The term MSME is often used to abbreviate Micro Small & Medium Enterprises; these are small sized enterprises operating in Manufacturing and Service sector. The category of these enterprises are determined considering the amount of Investment made in plant, machinery or equipments (the criteria is now proposed to be revised considering the Investment and Annual Turnover as announced by FM N. Sitharaman on 13th May 2020). MSMEs are backbone of economic development in India, with its large population needing products and services. MSMEs are governed by the provisions of MSMED Act 2006.

Benefits available

1. Protection for timely payment

As per section 15 of the act, if the registered enterprise supplies goods or services, the payment for such supply shall be made by buyer on or before the date agreed upon between buyer and supplier.

Provided that in no case the period agreed upon between supplier and the buyer in writing shall not exceed 45 days from the date of acceptance or the day of deemed acceptance.

If the buyer fails to make the payment within 45 days, then notwithstanding anything contained in any agreement, the buyer shall also pay interest at the rate of three times the rate notified by RBI along with the amount due to the supplier.

2. Concessional Electricity

Enterprises registered under MSMED Act, can avail concessional electricity. To avail the benefit of concessional electricity the applicant shall produce the MSME Registration certificate to the electricity department.

3. Reduced IPR Filing Fee

The Department of Electronics and Information Technology (DeiTY) has launched a scheme entitled “Support for International Patent Protection in E&IT (SIP-EIT)” to provide financial support to MSMEs and Technology Start-Up units for international patent filing.

The scheme provides for reimbursement of total charges incurred in filing and processing of a patent application, the reimbursement limit has been set to the higher of following two:

• INR 15,00,000 per invention or

• 50% of the total charges incurred in filing and processing of patent

4. Availability of Loan

By virtue of RBI directives, banks have certain earmarked funds that have to mandatorily to be given to MSMEs. These loans can be availed by producing the MSME registration certificates.

5. Income tax Exemptions

MSMEs can avail the benefits of Presumptive taxation section 44AD or 44ADA under income Tax Act 1961.

6. Reimbursement of ISO Certification Charges

The MSMEs can avail an exemption of all the expenses incurred for obtaining ISO Certifications.

7. Exclusive purchase and sheltering

As part of the MSME Market Development Assistance Scheme, the Central Government follows a Price and Purchase Preference policy. Wherein some items are listed under it for exclusive purchases by Central Government from the medium, micro and small units only.

Recently Finance Minister Nirmala Sitharaman announced few measures to make the Indian MSMEs “atmanirbhar”. Some of the major announcements would include:

INR 3 Lakh Crore worth of Collateral free loans

Rs 20,000 crore subordinate debt

Rs 50,000 crore equity infusion

Revision of MSME definition

Barring the global tenders in Government Procurement tenders worth INR 200 Crores

Clearing MSME dues by government and central public sector enterprises.

Definition of MSME

• Existing Definition

In accordance with the provisions of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two classes:

– Manufacturing Enterprises

– Service Enterprises



Investment in plant & machinery/ Equipments
Manufacturing Sector Service Sector
Micro Enterprises Does not exceed twenty five lakh rupees Does not exceed ten lakh rupees:
Small Enterprises More than twenty five lakh rupees but does not exceed five crore rupees More than ten lakh rupees but does not exceed two crore rupees
Medium Enterprises More than five crore rupees but does not exceed ten crore rupees More than two crore rupees but does not exceed five core rupees

• Proposed Definition

On 13th May 2020, while delivering the economic package, which is part of Aatmanirbhar Bharat Abhiyan, Finance Minister Nirmala Sitharaman announced revision in the definition of MSME.

Now the definition would include Turnover of the enterprises apart from the Investment.



Investment and Annual Turnover
Manufacturing & Service Sector
Micro Enterprises Investments up to INR 1 Cr. & Turnover of less than INR 5Cr.
Small Enterprises Investments up to INR 10 Cr. & Turnover of less than INR 50Cr.
Medium Enterprises Investments up to INR 20 Cr. & Turnover of less than INR 100Cr.


Documents required for registration

– Adhaar Number

– Owners Name

– Name of Enterprises

– Type of Organization


– Date of Commencement

– Bank Details

– Personal Details: Personal details such as Identity proof, Address proof etc.

Procedure of Registration

– Fill up the Application Form

– Make the online Payment

– Executive will process the application

– Receive the certificate on Mail


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One Comment

  1. @rohit0803 says:

    Now in order to widen the scope of MSME, the MSME Minister in cabinet briefing on 1st June 2020 has further increased the Limit in case of medium enterprises as follows ” a company with up to Rs 50 crore investments and up to Rs 250 crore turnover is classified as a medium enterprise”

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April 2021