CS.P.Eswaramoorthy, B.sc., Acs.,
Company Secretary in Practice,
7/25, Sri Sakthi Complex,
Coimbatore - 641045
91 422 4216903
91 99655 19246
Micro, Small MICRO, SMALL AND MEDIUM ENTERPRISES
(MSME) – VIEW
and Medium Enterprises should seek registration
with the Director of Industries of the concerned State Government.
NEW NOMENCLATURE AND CLASSIFICATION OF MSME
(As per Micro, small and Medium Enterprises Development Act,2006)
||(Ceiling on investment in Plant & Machinery )
||(Ceiling on investment in Equipment )
A. MANAFACTURING ENTERPRISES
Micro Manufacturing Enterprises: The Investment in Plant and Machinery
does not exceed Rs.25 Lakhs.
Small Manufacturing Enterprises: The Investment in Plant and Machinery
is more than Rs.25 Lakhs and does not exceed Rs.500 Lakhs.
Medium Manufacturing Enterprises: The Investment in Plant and
Machinery is More than Rs.500 Lakhs and does not exceed Rs.1000 Lakhs.
B. SERVICE ENTERPRISES
Micro Service Enterprises: The Investment in Plant and Machinery
does not exceed Rs.10 Lakhs.
Small Service Enterprises: The Investment in Plant and Machinery
is more than Rs.10 Lakhs and does not exceed Rs.200 Lakhs.
Medium Service Enterprises: The Investment in Plant and Machinery
is More than Rs.200 Lakhs and does not exceed Rs.500 Lakhs.
Calculation of Investment in Plant and Machinery
1. Cost of which shall be excluded while calculating the investment in plant
and machinery as follows:
(i) equipment such as tools, jigs, dies, moulds and
spare parts for maintenance and the
cost of consumable
(ii) installation of plant and machinery;
(iii) research and development equipment and pollution control
(iv) power generation set and extra transformer installed
by the enterprise as per the
regulations of the State
(v) bank charges and service charges paid to the National
Small Industries Corporation
or the State Small Industries
(vi) procurement or installation of cables, wiring, bus bars,
electrical control panels(not
mounted on individual
machines), oil circuit breakers or miniature circuit breakers
which are necessarily
to be used for providing electrical power to the plant and
machinery or for safety
(vii) gas producer plants;
(viii) transportation charges (excluding sales-tax or value
added tax and excise duty)
machinery from the place of their manufacture to the site of the
(ix) charges paid for technical know-how for erection of
plant and machinery;
(x) such storage tanks which store raw materials and
finished products only and are
with the manufacturing process; and
(xi) fire fighting equipment.
2. While calculating the investment in plant and machinery
referred above, the original price thereof, irrespective of whether the plant
and machinery are new or second hand, shall be taken into account provided that
in the case of imported machinery, the following shall be included in calculating
the value, namely:
Import duty (excluding miscellaneous expenses such as transportation from the
port to the site of the factory, demurrage paid at the port);
clearance charges; and
Sales tax or value added tax.
The main purpose of Registration is to maintain statistics and maintain a roll
of such units for the purposes of providing incentives and support services.
States have generally adopted the uniform registration procedures as per the
guidelines. It must be noted that small industries is basically a state subject.
States use the same registration scheme for implementing their own policies.
BENEFITS OF REGISTERING
The registration scheme has no statutory basis. Units would normally get registered
to avail some benefits, incentives or support given either by the Central or
State Govt. The regime of incentives offered by the Centre generally contains
the following: - Credit prescription (Priority sector lending), differential
rates of interest etc. - Excise Exemption Scheme - Exemption under Direct Tax
Laws. - Statutory support such as reservation and the Interest on Delayed Payments
Act. (It is to be noted that the Banking Laws, Excise Law and the Direct Taxes
Law have incorporated the word MSME in their exemption notifications. Though
in many cases they may define it differently. However, generally the registration
certificate issued by the registering authority is seen as proof of being MSME).
States/UTs have their own package of facilities and incentives for small scale.
They relate to development of industrial estates, tax subsidies, power tariff
subsidies, capital investment subsidies and other support. Both the Centre and
the State, whether under law or otherwise, target their incentives and support
packages generally to units registered with them.
Where MSME has to be registered?
DIC (District Industries Centre) is the primary registering centre.
EM ( Entrepreneur Memorandum) has to be submitted to the Concerned DIC.
The form of Memorandum is in two parts. Any person who intends to establish
a micro, small or medium enterprise engaged in providing or rendering of services
may file or those who want to establish medium enterprise engaged in the production
or manufacture of products shall file Part- I of the Entrepreneurs Memorandum
to District Industries Centre.
