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What Are MSMEs ?

Micro, Small, and Medium Enterprises are better known by the acronym MSME. MSMEs are the backbone of the Indian economy. Silently operating in different areas across the country, more than 6 crore MSMEs have a crucial role to play in building a stronger and self-reliant India. These small economic engines have a huge impact on the country’s GDP.

The government of India made a proposal to redefine MSMEs by the Micro, Small, and Medium Enterprises Development (Amendment) Bill, 2018, to classify them as manufacturing or service-providing enterprises.

The government of India made a proposal to redefine MSMEs by the Micro, Small, and Medium Enterprises Development (Amendment) Bill, 2018, to classify them as manufacturing or service-providing enterprises.

Classification under MSMEs:

The new criterion is based on the Investment Amount and Turnover of the enterprise.

Composite Criteria: Investment in Plant & Machinery/equipment and Annual Turnover

ClassificationMicroSmallMedium
Manufacturing Enterprises and Enterprises rendering Services Investment in Plant and Machinery or Equipment:

Not more than Rs.1 crore and Annual Turnover; not more than Rs. 5 crore
Investment in Plant and Machinery or Equipment:

Not more than Rs.10 crore and Annual Turnover; not more than Rs. 50 crore
Investment in Plant and Machinery or Equipment:

Not more than Rs.50 crore and Annual Turnover; not more than Rs. 250 crore

Benefits of MSME registration

1. Priority Lending: Our first MSME benefit is priority lending. Whether you’re the proud owner of a cutting-edge technology business or a masala packing company, employing rural women, credit and loan is something that your business will inevitably require for long- and short-term financing. Banks, by virtue of the directions issued by the Reserve Bank of India, have certain earmarked funds that have to mandatorily be given to MSME businesses. Producing MSME certificate benefits to entitle one to avail of this loan on a priority basis with fewer hassles.

2. Fewer interest rates and availability and access to greater credit: In the absence of collateral security (any property/cash given as a security against a loan), many business owners may find it extremely hard to secure a loan for starting in their industry. However, with an MSME Registration, all banks are specifically instructed to offer loans at interest rates lower than usual and one may be able to avail of this benefit from several banking institutions for their financing needs.

3. Income Tax exemption: There are several MSME registration benefits that can save lakhs of the amount that may be assessable to tax in the absence of this certificate. The benefit of a presumptive basis of taxation is available to enterprises, which relieves one from maintaining detailed books of accounts and undergoing audit procedures.

4. Credit Linked Guarantee Scheme: The Ministry of Micro, Small, and Medium Enterprises and the Small Industries Development Bank of India (SIDBI) have established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) specifically to implement Credit Guarantee Fund Scheme for micro and small enterprises. This scheme allows collateral-free loans of up to 50 lakhs for individual MSMEs.

5. Market assistance from the government and Export Promotion: The Government of India organizes several exchange programs, craft fairs, exhibitions, and trade-related events internationally. Being categorized as a micro, small or medium enterprise gives access to all of these platforms for international cooperation on trade-related aspects with different countries and fosters new business connections. The government also incentivizes the export of goods and services by MSMEs by way of subsidies, tax exemption, and technical support.

6. Capital and other grants for infrastructure development: Since MSMEs is a sector generating employment and giving entrepreneurial ventures a boost, the government also identifies training sectors for MSME and gives capital grants for improvisation of the infrastructure and support for entrepreneurial development.

7. Reimbursement of ISO Certification: To promote the standards and certifications received by MSMEs in a bid to enhance their performance across sectors, all registered micro and small industries can avail an exemption of all expenses incurred for obtaining ISO 9000, ISO 14001, and HACCP certifications.

8. Exclusive purchases and sheltering from the competition: As part of the MSME Market Development Assistance Scheme, the Central Government follows a Price and Purchase Preference policy. Wherein more than 358 items are listed under it for exclusive purchases by Central Government from the medium, micro, and small units only.

9. Technology and quality up-gradation support to MSMEs: In order to enhance the cost-effectiveness and promote clean energy use in manufacturing, the government reimburses project costs towards these goals for MSME sector units and also expenditure incurred for the implementation of clean technology, preparation of audit report and subsidies for licensing products according to national and international standards.

10. Subsidy on Patent Registration: Under the current laws, MSMEs registered with the MSME ministry stand to benefit from a 50% subsidy on their patent registration fees. This encourages small businesses and firms to keep innovating and working on new projects and technologies. The subsidy can be availed by submitting an application to the respective ministries.

Documents required for MSME Registration:

Conclusion:

MSME registration process provides many incentives and benefits including both monetary and non-monetary ones. These MSME registration benefits are related to the entrepreneurial and trade development of the business. If you want to enjoy the benefits of MSME registration for your micro, small or medium business, then you should opt for MSME registration without fail.