BETWEEN BURDEN AND BIAS: REGULATORY DISCRETION, PROCEDURAL COMPLEXITY AND THE SURVIVAL OF MSMES IN INDIA

The Micro, Small and Medium Enterprises (MSMEs) are vital to the economic structure of India as they significantly contribute to employment, decentralized manufacturing, and economic stability. The regulatory policy regarding MSMEs has generally been shaped to be supportive, focusing on formalisation, financial inclusion, and the embrace of digital practices. In the scholarly literature, this perspective is framed as regulation viewed either as an enabling factor or a perceptual construct influencing both adoption behavior and managerial intent. This paper examines framing by investigating regulatory enforcement as implemented by MSMEs. It indicates that procedural intricacy and selective enforcement have transformed regulatory adherence into an administrative obligation and created a type of structural bias that directly affects the survival of MSMEs. The study demonstrates that procedural defaults, along with notice-based and discretionary sanctions, leave MSMEs in a disadvantaged state of legal and financial exposure, utilizing doctrinal analysis and regulatory evaluation. It identifies a substantial research gap in MSME studies, which largely perceives businesses as subjects of regulation rather than as processes of regulation. Recast as issues of regulatory governance and legal risk, the paper emphasizes the need to prioritize procedural fairness, proportionality, and accountability in enforcement related to MSMEs. Keywords: MSME, Regulatory discretion, Procedural complexity, Regulatory enforcement, Compliance burden, Structural bias, Legal vulnerability, Procedural fairness, MSME survival, Indian regulatory governance.