Introduction to Micro, Small and Medium Enterprises (MSMEs)

MSMEs stand for Micro, Small, and Medium Enterprises, these are that classes of enterprises which works and operates on small scale in comparison to big tycoon enterprises.

Undoubtedly, MSMEs are small in their size but they are large in number. This MSMEs contributes in the economy of the country, therefore their existence are of critical importance. It is also pertinent to note that this sector is one of the principal contributors to gross domestic product, Exports and employments generation. Therefore keeping in mind the same thing government if India always plays a important role in development and growth of MSMEs. Government always holds the hand of MSMEs and endeavors for their benefit as more as possible.

MSMEThe key rational behind the classification of enterprise is to separate them from other enterprises and to pay special attention which they deserves.

Initially, the concept of MSMEs has been introduced in 2006 under MSMEs Act, 2006. Under this law, MSMEs falling in eligible criteria were required to register as MSMEs. After successful registration such MSMEs will get benefit instituted under the act and benefits later on developed by the government.

Earlier, MSMEs were required to obtain various registrations under different registrations windows to avail various benefits, later on government had realized this problem and introduced a single window registration system known Udyog Aadhar (UA) registration, this registration system has been renamed for multiple times such as: SSI Registration, entrepreneur’s memorandum.

EligibilityWhat Is Eligibility Criteria for MSMEs

The tag of MSME and registration under it is allowed for manufacture or producer and service provider only. Any manufacturer or service provider falling under eligibility criteria may register itself/himself under the single

Enterprise Investment in plant & machinery/ Equipment Turnover
MICRO Up to 1cr. Up to 5cr.
SMALL Up to 10cr. Up to 50cr.
MEDIUM Up to 50cr. Up to 250cr.

window registration system for MSMEs. Following is the updated eligibility criteria w.e.f 1st July 2020.

Benefits to MSMEs

  • Benefits under schemes and initiative taken/ launched by government of India under “Aatmnirbhar Bharat Mission”, such as distressed assets fund for MSMEs.SSI or MSME
  • 50% concession in trademark registration fees- Generally the government fees for Trade Mark registration is Rs.9000, but for the same service fee is Rs.4500 for MSMEs
  • Reimbursement of ISO certification fees
  • collateral free loan- Loan is an inevitable need for any business, specially for MSMEs which often faces problem of deep financial crunch. Collateral is prerequisite to avail loan, but to provide financial support to MSMEs, they are exempted for the requirement of collateral security
  • Concession in electricity bill, so that they can cut their expenses and to increase their profits
  • Preferences in government tenders and contracts.
  • Special financial assistance schemes by the government as well as by other commercial banks
  • Exemption to pay EMD (Earnest Money Deposit) – any person applying for tenders and bids are required to deposit a advance/token money as to give assurity of his interest to other party in contract or bid. But, MSMEs had been exempted to pay this amount

MSMEs Registration

MSME RegistrationEnterprises qualifying the eligibility criteria are required to register as MSME to avail the benefits and to recognizeas such. Registration system has been updated for several times in order to meet latest and prevailing needs and requirements. Now the government of India has introduced a new system known as UDYAM REGISTATION, it is completely online procedure.

One can apply for udyam registration online on

Must know about udyam registration

  • No physical documents are required.
  • Only Aadhar no will be enough for registration.
  • The Aadhar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).
  • In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organization or its authorized signatory shall provide its GSTIN and PAN along with its Aadhar number.
  • No enterprise shall file more than one Udyam Registration: Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.
  • Information linked with PAN and GSTIN will be auto populated.
  • No renewal requirement.
  • After successful filing of registration form, applicant will get a permanent identity number.
  • There will be no fee for filing Udyam Registration.
  • Having GST and pan is mandatory w.e.f 01/04/2020.

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It is my passion and interest to read laws and to interpret them and to draft articles & notes in easy language on such laws, so that the public at large can understand it. My objective is first to gain knowledge and second to share knowledge. View Full Profile

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October 2021