:

» NBMSME is consisting of 47 members (18 Ex-officio members and 29 members- the tenure of members is for two years from the date of notification).

» Has statutory backing.

» Provides representation to all sections/segments including Associations of Micro, Small and Medium manufacturing and service enterprises, women enterprises, Central Ministries, States representing different regions of the country, trade unions, etc.

» Quarterly meeting of the Board mandatory as per MSMED Act, 2006 - the Board has met six times from the date of its establishment.

Functions of the National Board:

» Examine the factors affecting the promotion and development of Micro, Small & Medium Enterprises and review the policies & programmes of the Central Government in regards to facilitating the promotion & development & enhancing the competitiveness of such enterprises and the impact thereof on such enterprises.

» Make recommendations on matters referred to in clause (a) above or any other matter referred to it by the Central Government which, in the opinion of that Government, is necessary or expedient for facilitating the promotion and development and enhancing the competitiveness of the micro, small and medium enterprises.

» Advice the Central Government on the use of the Fund or Funds constituted under section 12.

Section 7(2) of the MSMED Act, 2006 provides for constitution of Advisory Committee for MSME, by notification under the Chairmanship of Secretary, Ministry of Micro, Small Medium Enterprises.

The Advisory Committee comprises of five officers of the Central Government having experience in matters relating to Micro, Small and Medium Enterprises, three representatives of State Governments and one representative each from Micro, Small and Medium Enterprise associations.

The Member Secretary of National Board of Micro, Small & Medium Enterprises (NBMSME) is also the Member Secretary of Advisory Committee.


» To examine matters referred by the NBMSME concerning promotion and development of MSME sector and enhancing its competitiveness.

» To provide advice to the Central Government on issues related to the promotion, development and enhancement of competitiveness of micro, small and medium enterprises, covered under Section 9 to 12 and Section 14 of the MSMED Act, 2006, which include issues concerning Credit Facilities, Procurement of Preference Policy, Constitution and Administration of Funds, etc.

» To provide advice to the State Governments (in case sought by any of them) on issues relating to notifying any rule made to carry out the provisions of the MSMED Act-2006 including the composition of Micro, Small Enterprises Facilitation Councils etc. as provided under section 30.

» Recommend or advice Central Government or State Governments or the Board, as the case may be, in connection with the classification of a class(es) of enterprises after taking into consideration the level of employment, investments, need of higher investment in plant and machinery or equipment for technology upgradation, employment generation and enhanced competitiveness and international standards for classification of small and medium enterprises.