Micro, Small and Medium Enterprises (MSME) Registration and its Benefits

Micro, Small and Medium Enterprises (MSME) Registration and its Benefits

In this growing economy like india, there are ample opportunities for new enterprises and organisations to establish and grow. There is also a wide open market for Indian exporter and traders. Indian products and services have huge demand due to quality, price and high export standards.

The government has also taken its lead in the development, establishment and nurturing of budding entrepreneurs and young minds. MSME Certification is one of its initiative to provide support, opportunity and priority recognition to new work-force and business minds.

In this blog I will tell you in very simple and easy to undersand language about MSME (Micro, Small and Medium Enterprises), MSME Certificate Registration and MSME Benefits. But before stating anything, lets first know what is MSME.

What is MSME ?

As a part of Aatmanirbhar Bharat Abhiyaan announced by Respected Prime Minister Shri Narendra Modi ji on 12th May 2020, Finance Minister Nirmala Sitharaman on 13th May 2020 announced revisions in the definition of Micro Small and Medium Enterprises (MSME). Earlier, the MSMEs were defined on the basis of investments now will also include turnover of the company.

1. MSME categorization will be on the basis of investment and turnover together.

2. Now no more difference in classification of manufacturing and service enterprises. Both manufacturing and service enterprises will be under same class.

3.   Necessary amendment in the law will be bought soon.

Revised MSME Classification 

The revised classification of MSME (Micro small and Medium Enterprises) will be on the basis of Investment along with the Turnover of the concern. Now there will not be any distinction for the classification in between Manufacturing Concern and Service Provider Concerns. The classification is still in three (3) categories i.e. Micro, Small, Medium enterprises.

MICRO - A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 1 Crore and Turnover does not exceed Rs. 5 Crore;

SMALL - A small enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 Crore and Turnover does not exceed Rs. 50 Crore;

MEDIUM - A medium enterprise is an enterprise where the investment in equipment does not exceed Rs. 20 Crore and Turnover does not exceed Rs. 100 Crore;

Note : For reference, the Existing MSME Classification is also provided under strikeout fonts.

The Government of India (GOI) has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of Micro, Small and Medium Enterprises is as under :

Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below :-
A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh;
A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore;
A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.

In case of the above enterprises, investment in plant and machinery is the original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide
its notification No.S.O.1722(E) dated October 5, 2006 .


Enterprises engaged in providing or rendering of services and whose investment in equipment (Original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006 are specified below :-
A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh;
A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore;
A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.


Its sounds to be a little complicated, let us understand it with the help of this flow chart below :

The government is providing various assistance, facilities and training to MSME Units having "MSME Certificate" as registered with the Union Ministry of Micro, Small and Medium Enterprises. The Government of India (GOI), Union Ministry of Micro, Small and Medium Enterprises, Reserve Bank of India (RBI), SIDBI (Small Industrial Development Bank of India) and other statutory bodies by implying various policies and regulations are providing various benefits and support to MSMEs. The Government of India (GOI), Union Ministry of Micro, Small and Medium Enterprises, Reserve Bank of India (RBI) has implemented various regulations and governance policies for the banks and financial institutions to generate easy, lucid and rapid finance and other services for MSME. The Union Ministry of Micro, Small and Medium Enterprises has established various "Training Center" and "MSME Facilitation Centers" for people and enterprises having MSME registration in many cities as well as at district levels. These "Training Center" and "MSME Facilitation Centers" provide trainings and MSME Scheme related facilities to MSME's.

How to avail the benefits of MSME Registration ?

One need to register himself or his enterprises as "MSME" under the "Ministry of Micro, Small and Medium Enterprises". The registration for "MSME" can be obtained via any Professional Consultant very easily (like a Service Provider, CA Firm, CS Firm and Legal Professionals), you just need to provide them required documents and rest they will perform from their end. There are various categories of MSME under which registration certificate is issued, like C,D,E etc. These categories are provided by the department itself on the basis of the details provided at the time of registration and on the basis of other records likes past performance, investment, location etc.

But in order to avail the benefits there should have adequate knowledge, proper communication and timely action. For this follow the following steps :-

Step 1 : Get MSME Registration. One can get a MSME registration with the help of the Financial Consultant (like a Service Provider, CA Firm, CS Firm and Legal Professionals) providing this service or from the "MSME Facilitation Centers" of your area.

