Importance of MSME
In 2006, a policy to address the issues affecting the MSME’s was introduced in the name of Micro Small and Medium Enterprises Development (MSMED) Act. The Act is the first-ever legal framework for the recognition of the enterprises.
Eligibility and Who can apply
Existing MSME Clasification
|Criteria: Investment in Plant & Machinery or Equipment|
|Investment < Rs.25 lac||Investment < Rs. 5cr||Investment < Rs. 10 cr|
|Service Enterprises||Investment < Rs.10 lac||Investment < Rs. 2cr||Investment < Rs. 5 cr|
Revised MSME Classification Effective from 1st July,2020
Composite Criteria: Investment and Annual Turnover
|Manufacturing & Services||Investment upto Rs 1 cr. and Turnover upto Rs 5.cr||Investment upto Rs 10 cr. and Turnover upto Rs 50 cr.||Investment upto Rs 50cr. and Turnover upto Rs 250.cr|
Note: As per Office Memorandum dated 9th August,2021 issued by Ministry of MSME Street vendors can register as retail trades.
Earlier as per Office Memorandum dated 02nd July,2021 Wholesale and Retail trades has been included as MSMEs and they are now allowed to be registered as MSME.
MSME registration can be applied through the form Udyam following details is required in the form:
What happens when eligibility criteria of MSME exceeds
In case of graduation (from a lower to a higher category) or reverse- graduation (sliding down to lower category) of an enterprise a communication will be sent to the enterprise about the change in the status.
In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise will maintain its prevailing status till expiry of one year from the close of the year of registration.
In case of reverse-graduation of an enterprise, whether as a result of re- classification or due to actual changes in investment in plant and machinery or equipment or turnover or both, and whether the enterprise is registered under the act or not, the enterprise will continue in its present category till the closure of the financial year and it will be given the benefit of the changed status only with effect from 1st April of the financial year following the year in which such change took place
Updation and cancellation of MSME Registration
Facility for updation of any details if wrongly entered in UDYAM CERTIFICATE is provided in udyam Portal except the following.
Public Sector Bank loan in 59 minutes (in principle approval)
Micro, Small and Medium Enterprises (MSMEs) play an important role in the social and economic development of India. Access to timely and adequate finance is one of the crucial challenges faced by the sector. It is of paramount importance to cater to funding needs of this important segment of Indian economy along with simplifying decision-making process for a credit manager.
The user-friendly platform offers a simple loan application journey where an MSME borrower is not required to visit the bank branch for In-principle approval. The initiative automates various processes to Loan Appraisal in such a way that the borrower gets an In-principle approval in less than 59 minutes.
MSME Term Loan and Working Capital Loan . In-Principle Loan approval from INR 1 Lakh upto INR 5 cr.
Trade Receivables Discounting System Platform (TReDS) setup by Reserve Bank of India for MSME
In View of Promotion, Development and Enhancement of Competitiveness of Micro, Small and Medium Enterprises (MSME) notification dated 02nd November 2018 issued by Ministry of MSME.
Every company registered under the Companies Act, 2013 and having turnover of more than Rs. 500 Crore and all Central Public Sector Enterprises (CPSE) shall be required to get themselves onboarded on the Trade Receivables Discounting System Platform (TReDS) setup by Reserve Bank of India.
TReDS platform in India which are operating under RBI guidelines
TREDS: Why MSMES need to register right now
Once the MSME accepts the best suited bid, the discounted amount is credited to the MSME’s bank account on the next day of bid acceptance. This gives MSMEs quick access to working capital at a very low rate of interest.
Key Benefits of TREDS registration
Reporting to Registrar of Companies
Every company who get supplies of goods and services from MSME and whose payment to MSME supplier exceeds 45 days from the date of acceptance or the date of deemed acceptance of the goods or services shall submit a half yearly return to the MCA stating the following:
Consequences of delay payment to MSME
Dispute Resolution procedure
Any party to a dispute may with regard to amount and interest can make a reference to the Micro and Small Enterprises Facilitation Council
On receipt of a reference the council shall either itself conduct conciliation in the matter or seek the assistance of any institution or center providing alternate dispute resolution services by making a reference to such an institution or center, for conducting conciliation and the provisions of the Arbitration and Conciliation Act,1996 shall apply.
MSME E- Samadhan (Delayed Payment Monitoring System)
Ministry of MSME has taken an initiative for filing online application by the supplier MSME unit against the buyer of goods/services before the concerned MSEFC of his/her State/UT. These will be viewed by MSEFC Council for their actions. These will be also visible to Concerned Central Ministries, Departments, CPSEs, State Government, etc for pro-active actions.
MSEFC of the State after examining the case filed by MSE unit will issue directions to the buyer unit for payment of due amount along with interest as per the provisions under the MSMED Act 2006.