Once the above enterprises start production or start providing or rendering
services, they shall file Part II of the Entrepreneurs Memorandum to District
In case of non- filing of Part II of the Entrepreneurs Memorandum within two
years of the filing of Part I, the Memorandum (Part I) filed by the entrepreneur
will become invalid.
In case of change in the investment in plant and machinery or in equipment,
the enterprises who have already filed Entrepreneurs Memorandum should inform
the District Industries Centre of the same in writing within three month of
the change in investment.
In case of change of products and that of services
or addition in products or services, the enterprises which have already filed
Entrepreneurs Memorandum shall inform the District Industries Centre of the
same in writing within three months of the change
TYPES OF EM FILING
There are two types of filing of Entrepreneur Memorandum - Part I & Part II.
1. Entrepreneur Memorandum Part I is for
the proposed enterprises.
2. Entrepreneur Memorandum Part II is to
the established enterprises after
of commercial production.
ONLINE FILING OF ENTREPRENEUR MEMORANDUM - PART I
The online service for filing of Entrepreneur Memorandum Part-I is introduced
to mainly help the entrepreneurs to obtain acknowledgement to EM Part I readily
without contacting the General Managers of District Industries Centers and Regional
Joint Director, Chennai. Further it is informed that this online service is
introduced by the Department of Industries and Commerce with good intension
that entrepreneurs shall furnish the correct and true details to file online
This Online Entrepreneur Memorandum Acknowledgement shall be valid only if
self certified by the applicant and also the receipt of self certified copy
of generated online application at the respective DIC/Regional Joint Director
of Industries and Commerce, Chennai within 30 days from the date of filing of
online application. In case the self certified copy of the generated application
above is not received by the General Manager, District Industries Centre/ Regional
Joint Director of Industries and Commerce, Chennai within one month from the
date of generation of the application by the entrepreneur, the online Acknowledgement
will be cancelled by the General Manager, District Industries
Centre / Regional Joint Director of Industries and Commerce, Chennai and displayed
in the website.
Prior Clearance from Pollution Control Board is COMPULSORY in respect of
units for following Line of Activity:
Animal and Vegetable Plantations and Processing (Tannery, Sago, Starch)
Paper and Paper Pulp
Textile Processing, Dying and Bleaching
Iron Melting, Electro Plating, Heat Treatment
Thermal Power Stations
Drug and Pharmaceuticals
Paints and Varnishes
Pesticides and Insecticides
Petro Chemical Industries
Man Made Fibre units
Photo Film Manufacturing
A Micro, small and medium Enterprises can violate the regulations in the following
ways which will make it liable for de-registration:
It crosses the investment limits.
It starts manufacturing any new item or items that require an industrial license
or other kind of statutory license.
It does not satisfy the condition of being owned, controlled or being a subsidiary
of any other
Collateral Free Loans - Micro and Small Enterprises
On September 21, 2007 banks were advised, vide our circular RPCD.PLNFS.No 3068/06.02.31/2007-08,
that they may extend collateral-free loans upto Rs.5 lakh, to all new loans
sanctioned to the units of MSE sector (both manufacturing and services enterprises)
as defined under MSMED Act,2006. Banks may extend collateral-free loans upto
Rs.5 lakhs to all new loans to the MSE sector (both manufacturing and service
Finance Minister Pranab Mukherjee ,
presenting the Union Budget 2009-10 on July 6,
has given some respite to the MSME sector. Acknowledging that the slowdown in
exports due to the global demand slump has hit small and micro units the hardest,
the minister has proposed the formation of a special fund for the sector.
The proposed fund, worth Rs 4,000 crore,will be formed out of the Rural Infrastructure
Development Fund (RIDF) and provided to the Small Industries Development Bank
of India (SIDBI).
This fund is expected to incentivise
and State Finance Corporations (SFCs) to extend loans to MSMEs by
50% of incremental lending to these players during 2009-10. According to the
minister, this move will facilitate
flow at affordable rates for MSMEs and thereby provide them the much-needed
The announcement of the proposed fund has lifted the spirits of the MSME segment.
“For several months we have seen suffering due to the credit crunch. We hope
that with the formation of this fund we will be able to get adequate funds to
revive our business,” said GC Ghosh, proprietor of Radha Export International,
a small-sized basmati rice exporting company in Kolkata.
Other industries are required to get Industrial License under the Industries
(Development & Regulation) Act,1951.