Mumbai: In a notification the Reserve Bank of India has modified the definitions for micro, small and medium enterprises such as small road and water transport operators (owning a fleet not exceeding 10 vehicles), retail trade (with credit limits not exceeding Rs10 lakh), among many others.

It has defined these micro enterprises as an enterprise where the investment in equipment does not exceed Rs10 lakh; a small enterprise is one with investment in equipment between Rs10 lakh and Rs2 crore; a medium enterprise as those with investment in equipment between Rs2 crore and Rs5 crore.

While for enterprises engaged in the manufacture or production, processing or preservation of goods, with investment in plant and machinery not exceeding Rs25 lakh have been derfined as a micro enterprise is one.

In a medium enterprise, the investment in plant and machinery can be more than Rs5 crore but does not exceed Rs10 crore.

The existing provisions of the interest on Delayed Payment Act, 1998, to Small Scale and Ancillary Industrial Undertakings, have been strengthened under the MSMED Act. The agreement between seller and buyer shall not exceed more than 45 days.

If the buyer fails to make payments to the supplier, he shall be liable to pay compound interest with monthly rests on the amount from the appointed day or, on the date agreed on, at three times the bank rate. In case of a dispute on amounts due, a reference shall be made to the Micro and Small Enterprises Facilitation Council, set up by state governments.