New Safety Regulations for Machinery, Electrical Equipment Pose Emerging Challenges for MSMEs: Infomerics Ratings

The government’s new safety regulations for machinery and electrical equipment, set to take effect in August 2025, are posing emerging challenges for India’s MSME sector, according to a recent report by credit rating agency Infomerics Ratings. These regulations aim to align Indian safety practices with global standards, but compliance could be particularly burdensome for smaller businesses due to financial, technical, and infrastructural hurdles.

Dr. Manoranjan Sharma, Chief Economist at Infomerics Ratings, emphasized in the report titled India’s MSME Industry: MSME Growth in Focus: Key Budget 2024-2025 Initiatives and their Impact that MSMEs, which constitute 90% of the 1,50,000 manufacturers affected by these regulations, may find it difficult to meet the stringent safety and conformity requirements mandated by the Bureau of Indian Standards (BIS).

The safety standards will apply to over 50,000 types of machinery, including pumps, compressors, centrifuges, cranes, looms, metal-cutting tools, transformers, and switchgear, which fall under 463 tariff lines. The financial burden of compliance, compounded by delays in importing essential machinery and the lack of certified technical consultants, poses significant hurdles for these small-scale manufacturers.

The Ministry of Heavy Industry introduced the Machinery and Electrical Equipment Safety (Omnibus Technical Regulation) Order, 2024 on August 28, 2024, which focuses on ensuring stringent safety standards for both domestic and imported machinery. The order lays out three levels of safety standards:

1. Type A standards: General safety guidelines applicable to all machinery, emphasizing safe design, hazard identification, and risk assessment. Compliance requires adherence to IS 16819:2018/ISO 12100:2010.
2. Type B standards: Generic safety standards that cover features such as emergency stop functions and electrical safety, relevant across various types of machinery.
3. Type C standards: Machine-specific safety standards that apply to particular types of machinery.

A report by think tank GTRI noted that adapting to these multi-tiered safety standards within the one-year timeframe presents a significant challenge, especially for MSMEs. Compliance costs could range from ₹50,000 to ₹50 lakh per machinery type, depending on the standards required. The think tank has suggested that the government should consider delaying the implementation to allow smaller firms more time to prepare.

While the new regulations pose considerable challenges, Infomerics Ratings highlighted that the government’s recent budgetary provisions aim to strengthen the MSME sector. Measures such as the credit guarantee scheme, a new MSME credit assessment model, an increase in the Mudra loan limit, and enhanced liquidity through the TReDS platform are expected to boost the sector’s contribution to GDP, employment, and exports.

“These measures are expected to have a highly positive impact,” the report noted, indicating that despite the challenges, the MSME sector could experience growth as a result of these initiatives.

Disclaimer: This article is based on available information and aims to provide insights into upcoming regulatory changes. The details mentioned, including compliance requirements and financial estimates, may be subject to change. Readers are advised to verify facts independently before making any business or investment decisions.