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What Is MSME Registration? : A Detailed Guide On MSME And Its Benefits

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 –

  1. More than 45% of total industrial employment in India
  2. More than 50% of total exports done in India
  3. 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

  1. What Are MSME?
  2. Ministry Of MSME
  3. MSME Registration Process
  4. MSME Registration Benefits
  5. Schemes Under MSME Registration
  6. Frequently Asked Questions

What Are MSME?

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

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

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

  1. To do the registration, firstly the applicant has to visit the MSME official website (www.udyogaadhaar.gov.in). 
  2. Then the applicant has to fill the application form available on the website.
  3. After filling the application form, the applicant can upload the required documents if any, and then submit the form by OTP verification.
  4. Finally, after the successful submission of the application form, the MSME registration number and certificate will be issued.
  5. If the applicant has more than one business, then he can apply for MSME registration for all businesses separately.

MSME Registration Benefits

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

Schemes

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.

2. Incubation

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

frequently asked questions

Now let us discuss in general some of the frequently asked question on MSME.

Q1. What is the MSME registration fees?

There is no fee for MSME registration. It is entirely free to register.

Q2. What is an MSME loan?

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

Q3. What businesses come under MSME?

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.

Q4. What is SSI registration?

SSI registration is also known as Small Scale Industry registration. The Ministry of MSME provides it.

Q5. How long is the MSME registration valid?

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.

Q6. How can we check MSME registration?

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.

Q7. Is MSME registration mandatory?

No. MSME registration is not mandatory. One can apply for it to get various benefits under MSME.

Q8. What is plant and machinery investment in 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.

Q9. Is Aadhaar mandatory for MSME registration?

Yes, aadhaar of the applicant is mandatory for MSME registration.

Q10. Can a trader apply for MSME?

No. Trading is not covered under MSME so a trader cannot apply for it.

Q11. Can the MSME certificate be modified?

Yes, the applicant can modify the MSME certificate through an online application.

Q12. Can an individual register for MSME?

No, an individual can not register for MSME. It is only for businesses.

Q13. What is the turnover limit in MSME?


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

Q14. What is NIC code?

NIC is also known as the National Industrial Classification. It is a classification system made by the government to define different business activities.

Q15. Can we cancel MSME registration?

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.

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