Micro, Small and Medium Enterprises (MSME)
The MSME sector contributes to 45% of India’s Total Industrial Employment, 50% of India’s Total Exports and 95% of all industrial units of the country and more than 6000 types of products are manufactured in these industries (As per msme.gov.in). When these industries grow, the economy of the country grows as a whole and flourishes. These industries are also known as small-scale industries or SSI’s.
Micro, Small and Medium sized enterprises in both the manufacturing and service sector can obtain MSME Registration under the MSMED Act. Though the MSME registration is not statutory, it is beneficial for business at it provides a range of benefits such as eligibility for lower rates of interest, excise exemption scheme, tax subsidies, power tariff subsidies, capital investment subsidies and other support.
The Indian government has always been in favor of providing benefits to Micro, small and medium enterprises (MSMEs). There are many advantages of obtaining MSME registration in India, which can be only availed if the business had registered itself as an MSME/SSI under MSME Act.
Understanding MSME as per the Law: The Government of India has devised the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. In legal terms, the definition of micro, small and medium enterprises can be best understood as
What is the registration of MSME?
The Government of India has devised the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. In legal terms, the definition of micro, small and medium enterprises can be best understood as
Any company that comes under the category of MSME needs t to ensure they are registered under the MSME category. MSME registration stands for the micro small and medium enterprises registration. MSMED Act has been launched by the government of India to support the MSME through various schemes, subsidies, and incentives. With MSME Registration, banks also provide the loans at lower rate of interests, as these MSME play an important role in the country’s economic growth.
Benefits of MSME Registration
The following are a few advantages or obtaining SSI/MSME registration in India:
1. Bank Loans (Collateral Free)
The Government of India has made collateral-free credit available to all small and micro business sectors. This initiative guarantees funds to micro and small sector enterprises. Under this scheme, both the old as well as the new enterprises can claim the benefits. A trust named The Credit Guarantee Trust Fund Scheme was introduced by the GOI(Government Of India), SIDBI(Small Industries Development Bank Of India) and the Ministry of Micro, Small and Medium Enterprise to make sure this scheme is implemented (Credit Guarantee Scheme) for all Micro and Small Enterprise.
2. Subsidy on Patent Registration
A hefty 50% subsidy is given to the Enterprise that has the certificate of registration granted by MSME. This subsidy can be availed for patent registration by giving application to respective ministry.
3. Overdraft Interest Rate Exemption
Businesses or enterprises registered under MSME can avail a benefit of 1% on the Over Draft as mentioned in a scheme that differs from bank to bank.
4. Industrial Promotion Subsidy Eligibility
Enterprises registered under MSME are also eligible for a subsidy for Industrial Promotion as suggested by the Government.
5. Protection against Payments (Delayed Payments)
At times, the buyers of services or products from the MSME’s or SSIs tend to delay the payment. The Ministry of Micro, Small and Medium Enterprise lend a helping hand to such enterprises by giving them the right to collect interest on the payments that are delayed from the buyer’s side. The settlement of such disputes must be done in minimum time through conciliation and arbitration.
In case, if any MSME registered enterprise supplies any goods or services to a buyer then the buyer is required to make the payment on or before the agreed date of payment or within 15 days from the day they had accepted the goods and services from MSME or SCI registered business( if there is no mention of the date of payment).
If the buyer delays the payment for more than 45 days after accepting the products or services then the buyer has to pay compound interest along with interests (monthly) on the amount that was agreed to be paid. The interest rate is three times the rate that is notified by the Reserve Bank of India.
6. Fewer Electricity Bills
This concession is available to all the Enterprises that have the MSME Registration Certificate by providing an application to the department of the electricity along with the certificate of registration by MSME.
7. ISO Certification Charges Reimbursement
The registered MSME enterprises can claim the reimbursement of the expenses that were spent for the ISO certification.
Registration Process for MSME
One can opt for MSME registration online and offline as well. The registration process for both the manufacturing sectors and service sectors can be done on a single platform of msme.gov.in. Following is the process of MSME registration.
Fill up the form for MSME registration
- Go to the website of the MSME online application or paste this URL in another tab https://msme.gov.in/online-application.
- Fill up the form online or take a print out and fill-up the form offline.
Prepare the documents
Prepare the documents with the assistance of the experts at MSME.
The process can take up to 2 working days.
Make the application
- Submit the application form coupled with the required documents.
- After submitting the application, verification takes place.
- The verification can take up to 2 working days.
Approval and registration
- The registration will be done if the application has been approved.
- The MSME certificate will be delivered to you.
The MSME registration application form contains the following components.
- Aadhaar details, PAN details, social category and gender of the entrepreneur.
- Name and type of enterprise.
- Address and contact details.
- Investment amount.
- Employee number.
The MSME registration fee is ₹ 1,999. Applicants can pay the fees using the online payment gateways. However, keep the investment limit in mind while applying for the registration.
Documents required for MSME registration
Here are some essential documents we required to get the information about the organization and its activity:
- Aadha r Card of entrepreneur is must required
- Proprietorship PAN Card is required, if it is sole proprietorship firm
- Company PAN Card is required for Private Limited/ LLP/ OPC/ Partnership
- Certificate of Incorporation (COI) of company
- Address proof of business place
- Bank details (A/C Number, IFSC code)
- Nature of the business
- Investment of capital in business
- Number of employees working in your organization
Why we should do MSME Registration?
- Acquiring MSME registration certificate is not legally mandatory for a business or enterprise but you have to acquire the advantages, through it an organization can grow like a tree.
- So we will be advised you always that registering your enterprise under MSME scheme can get a variety of several benefits from the government sectors including lower interest rates, excise exemption scheme in respect to specified commodities, tax subsidies, exemption under Direct Tax Laws, power tariff subsidy, capital investment subsidies, etc.