MSME- The pillars of Indian economy Talking in numbers, for every 100 companies in India, there are more than 95 micro enterprises, four small-to medium businesses, and less than one large company, according to Dun & Bradstreet Research. During 201819, MSME (Micro, Small & Medium Enterprises) sector contributes to 30.3% in country’s total GDP, 48% in exports and 95% of all industrial units of the country and more than 6000 types of products are manufactured in these industries (as per msme.gov.in). Since they contribute to a large extent to our economy, government has always tried to assist these enterprises by providing certain monetary or non-monetary benefits. There is a dedicated ministry, act and a website for MSME.
Who are MSME?
As per the MSME Act, both manufacturing and service sector enterprises are covered (Traders has been excluded from this). The classification of micro, small & medium is based on investment in Plant & Machinery/Equipment-
Although the registration is not made mandatory by the government but it is beneficial to obtain registration as many benefits like easy availability of finance, concession in patent registration fee, reimbursement of some expenses, etc. can be availed only after obtaining the registration under the MSME Act. The registration can be done at https://udyogaadhaar.gov.in/UA/UAM_Registration.aspx. No fees has been prescribed by the Govt., whoever wants to take the benefit of this can register them free of cost.
It is a single page form, having Aadhar number is prerequisite, bank details, investment made, number of employees, nature of business and some other general information is required.
Documents required for authentication (No need to attach)are-
- Business address proof
- PAN Card
Benefits of registering under MSME-
There are many 'monetary' as well as 'non-monetary'benefits available for registered enterprises-
- Subsidy on patent registration- Registered enterprises can avail 50% subsidy on patent registration.
- Subsidy on trademark registration- 50% subsidy will be provided for companies.
- The registered MSME enterprises can claim the reimbursement of the expenses that were spent for the ISO certification.
- All new industrial units in public IT parks are exempted from payment of stamp duty and registration fees.
- Rate of interest from bank are lower as compared to others (Banks have target to lend approx 60% advances to micro enterprises).
- MSME can avail a benefit of 1% on the overdraft as mentioned in a scheme that differs from bank to bank.
- Eligible for Industrial Promotion Subsidy (IPS) & subsidy for bar code registration.
- Eligible for Counter Guarantee from GOI through CGSTI.
- For upgradation of technology, scheme named Credit Linked CGSTI Subsidy Scheme (CLCSS) was launched to provide 15% capital subsidy (max 15 lakhs) for purchase of plant & machinery.
- While applying for government tenders, they are exempted from payment of earnest money, waiver of security deposit upto the monetary limit for which at the unit is registered, issue of tender sets free of cost;
- By providing an application to the concerned department, MSME registered enterprises can avail a concession in electricity bills.
- In order to ensure timely payment of dues of MSME registered enterprise, GOI has made a provision that payment must be made on agreed date or within 15 days of accepting the goods/services in case no date is agreed upon. If payment is not made within 45 days of acceptance or the agreed date then the supplier is entitled to charge compound interest which is 3 times the bank rate as notified by RBI.
- Ministry of MSME along with SIDBI established a trust named The Credit Guarantee Trust Fund to make available collateral free credit to both the existing and new enterprises. Guarantee fee is to be paid by the MSE;
- As per Industries (Development and Regulation) Act, 1951, some items are exclusively reserved to be manufactured in SSI(MSME) sector to ensure increased production and greater employment opportunities in small scale industries;
- Under International Cooperation Scheme, financial assistance is provided on reimbursement basis for deputation of MSME business delegation to other countries for exploring new areas, participation in international exhibition, trade fairs, buyer-seller meet, seminars & for holding international conference that are in interest of MSME sector
- There are many government tenders which are open only to MSME enterprises.
- Enterprises registered under MSME are given higher preference and an easy way to obtain government licenses, approvals and registrations.
- For easy financing, schemes like Prime Minister Employment Generation Programme (PMEGP), Performance and credit rating scheme, A Scheme for promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE), SIDBI and some private and public bank schemes were introduced and implemented.
Special point- If any enterprise was once covered in a certain category graduates to a higher category from its original category or beyond the purview of the MSME Act, it shall continue to avail all non-tax benefits of its original category for a period of three years from the date of such graduation to the higher category.