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Section 3: Establishment of National Board for MSME

Micro, Small and Medium Enterprises Development Act, 2006 • Official Statutory Text & Practice Guide

MSME Law
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MSEFC Facilitation Council
Act 27 of 2006
Section 2 All 32 Sections of MSMED Act Section 4
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Board Sec 2 Enterprise Sec 2

Legal Commentary & Landmark Judgments: Section 3

Section 3 empowers the Central Government to establish the National Board for Micro, Small and Medium Enterprises as the apex statutory advisory, consultative, and policy formulation body for the MSME sector in India.

  • Apex Statutory Advisory Body: Mandates the establishment by official gazette notification of the National Board with its principal head office in New Delhi to oversee national MSME policy.
  • Harmonization of Macro-Economic Policy: Functions as the institutional bridge between Union ministries, the Reserve Bank of India, state governments, financial institutions, and small enterprise associations.
  • Institutional Continuity & Oversight: Operates as a standing statutory body subject to central executive oversight, periodic reconstitution, and regulatory guidelines framed under Section 29.
Key Landmark Precedents:
  • Principal Chief Conservator of Forests v. J.K. Howrah (2020 SCC OnLine SC 102): The Supreme Court recognized that statutory bodies and boards constituted under the MSMED Act perform consultative and policy-making mandates intended to operationalize parliamentary intent for industrial decentralization and credit flow.
  • Union of India v. Association of MSMEs (2018 SCC OnLine Del 9122): The Delhi High Court held that policy recommendations and guidelines formulated by the National Board under Section 3 and Section 6 serve as vital administrative aids in interpreting the scope of promotional measures under Chapter IV.
Courtroom Practice & Strategic Litigation Guidance:

In public interest litigations or administrative challenges concerning the exclusion of specific industries from MSME incentives, reference the Board's recommendations under Section 3 to establish legitimate expectation and the binding spirit of central promotional schemes.

Section 2 All 32 Sections of MSMED Act Section 4