The ministry of small scale industries has introduced the Small and Medium Enterprises Development Bill, 2005 in the Parliament on May 12, 2005. The Bill provides for facilitating the promotion and development and enhancement of the competitiveness in small and medium enterprises. The enhancement of SSI investment cap from Rs one crore to Rs five crore, one of the long pending demands of domestic pharmaceutical industry, is the highlight of the bill.

The Bill was one of the promises made during the Union Budget 2005-'06 by the Union Government. The finance minister had stressed the need for new legislation that will provide a supportive environment for small and medium enterprises.

The Bill, in its current shape, proposes to create a separate category of industries ie, the medium scale category for units where investment comes with Rs 10 crore. It also seeks to extend progressive credit facilities to SSIs in line with the Reserve Bank of India guidelines. Formation of a separate fund for the development of SMEs, preparation of a Procurement Policy favouring small scale sector etc are some of the major policy initiatives taken up in the Bill.