From creating large scale employment to gaining economic stability, MSME plays an important role to ensure the country’s economic growth. In India, more than 50 million people got employment through MSME, and it has almost 8% contribution to our nation’s GDP.
Though there are several issues related to infrastructure, lack of proper market linkages has disturbed the flourishing of MSME, both central and state governments across the country have taken some important measures to encourage.
Registration of MSME does not have any legal obligation, but the registration always helps to reap various benefits from numerous government schemes.
Registering as MSME can aid you with credit at a much lower interest rate, incentives on products you export as an enterprise, exemption on excise duty, etc. Not only that but also businesses registered under MSME enjoy several statutory aids like reservations and the interest on delay in payments because of unavoidable situations.
1. Classification of Micro, Small and Medium-Sized enterprises
The benefits offered under the scheme depends on the classification of Medium small and micro-enterprises.
Following conditions are applicable to the businesses engaged in the preservation and processing of food items, manufacturing of goods,
1.1 Category Investment in machinery and plant by Manufacturing Units
- Micro enterprises: less than Rs. 25 lakh
- Small enterprises: more than Rs 25 lakh to Rs. 5 crore
- Medium enterprises: more than Rs 5 crore to Rs 10 crore
1.2 Category investment in equipment and furniture by Service Providing Units
- Microenterprise: less than or equal to Rs 10 lakh
- Small enterprise: In between Rs 10 lakh to Rs 2 crore
- Medium enterprise: More than Rs. 2 crores to Rs. 5 crore
2. Key Benefits of MSME Registration Government Offers
From reservation, entrepreneurial memorandum to credit guarantee fund trust and capital aid for technological upgradation businesses registered under MSME get several benefits.
Here have a look at the key benefits below,
- The businesses registered under MSME get bank loans at a much cheaper interest rate.
- Different tax rebates are also offered to businesses under MSME
- MSMEs can carry forward Credit for minimum alternate tax (MAT) for 15 years instead of 10 years
- Government offers several tenders reserved only for MSMEs
- MSMEs gets easy credit access
- Higher preferences are given for government license and certification to the businesses registered as MSME
- One time settlement fees are available for non-paid amounts in case of MSMEs
3. Documents Require for MSME Registration
Business entities need to submit documents like a copy of purchase bill, business address proof, a license from regulatory bodies.
- Aadhaar No. of Any Partner
- Pan Number of Firm
- Name of Enterprises
- Location of Plant Detail
- Office address of Enterprises
- Date of Commencement
- Bank details:
- Account Detail
- IFSC Code
- Major Activity (Manufacturing/Traders) ( Please specify which type of Manufacturing/Trading)
- Person Employed
- Investment (Plant & Machinery/ Equipment’s)
4. Government Launched Schemes for MSMEs
In recent times, the Indian Government has introduced several schemes under MSME. The schemes are as follows,
- Zero Defect Zero Effect
- Udyog Aadhaar Memorandum
- Grievance Monitoring System
- Women Entrepreneurship
- Quality technology Tools & Quality Management Standards
- Women Entrepreneurship
- Credit linked Capital Subsidy Scheme
4.1 Udyog Aadhaar Memorandum
An Indian resident holding an Aadhaar Card can avail of the scheme. Moreover, a person with a business registered under the scheme can avail of loans, credits, and government subsidies. Registering under the scheme is easy as you can do it both through online and offline mode. Benefits of the Udyog Aadhaar Scheme,
- Protection against delayed payment
- Collateral free bank loans
- Octroi benefits
- Subsidy on barcode registration
- Concession on Electricity bills
- Subsidies on NSIC Performance and Credit ratings
- Waive off stamp duty and registration fees
- IPS subsidy is also available
- A raise on the extent of guarantee cover from 75% to 80%
- Subsidy of 50% on patent registration
4.2 Zero Defect Zero Effect
To encourage the manufacturer and exporter of goods, the government of India has introduced this scheme. As per the scheme, businesses can avail ZED certification by exporting goods with zero defects alongside maintaining the ecological needs while manufacturing. Businesses with ZED certificate can have the following benefits,
- 0.5% concession on interests on Loans
- Rs. 25 lakh for technology adaptation
- 50% concession on processing fees
- Rs. 25 lakh for setting up of new ETP
- Along with that, allotment of Rs 5 lakh for testing equipment purchase is also available
- Rs. 20 lakh for International and Rs 10 lakh for domestic patent registration
- On the ZED certification cost 80%, 60%, and 50% subsidy
4.3 Quality Management Standards and Quality Technology Tools
Registration under this scheme can avail you with a clear understanding and implementation of the quality standards. However, the purpose of the scheme is to make the micro, small, and medium enterprises used to with new technology. Therefore, businesses registered under the scheme can get access to different awareness campaigns, seminars, and activities.
4.4 Grievance Monitoring System
The Government of India has shown strong intent to empower small, micro and mid-sized businesses through this scheme. Hence, if your business is registered under the scheme, you can complain about any issue you face to avail of any service as an MSME. You can check the status of your complaint alongside you can raise further complaints if you are not satisfied with the outcome of the previous one.
The Government has launched this scheme to promote new ideas. Alongside that, promoting state of the art products, and designs is also one of the main ideas behind this scheme. Hence, if you are an innovator you can be beneficial under the scheme to implement your ideas. Registering to this scheme can offer you from 75% to 80% funding from the Government.
4.6 Women Entrepreneurship
The Women Entrepreneurship scheme is started for women who are looking to establish themselves as successful entrepreneurs. However, the government offers training, counselling, and capital to women to help them manage and expand their business.
As said earlier, MSME plays a vital role in deciding a country’s economic growth. With so many schemes and funding offering things have become much easier to register and start your business.