The fact that almost 65% of the country's population comprises of young age particularly under the age of 35 years is the reason that our country has the gain status of young nations in the world. Although it is true that the more the working eligible population, the more the unemployment problems are if are to name one sector that is immensely contributing to resolving such issues, is the Micro, Small and Medium Enterprises sector. Comprising of almost 90% by Micro-enterprises the sector largely covered urban and rural areas which are the heart and soul of the nation.
With the continuous efforts and initiatives brought in by the government, the sector is on its path of bringing India among the list of leading economies of the world. The sectors contemplate the idea of entrepreneurship and have categories the same into Micro, Small and Medium based on the criteria of investment and now includes the Retail and wholesale trade businesses (who are eligible to avail the benefits of priority sector lending) vide government's circular dated 2nd July 2021.
The latest threshold given for MSME published by M/o MSME vide its circular dated 1st June 2020 is as below:
- an investment up to Rs 1 crore and turnover up to Rs 5 crore are classified as Micro;
- an investment up to Rs 10 crore and turnover up to Rs 50 crore are classified as Small, and
- an investment up to Rs 50 crore and turnover up to Rs 250 crore are classified as Medium.
Similarly, the Startups though may be small companies but significant contribution in economic growth. They help in creating more jobs which means more employment, and more employment means an improved economy. The government of India vides its Notification No. G.S.R. 127 (E) DATED 19th February 2019 provided a modified definition of Startup. Therefore an entity is to consider as a startup that is
- Up to a period of ten years from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.
- Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees
- working towards innovation, development, or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.
Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup'.
Not only do such startups bring economic dynamism, but such are also bringing new ideas to the table and generate competition. Perhaps that might be the reason that the government have now shifted its growth approach to make MSMEs and startups engines of India's Growth.
However in this entrepreneurship journey, the professionals who are excellent with regulatory and compliance procedures, well updated with various schemes and initiatives, statutory requirements can be of great help. This professional can guide the prospective entrepreneurs in the capacity as
- Obtaining Project Financing/Term Loans;
- Capital Raising from other sources in the market;
- Conduct the Due diligence process before approaching the funds;
- Helps in establishing a corporate entity; Ensure all Statutory Filings and Register maintenance;
- Act as a legal advisor and representative and many more
A detailed list of opportunities for professionals in MSMEs and Startups
The Professionals can provide Advisory services to MSMEs
- Legal setting up of Enterprise (i.e. getting registration for a startup, PAN, TAN, MSME, etc.).
- Selection of Organization Structure (Sole Proprietorship, Company, Partnership, LLP, OPC, etc.).
- Labour Law aspects.
- Listing of MSMEs.
- Taxation aspects.
- Legal and Regulatory Compliances.
- Financial advisory services.
- Corporate Governance assistance and professional guidance.
- The signing of Annual Returns of the Company.
- Maintaining Statutory Registers.
- Act as Legal advisor and Representative.
- Handling matters of GST, Labour laws, and Corporate Laws.
- Conducting Secretarial Audit or Due diligence before seeking the funds.
- Handling matters relating to the conversion of Sole proprietorship or Partnership to Companies or any other form of business entities.
- Issuing Compliance Certificate to ensure compliance of various regulatory prescriptions in case of listing in MSME Exchange.
- Handling matters of Public issue.
- Preparation of detailed project report.
- Providing services related to Custom Development Scheme and Export Promotion Scheme.
- Guidance by Professionals to small and medium enterprises with regard to a credit facility of 2% as interest subsidy through SIDBI.
- Professionals help the organizations in availing the benefits of the MSME policies of central and state government similarly to those available for startups.
Additionally below are some ideas where the professionals can assist the budding startups
- By assisting start-ups to get recognition through startup India portal
- Drafting and creating essential legal documents such as
- Incorporation documents
- A non-disclosure agreement for dealing between client and investor will include certain documents and paper such as
- Employment contract, offer letters etc. binding clause
- Confidentiality agreement
- Owning of information
- Obligation with respect to crucial information
- Terms and conditions of work
- Company policies etc.
- Bylaws - definite of working rules and regulations. Security provision etc.
- Business advisor- fundraising options/opportunities, compliance monitoring other statutory compliance and mandates, periodical check, etc.
- The web portal of business-handling online query, improvisation, digital marketing
- Accounting and finance matter: Taxation and Finance are the key areas along with Secretarial Compliances. Professionals are playing a very significant and crucial role to help smoothen business operations.
Often it has been seen that most of the startup, MSMEs entrepreneurs are either unaware of available schemes/facilities or reluctant to avail its benefits due to cumbersome application/approval process, resulting in shut down of their ventures in the starting few years. Recognizing the same the government has even provided a mentorship facility on the startup India portal where the prospective mentor can connect and get access to all registered startups on its portal. This step has created yet another professional opportunity for those willing to provide their expert advice and help the nation move forward on its path of leading economy in the world.
The Startup India team provides active support to States in the formulation and operationalization of their startup policies. Presently, 30 of the 36 States and Union Territories have a dedicated Startup Policy.