Micro, Small & Medium Enterprises (MSME)

The concept of Micro, Small and Medium Enterprises (MSME) was first introduced in India in the year 2006. The MSME Sector has seen drastic growth in past five decades. The MSMEs are a crucial part of the economy and plays a vital role in the supply chain. MSME Sector generates employment and foster the entrepreneurship thereby, contributes to the develop of economy. The domain of MSMEs is getting wider as they’re meeting the demand of their products and services in domestic as well as global markets. It contributes a major portion in the GDP of India. Government of India is taking various initiatives to develop and grow the MSME sector. MSME is classified into 3 categories: micro, small and medium enterprises on the basis of their investment in plant & machinery or equipment and turnover limit.

Investment limit/Criteria for Classification as Micro, Small & Medium Enterprise

Classification Investment in Plant & Machinery or Equipment Turnover
Micro Up to one Crore Rupees Up to Five Crore Rupees
Small Up to Ten Crore Rupees Up to Fifty Crore Rupees
Medium Up to Fifty Crore Rupees Up to Two Hundred and Fifty Crore Rupees

MSME Registration

An entity which qualifies the above criteria can apply for MSME Registration. The registration can be obtained through online application on the Udyam Portal. The MSME Registration is called Udyam Registration. It is not mandatory for an entity to obtain Udyam Registration; however, it’s advisable to obtain the registration. The registration process is simple and there is no fee applicable.

Benefits of MSME Registration:

  • Lower Interest on Loans: An entity having Udyam Registration can avail the bank loan at a lower interest rate. ­­­
  • Easy Access to Credit: An entity having registration can avail the benefits of various credit schemes launched by the Government for the promotion of MSMEs.
  • Quick approvals from CG/SGs: Entities having registration are treated on priority for approval of any license/certification.
  • Tax Concessions: Various tax rebates and concessions are provided by the Government to the MSMEs.
  • Access to Government Tenders: There are various government tenders for which only MSMEs can make a bid.

Role of MSME in Indian Economy 

Micro, Small and Medium Enterprises (MSME) have a significant role in our economy due to its endeavors to expand entrepreneurship through business innovations. It is widening its range day by day, by producing various products and services to meet the demands of domestic as well as global markets.  As per the statistics of Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, the contribution of MSME sector in country’s GDP for the year 2018-19 was 30.27%.

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I am a Practicing Company Secretary and a Lawyer and have an experience of over 12 years. I have been practicing in the field of Corporate Laws, Secretarial Audits, Legal Drafting, Compliances, NBFC, FEMA & RBI and SEBI, Stock and Commodity Market Exchange Regulation, Advisory of Listed and unli View Full Profile

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