MSME Registration and Benefits in India
Micro, Small and Medium Enterprises (MSMEs) are the backbone of India's economy, comprising nearly 30% of the country's GDP and providing employment to millions of people. To support and promote these businesses, the Government of India has introduced the Micro, Small and Medium Enterprises Development (MSMED) Act, which provides various benefits and incentives to MSMEs that register under the Act
What is MSME Registration ?
MSME registration is a voluntary registration process that enables MSMEs to avail themselves of various schemes and benefits offered by the government. MSME registration can be done online through the Udyam Registration Portal, which is a simplified and user-friendly platform for MSMEs to register themselves with Minimal documents and no government fees.
What are the Eligibility Criteria for MSME Registration ?
The eligibility criteria for MSME registration depend on the type of enterprise, its annual turnover, and its investment in plant and machinery or equipment. The following table shows the current revised MSME classification, where both the investment and annul turnover are to be considered for deciding if an entity is considered as an MSME.
| TYPE OF ENTERPRISE | INVESTMENT IN PLANT AND MACHINERY (Manufacturing ) | INVESTMENT IN EQUIPMENT (SERVICE) |
| Micro | Up to Rs. 25 Lakhs | Up to Rs. 10 Lakhs |
| Small | Above Rs. 25 Lakhs and up to Rs. 5 Crores | Above Rs. 10 Lakhs and up to Rs. 2 Crores |
The MSME Registration is allowed for manufactures or producers and service provider only. The following entities are eligible for MSME Registration:
- Individual, startups, Business owners, and entrepreneurs
- Private and public limited companies
- Sole Proprietorship
- Partnership firm
- Limited liability Partnerships (LLPs)
- Self Help Groups (SHGs)
- Co-operatives societies
- Trusts
The Documents required for MSME registration are:
- Aadhaar Card
- Pan Card
There are no MSME registration fees and its does not require proof of documents. PAN and GST-linked details no investment and turnover of enterprises will be taken automatically by the Udyam Registration Portal from the Government databases since the portal is integrated with Income Tax and GSTIN systems. GST registration is not compulsory for enterprises that do not require a GST registration. However, enterprises that mandatorily need to obtain GST registration under the GST law, must enter their GSTIN for obtaining the MSME registration or Udyam Registration.
The amount and duration of the concession vary from state to state and depend on the policies and schemes of the respective governments. Some states offer a flat rate of concession, while others offer a percentage of concession based on the consumption or local factor of the MSME.
6. Free ISO Certification.
MSMEs can avail free ISO Certification from the government, which is an international standard for quality management systems. ISO Certification helps MSMEs improve their processes, products and services, as well as enhance their customer satisfaction and loyalty.
ISO Certification also gives MSMEs a competitive edge in the market, as it demonstrates their adherence to global standards and best practices. Moreover, ISO certification can help MSMEs access new markets and opportunities, as it increases their credibility and trustworthiness among customers and stakeholders.
MSME registration is a beneficial and easy process that can help MSMEs in India grow and prosper by registering as on MSME, businesses can avail various schemes and benefits offered by the government, such as collateral-free loans, interest subvention, subsidy on patent registration, Industrial Promotion subsidy, Protection against delayed payments, reduced electricity bills and free ISO certification.
What are the Benefits of MSME Registration ?
MSME Registration offers several benefits to businesses that can help them grow and become more competitive. These benefits include easier access to credit, interest subvention, subsidy on patent registration, industrial promotion subsidy, timely payments, and free ISO certification. In this Section, we will explore all the benefits of MSME registration in details and explain how they can help MSMEs improve their operations and financial stability.
1. Collateral Free Loans:
As mentioned earlier, obtaining loans is often a challenge for MSMEs. However, the MSME registration, banks and financial institutions are more likely to offer credit without requiring the MSME to pledge assets as security. This is because the government provides credit guarantee schemes to banks, making it less risky for them to lend to MSMEs.
This benefits helps MSMEs access much- needed funds to grow and expand their business operations. The government also provides interest subvention or reduced interest rates on loans up to a certain limit for MSMEs who promptly repay their loans.
