MSME stands for Micro, Small and Medium Enterprises. A country’s actual economic growth in not just dependent on its large scale industries and multi- national organizations but also on its medium level industries and most importantly on its small scale businesses.

The Ministry of Micro Small and Medium Enterprises has provided a suitable name for Small Scale Business operations in India as Micro, Small and Medium Enterprises (MSME). The Provisions related to MSME are provided in THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 (MSMED Act).

Entities which are eligible for Registration as MSME :

Any type of Entity like Proprietorship Firm, Partnership Firm, Association of Persons, HUF, Company, LLP and any other Business entity can Register as MSME.

Sectors of Business that can register be MSME :

MSME covers only manufacturing and service industries. Trading companies are not covered by the scheme. MSME model is brought to support new business ideas by providing them subsidies and benefits whereas trading companies are just like middlemen, only a link between manufacturer and customer. Hence not covered under the scheme.

Criteria for Consideration as Micro, Small or Medium Enterprise:-

Section 7 of “MSMED Act” classifies the enterprises into micro, small and medium enterprises. In case of manufacturing sector, classification has been done on the basis of investment in plant and machinery and in case of service sector, classification has been done on the basis of investment in equipment’s.

Earlier there was criteria which was based only on the Investment in Plant and Machinery but from 1st July, 2020 the Ministry has changed the thresholds as well as the criteria for considering the business entity as Micro, Small or Medium Enterprise based on Investment in Plant and Machinery as well as on Turnover of the Entity. The revised Criteria for MSME is as below:-

Criteria: Investment in Plant & Machinery/equipment and Annual Turnover
Classification Micro Small Medium
Manufacturing Enterprises and Enterprises rendering
Services
Investment in Plant and Machinery or Equipment:

Not more than Rs.1 crore and Annual Turnover ; not more
than Rs. 5 crore

Investment in Plant and Machinery or Equipment:

Not more than Rs.10 crore and Annual Turnover ; not more than Rs. 50 crore

Investment in Plant and Machinery or Equipment:

Not more than Rs.50 crore and Annual Turnover ; not more than Rs. 250 crore

Procedure for Registration as MSME :-

MSME registration has now been replaced with the Udyam Registration.

MSME registration is to be done in the government portal of udyamregistration.gov.in. The registration of MSMEs can be done under the following two categories in the portal –

  • For New Entrepreneurs who are not Registered yet as MSME and
  • For those having registration as EM-II or UAM and For those having registration as EM-II or UAM through Assisted filing.

This registration with MSME/Udyam Registration is completely online.

Benefits of MSME Registration :-

1. Bank Loans without any collateral security :-

The Government of India has made collateral-free credit facilities available for all small and micro business sectors. This initiative guarantees funds to micro and small sector enterprises. Under this scheme, both the old as well as the new enterprises can claim the benefits.

2. 50% Subsidy on Patent/Trademark Registration

50% subsidy in payment of fee in case of patent registration or Trademark Registration has been given to the Enterprises that has the certificate of registration as MSME.A

3. Exemption of Interest Rate charged on Overdraft Limit

Businesses or enterprises registered under MSME can avail a benefit of upto 1% on the Over Draft as mentioned in a scheme that differs from bank to bank.

4. Protection against Delayed Payments

The Micro, Small and Medium Enterprises Development Act, 2006 provides for the provisions to deal with the problem of delayed payment, whereby any buyer who fails to make payment to MSME supplier, as per agreed terms or within a maximum period of 45 days, he would be liable to pay interest to MSME supplier.

In addition to this The Government of India has launched an online SAMADHAAN portal (samadhaan.msme.gov.in) on October 30, 2017 to enable micro & small enterprises to directly register their cases relating to delayed payments online on the portal.

5. Full Reimbursement for ISO Certification Charges

The registered MSME enterprises can claim the full reimbursement of the expenses that were spent for the ISO certification.

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