New Machinery Safety Rules MSME Manufacturers Fear Disruption

Concerns Over New Machinery Safety Rules

MSME Machinery Manufacturers Fear Disruption

In a move that has sent ripples through India's manufacturing sector, the government's recent safety regulations for machinery and electrical equipment are poised to significantly impact domestic production, particularly among Micro, Small, and Medium Enterprises (MSMEs).
 
The Machinery and Electrical Equipment Safety (Omnibus Technical Regulation) Order, 2024, introduced by the Ministry of Heavy Industry (MHI) on August 28, 2024, is set to take effect exactly one year later.
 
This new regulation mandates stringent safety standards for all machinery and electrical equipment manufactured or imported into India, aligning Indian safety practices with global standards, covering an estimated 50,000 types of machinery across 463 product categories, including industrial equipment like pumps, compressors, cranes, and metal-cutting tools, which are vital to the Indian economy.

Under the new regulations, production and imports of machinery and electrical equipment will require prior approval from the Bureau of Indian Standards (BIS), and compliance with three new safety standards will be mandatory.

While the intention behind the regulation is commendable, its implementation could prove challenging for India's vast MSME sector.

It is estimated that about 1,50,000 manufacturers, 90% of which are MSMEs, face unique hurdles in complying with the new standards due to financial, technical, and infrastructural constraints.

While the new regulations are to apply only for domestic supplies and not for exports, it would practically to all as most of the Machinery Manufacturers supply to both the markerts.

Adapting to the new standards within a year presents a near-impossible challenge for many MSMEs, especially those unfamiliar with the technical language of the order or the safety standards involved. The financial burden for compliance could range from Rs 50,000 to Rs 50,00,000 per machine, making it a massive challenge for small businesses. Many MSMEs lack the advanced technology and skilled workforce required to meet the new standards. According to the GTRI, without additional government support or a delay in the order’s implementation, many MSMEs could face closure.

The impact of these regulations extends beyond domestic production. In the fiscal year 2024, India imported machinery worth USD 25 billion in the affected categories, with China accounting for a significant 39.1% of this value.
 
Simultaneously, India exported USD 17.7 billion worth of machinery. The new rules could potentially disrupt this trade flow, affecting both imports and exports.
 
As the deadline for compliance approaches, the industry watches closely. The success of these regulations will depend on a coordinated strategy involving the government and all stakeholders. The coming months will be crucial and Machinery Manufacturers need to understand and implement the new Standards to successfully navigate this transition. This period marks a critical juncture for India's MSMEs as they navigate new safety requirements while also striving to recover from economic challenges.