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Dynamic sector of Indian Economy

MSME is the abbreviation used for Micro, small and medium enterprises. MSM Enterprises or small-scale industries (SSIs) are like a backbone of the economy of the developing country like India. The growth of these industries directly impacts the growth of the Indian economy in a positive way. Whether the company deals in manufacturing or services, it can obtain MSME registration. Although it is not mandatory to apply for MSME registration but getting a business registered under MSME provides numerous benefits like credit facilities, loans, taxation, setting up the business etc.

Micro, Small and Medium Enterprises (MSME) sector was established to facilitate, develop and promote the competitiveness of the micro, small and medium enterprises and it has emerged as a dynamic sector of the Indian economy over the last sixty years.

Earlier, MSME classification was based on the criteria of investment in plant and machinery or equipment. So the MSME have to limit their investment to a lower limit to enjoy the MSME benefits.

Sector Criteria Micro Small Medium
Manufacturing Investment <25 lakh <5 Crore <10 Crore
Services Investment <10 lakh <2 Crore <5 Crore

These limits were impacting the growth of MSME as they were unable to scale their businesses further. After a long-pending demand for the revision of MSME classification, the government revised the msme classification under Aatmanirbhar Bharat Abhiyan(ABA) by inserting the criteria of both investment and annual turnover. The distinction between the manufacturing and service sector was removed. Following is the revised structure of MSME classification based on the criteria of both investment and annual turnover.

Criteria Micro Small Medium
Investment &

Annual Turnover

<1 Crore &

<5 Crore

<10 Crore &

<50 Crore

<50 Crore &

<250 Crore

MSME registration is completely an online process. The only documents required are PAN card and Aadhar Card. All the details related to PAN and GST will be pre-filled as the portal is fully integrated with income tax and GST websites.

Benefits of MSME Registration:

  • The cost of setting up an industry and getting a patent registered has become way too cheaper as there are many concessions and rebates available.
  • The interest on bank loans is very low, somewhere 1 to 1.5 % which is much lower than normal routine loans.
  • Collateral free loans from banks
  • Beneficial reservation policies in the manufacturing/production sector
  • Concession in electricity bills
  • Direct tax laws rules exemption
  • Waiver of stamp duty and registration fees
  • The credit for Minimum Alternate Tax(MAT) can be carried forward for up to 15 years instead of 10 years.
  • One can easily acquire government tenders as the MSME portal is linked with various other govt. portals which makes it easy to get the marketplace.
  • There is a one-time settlement fee for non-paid amounts of MSME.

Some of the MSME schemes approved by the govt. of India are-

1. Udyog Aadhar Memorandum scheme

2. Incubation

3. Women Entrepreneurship

4. Grievance Monitoring system

5. Zero defect zero effect scheme

6. Credit linked capital subsidy

7. Quality management standards & quality technology tools

The Micro, Small and Medium Enterprises (MSME) were classified as per the MSME Act-2006 solely based on their investment. However, the Finance Minister Nirmala Sitharaman broadened the definition by introducing composite criteria. The process of MSME registration is paper-less and based on self declaration.



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July 2024