MSME, also known as Micro, Small, and Medium Enterprises are those businesses that have MSME registration and are governed by the MSMED Act in India under the Ministry of Micro, Small, and Medium Enterprises.
MSME sector is a significant sector in India and therefore contributes to the economy of the country. According to the Ministry of MSME, 90% of the businesses operating in India are registered under MSME and so it is a big part of the Indian economy.
These businesses contribute to the following –
- More than 45% of total industrial employment in India
- More than 50% of total exports done in India
- Manufacturing of more than 6,000 products
Any business either in the manufacturing or service sector can get itself registered under MSME.
Although the registration is not mandatory from the government side, if a business gets registered under MSME, it can avail of various benefits in the form of loans, taxes, etc.
Let us now understand more about MSME registration and its benefits in detail.
Table of Content
- What Are MSME?
- Ministry Of MSME
- MSME Registration Process
- MSME Registration Benefits
- Schemes Under MSME Registration
- Frequently Asked Questions
What Are MSME?
MSME, also known as Micro, Small, and Medium Enterprises, are the businesses that are either in the manufacturing sector or the service sector and are registered under MSME.
The Ministry of Micro, Small, and Medium Enterprises has classified the businesses specifically into three categories – Micro, Small, and Medium Enterprises depending upon the investment made in the business and the annual turnover.
MSME Registration Criteria
1. Micro Enterprises
Enterprises which have an investment in the manufacturing or service business less than one crore and the annual turnover is less than five crores.
2. Small Enterprises
Enterprises which have an investment in the manufacturing or service business less than ten crores and the annual turnover is less than fifty crores.
3. Medium Enterprises
Enterprises which have an investment in the manufacturing or service business less than twenty crores and the annual turnover is less than a hundred crore.
Ministry Of MSME
Ministry of MSME is a ministry that is formed under the government of India. Therefore the primary purpose of this ministry is to formulate various rules, regulations, and laws related to micro, small and medium enterprises.
In other words, it provides multiple schemes and facilities under the MSMED Act to the businesses which are registered under MSME.
The ministry is formed to look after the overall growth of small and medium businesses in India which directly impacts the economy of the country.
MSME Registration Process
Any business that is looking for registration under MSME can do it by applying online on the MSME website. The Ministry of MSME issues the registration certificate that is in a digital format.
Information Needed For MSME Registration
- Aadhaar number of owner
- Name of owner
- Name of business enterprise
- PAN of applicant
- Type of business entity such as Sole Proprietor, LLP, Private Limited, Partnership, etc.
- Complete postal address
- Mobile number and email id of the applicant
- Date of commencement of business
- Bank account details of business
- The major activity of the business
- Nature of product/service
- The number of persons employed.
- Business investment
MSME Registration Procedue
- To do the registration, firstly the applicant has to visit the MSME official website (www.udyogaadhaar.gov.in).
- Then the applicant has to fill the application form available on the website.
- After filling the application form, the applicant can upload the required documents if any, and then submit the form by OTP verification.
- Finally, after the successful submission of the application form, the MSME registration number and certificate will be issued.
- If the applicant has more than one business, then he can apply for MSME registration for all businesses separately.
MSME Registration Benefits
There are various benefits for the businesses which are registered under MSME such as –
- Easy processing of business loans from banks at a very low-interest rate (around 1 to 1.5%), which is lower than regular business loans.
- Collateral free loan availability from banks
- Good credit facility
- Rebate on various direct taxes
- Preference is given in government tenders and government orders
- Rebate in government fees while getting various registrations and certifications like a trademark, patent, copyright, etc.
- Ease of getting government licenses and certifications
- Concession in electricity bills
- Various bank schemes and facilities from time to time
- As a result of registration, the business becomes eligible for Mudra Loan Scheme of the government of India
Schemes Under MSME Registration
The government has launched various schemes for the businesses registered under MSME such as –
1. Udyog Aadhaar
Businesses can register under this scheme easily through an online application. Therefore this scheme helps in availing various credit facilities, loan facilities, and subsidies by the banks and government.
This scheme is specifically for businesses working for the development and innovation of new technologies, products, and services.
Therefore under this scheme, 75% to 80% of the total cost involved in the development or innovation stage can be entirely financed by the government.
3. Credit Linked Capital Subsidy Scheme
This scheme provides subsidized capital to businesses therefore they can replace their old technology with the latest technology to give growth to the company.
As a result, it helps businesses to adopt the latest technologies available in the market by making them aware of it.
4. Zero Defect Zero Effect
This scheme provides certain rebates and concessions to the exporters so that they export goods to other countries easily.
One primary condition of this scheme is that the products which are exported have to meet the quality standards as described under the scheme so that they are not rejected by other countries and sent back to India.
5. Quality Management Standards & Quality Technology Tools
This scheme helps businesses to implement quality standard practices in their business and also gives guidance in using the latest technology by conducting various seminars, events, campaigns, etc.
6. Grievance Monitoring System
This scheme helps businesses to raise their complaints related to their businesses to the concerned department of the government and also to keep track of the status of the complaint.
7. Women Entrepreneurship
Women who are starting the business can take benefit from this scheme. It provides them support in doing business through training, capital, infrastructure, and various schemes so that they can easily grow their businesses.
Frequently Asked Questions
Now let us discuss in general some of the frequently asked question on MSME.
There is no fee for MSME registration. It is entirely free to register.
MSME loan is a low-interest loan provided by the banks to the businesses registered under MSME so that they can easily start their businesses
All the businesses involved in the manufacturing or service sector can come under MSME; however, their investment in the company is less than the specified limit.
SSI registration is also known as Small Scale Industry registration. The Ministry of MSME provides it.
MSME registration is valid for a lifetime or as long as the business is running. If the turnover of the company crosses the specified limit, then it has to be cancelled.
After successful MSME registration, a unique UAM number is allotted to the applicant. The applicant can visit the website (www.udyogaadhaar.gov.in) and check the MSME registration using the UAM number.
No. MSME registration is not mandatory. One can apply for it to get various benefits under MSME.
In MSME, the plant and machinery investment or the business investment includes the actual cost of the plant or machinery, excluding the cost of components.
Yes, aadhaar of the applicant is mandatory for MSME registration.
No. Trading is not covered under MSME so a trader cannot apply for it.
Yes, the applicant can modify the MSME certificate through an online application.
No, an individual can not register for MSME. It is only for businesses.
Micro-Enterprise – Annual turnover is less than five crores
Small-Enterprise – Annual turnover is less than fifty crores
Medium Enterprise – Annual turnover is less than a hundred crore
NIC is also known as the National Industrial Classification. It is a classification system made by the government to define different business activities.
Yes, the MSME registration can be cancelled by the applicant in case the business is closed or if the turnover exceeds the specified limit under MSME.