Step 2 : Visit SIDBI (Small Industries Development Bank of India), MSME Facilitated Centers under the aegis of Union Ministry of Micro, Small and Medium Enterprises or their website to know about the variour schemes running.

Step 3 :   1. Always avail any registration or loan facilities under MSME Categories.

             2. Do not forget to mention to the respective department or bank that, "YOU   HAVE MSME CERTIFICATE".

               3. At the time of paying any statutory due or fee always enquiry about MSME Concessions, waivers or benefits. Mention your MSME Registration and attach copy of your certificate if allowed.

  

Benefits of MSME Registration

There are many benefits of MSME Registration. In other words we can say that MSME Registration provides you the entitlement for MSME benefits. some of them are discussed below :

BENEFITS OF MSME

 

1. Providing Training

The Union Ministry of Micro, Small and Medium Enterprises has established various technology center and other training centers for providing tech training and other skill development training to people to generate employment and self employed entrepreneurs. These centers either by their own or through MOU (Memorandum of Undertaking) with Institutions, provide training to MSME Registered youth. Below news is the supporting for this imitative of a Tech Center under MSME. 

Source : The Times of India dt. 02/11/2019

 

2. Sectoral and Priority Financing 

There is special sectoral and priority financing to the MSME's. These loan are provided by SIDBI (Small Industrial Development Bank of India). Sectoral Financing means financing to the specific sector i.e. MSME sector enterprises.

3. Bank loan without collateral  

The Government of India (GOI) has assigned the Union Ministry of Micro, Small and Medium Enterprises and the SIDBI (Small Industrial Development Bank of India) to trigger this task. The Union Ministry of Micro, Small and Medium Enterprises and the SIDBI (Small Industrial Development Bank of India) established a Trust named "Credit Guarantee Fund Trust for Micro and small Enterprises (CGTMSE) specifically to implement credit guarantee fund scheme for the MSME's. Under this scheme loans are provided collateral Free.

4. Waiver of Stamp Duty

The state government as per their state policy (differ from state to state) has developed norms for MSME's to waive off the stamp duty payable by MSME units for any of their business related transactions like purchase of land etc. The stamp duty waiver starts from 25% (differ from state to state) of the actual chargeable duty. For availing the waiver one must have MSME Certificate.

5. Subsidy on Patent Registration

Subsidy is given to the MSME Enterprises for the patent registration by the Ministry of Micro, Small and Medium Enterprises. For this application is to be made to the respective ministry. The subsidy starts from 50%, subject to conditions.

6. Special Banking Facilities by Banks

The GOI and RBI has lain down varies norms, regulation and provisions over the banking & financial institutions for providing specific denomination & percentage of its financing capacity to MSME units. This helps MSME's to get better finance from various banks and financial institutions. And as the banks are mandate to comply with the norms to finance MSMEs, they robustly look for MSME to provide loan and financial services. MSME get low interest rate loans and charges waiver. The interest concession differ from bank to bank. Like MSME can avail a benefit of 1% reduction over the overdraft (differ from bank to bank).

 

7. Industrial Promotion Subsidy Eligibility  

MSME's are also eligible for Industrial Promotion Subsidy for Industrial Promotion as suggested by the Government.

8. Concessional Electricity Rate

There are various state government schemes under which, they provide electricity connection and supply to MSME at concessional charges and rates. It differs from state to state as per their policy. This concession is available to all the Enterprises that have the MSME Registration Certificate, by providing an application in the respective manner (As per scheme) to the Electricity Department/Board along with the copy of MSME Registration Certificate.

9. Income Tax Benefits

There are many exemptions, deductions and other benefits available to MSME Units. Presumptive basis of taxation (depending on eligibility) can be considered as one of it. Export without payment of GST by executing a LUT (letter of Undertaking) in Form GST RFD – 11 (Circular No. 40/14/2018-GST) online is very easily allowed to MSME Unit.

10. Export Support and Market Visibility

GOI (Government of India) has made Export registration easy. It also provides easy export facilities to MSME Unit. They provide subsidies, tax exemption, and technical support as well to MSME Units. GOI organizes several exchange programs, craft fairs, exhibitions, and trade-related events internationally for MSME Enterprises to get international clients and business.Below is a news exact from a website showing the same.

This is a all about MSME, MSME Registration and its benefits. These are a few amongst many. Any comment and suggestion is most welcome. Share with your friends and family. For any query or assistance, feel free to comment.

Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. It has no connection with the websites mentioned in its contents. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.