The Indian Small and Medium Enterprises (SME) sector has always served as a safety net for the Indian economy, allowing it to adapt to global economic shocks and adversities. Over the last five decades, it has evolved as a very lively and dynamic sector of the Indian economy.

SMEs not only play an important role in offering significant job possibilities at a cheaper capital cost than major enterprises, but they also contribute to the industrialization of rural regions. The Indian MSME sector is the backbone of the national economic structure, with 36 million units and more than 80 million people employed as of today. The sector, which includes over 6,000 items, provides around 8% of GDP, as well as 45 percent of overall industrial production and 40 percent of total exports from the country.

The Micro, Small, and Medium Enterprises Development (MSMED) Act of 2006 provided for enabling the promotion and development of MSMEs (often referred to as SMEs) and boosting their competitiveness, among other things. Given the importance of SMEs in nation building and its potential for creating employment and revenue as well as promoting innovation and enterprise, it was critical that the appropriate enabling environment be created for these businesses to thrive.

The Prime Minister's Task Force suggested in January 2010 the establishment of a separate Stock Exchange/Platform for SMEs. SEBI has also established laws for the governance of the SME Platform. The Bombay Stock Exchange and the National Stock Exchange have developed BSE SME Platform and EMERGE, respectively, to support this endeavour. The stock exchanges are always trying to provide the platform most suited for firms to grow from small to large by raising funds from the capital market.


  • A public listing provides value and prominence, as well as increasing employee appeal.
  • It provides the opportunity to employ shares to leverage acquisitions, as well as an exit option for the original founders and investors.
  • In comparison to a typical IPO, there are less regulatory constraints.
  • The issuing firm has a lot more say over the DPO.
  • DPOs are not affected by market circumstances, and no brokerage business is required.
  • Shares can be sold on the open market through a variety of channels, including the internet and direct mail.
  • Such non-registration-required offers can raise cash more rapidly and inexpensively.
  • Share price discovery and a launching platform for additional capital raising.
  • Enhanced visibility.
  • Gain access to a large network of BSE trading members.
  • Increasing access to investment capital
  • Raise funds from the company's own community, which includes small, non-wealthy investors.
  • There is no need to buy or employ an expensive/potentially dangerous shell corporation. This helps to prevent the unforeseen dangers that such reverse mergers entail.
  • DPOs are significantly less expensive than IPOs.
  • It enables the use of shares to finalize purchases.
  • To recruit and retain employees, provide stock options.

Documents Required

  • Any and all state regulatory clearance.
  • A disclosure statement known as an offering memorandum or prospectus that offers comprehensive information to potential investors.

Type of Delisting

  • Voluntary delisting occurs when a company decides to remove security on its own.
  • Compulsory delisting occurs when a company's securities are withdrawn from a stock exchange as a punitive action for failing to make filings or comply with the conditions outlined in the Listing agreement, as defined by the SEBI (Delisting of Securities) Regulations, 2009