India asks EU to change SME definition

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SME TImes News Bureau | 16 Aug, 2012
In a bid to help Indian small and medium enterprises qualify for fee concessions under the European Union's environment legislation, popularly known as REACH, India has asked the 27- nation trading block to amend its definition of SME, according to a media report published today.

"Our industry has been struggling to keep pace with the fast-changing regulations under EU's REACH initiative, and are also taking a financial blow due to the heavy fees that have to be paid for getting chemicals registered under the programme," the report quotes a government official as saying.

Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) is a European Union Regulation of 18 December 2006. The regulation addresses the production and use of chemical substances, and their potential impacts on both human health and the environment.

REACH is the strictest law to date regulating chemical substances and will affect industries throughout the world. It entered into force in 1 June 2007, with a phased implementation over the next decade.

Under the programme, items that contain chemicals identified by REACH have to be registered in EU giving details of the levels of various substances in the product

At present, EU offers steep fee concession to SMEs, but as the definitions of what constitutes an SME differs in India and Europe, most Indian SMEs do not fall under the SME category as defined by European countries.

In Europe, there are three broad parameters which define SMEs: micro-entities are companies with up to 10 employees; small companies employ up to 50 workers, whilst medium-sized enterprises have up to 250 employees.

In India, SME definition is based not on number of employees but on amount of investment. Most Indian SMEs are labour-intensive and employ more than the prescribed workers as defined by European countries.