2. Subsidy on Patent Registration:
2. Subsidy on Patent Registration:
MSMEs can avail a 50% subsidy on the total cost of patent registration, which makes it more affordable for them to product their inventions and innovations. Patent registration is crucial for MSMEs that invest heavily in research and development, as it helps them protect their intellectual property rights and prevent competitors from copying their ideas.
Patent registration also enhances the reputation and credibility of MSMEs in the market, as it shows their commitment to innovation and quality. Moreover, patent registration can help MSMEs attract investors and partners who value intellectual property.
3. Industrial Promotion Subsidy:
MSMEs can also avail an industrial promotion subsidy from the government, which is a financial assistance given to MSMEs for setting up or expanding their units in certain sectors or regions. The industrial promotion subsidy aims to encourage MSMEs to invest in new technologies, infrastructure, and skill development as well as to promote regional development and employment generation.
MSMEs can also avail an industrial promotion subsidy from the government, which is a financial assistance given to MSMEs for setting up or expanding their units in certain sectors or regions. The industrial promotion subsidy aims to encourage MSMEs to invest in new technologies, infrastructure, and skill development as well as to promote regional development and employment generation.
The Industrial promotion subsidy varies from state to state and sector to sector, depending on the policies and schemes of the respective governments. Some of the common types of industrial promotion subsidies are capital subsidy, power subsidy, transport subsidy, etc.
4. Protection against delayed payments:
4. Protection against delayed payments:
One of the major challenges faced by MSME is delayed payments from their buyers or customers, which affects their cash flow and working Capital. To address the issue, the government has enacted the MSMED act, which provides protection to MSMEs against delayed payments.
According to the Act, any buyer who purchases goods or services from an MSME has to make the payment within 45 days from the date of acceptance or deemed acceptance of the goods or services.
If the buyer fails to do so, he has to pay interest to the MSME at three times the bank rate notified by RBI.
The Act also empowers MSMEs to file a complaint against delayed payment in the Micro and Small Enterprises Facilitation Council (MSEFC), which is quasi-judicial body established by the state governments. The MSEFC has to dispose of the complaint within 90 days from the date of filing.
The government has also launched a portal called Samadhan, where MSMEs can register their delayed payment cases online and track their status. The portal also facilitates conciliation and arbitration between MSME and buyers.
5. Reduced Electricity Bills.
Another benefits of MSME registration is that it entitles MSME to get concessions on electricity bills from the state governments. This benefits helps MSMEs reduce their operational costs and increase their profitability.
The government has also launched a portal called Samadhan, where MSMEs can register their delayed payment cases online and track their status. The portal also facilitates conciliation and arbitration between MSME and buyers.
5. Reduced Electricity Bills.
Another benefits of MSME registration is that it entitles MSME to get concessions on electricity bills from the state governments. This benefits helps MSMEs reduce their operational costs and increase their profitability.
The amount and duration of the concession vary from state to state and depend on the policies and schemes of the respective governments. Some states offer a flat rate of concession, while others offer a percentage of concession based on the consumption or local factor of the MSME.
6. Free ISO Certification.
MSMEs can avail free ISO Certification from the government, which is an international standard for quality management systems. ISO Certification helps MSMEs improve their processes, products and services, as well as enhance their customer satisfaction and loyalty.
ISO Certification also gives MSMEs a competitive edge in the market, as it demonstrates their adherence to global standards and best practices. Moreover, ISO certification can help MSMEs access new markets and opportunities, as it increases their credibility and trustworthiness among customers and stakeholders.
The government provides reimbursement of the expense incurred by MSMEs for obtaining ISO certification, up to certain limit. The reimbursement can be claimed by submitting an application along with the required documents to the respective authorities.
Conclusion.
MSME registration is a beneficial and easy process that can help MSMEs in India grow and prosper by registering as on MSME, businesses can avail various schemes and benefits offered by the government, such as collateral-free loans, interest subvention, subsidy on patent registration, Industrial Promotion subsidy, Protection against delayed payments, reduced electricity bills and free ISO certification.
These benefits can help MSMEs improve their operations and financial stability, as well as enhance their reputation and competitiveness in the market. Therefore, it is advisable for all eligible businesses to the register as on MSME and take advantage of the opportunities available to them.
