What keeps the economic wheels running for a developing country like India? Of course, the micro, small, and medium enterprise (MSME) sector of the nation. This sector prides itself as a primary contributor to employment, exports, manufacturing, and industrial units in India. 

But not all businesses fall under the MSME category because there’s a maximum revenue criterion set by the Government. A business has to hit the benchmark to qualify as an MSME.  

[Recommended read: Turnover to Define MSMEs – New MSME Definition]

According to the MSMED Act, 2006, also known as Micro, Small and Medium Enterprises Development Act:

  1. MSME in the manufacturing sector can be identified if: 
  • Micro enterprises – The investment doesn’t exceed Rs 25 lakh 
  • Small enterprises – The investment is more than Rs 25 lakh but doesn’t exceed Rs 5 crore
  • Medium enterprises – The investment is more than Rs 5 crore and doesn’t exceed Rs 10 crore 
  1. MSME in the service sector can be identified if: 
  • Micro enterprises – The investment doesn’t exceed Rs 10 lakh 
  • Small enterprises – The investment is more than Rs 10 lakh but does not exceed Rs 2 crore 
  • Medium enterprises – The investment is more than Rs 2 crore but doesn’t exceed Rs 5 crore

This definition of MSME has been recently amended on the 13th of May 2020 by the central government. Investments are no longer the only parameter to define an MSME. FM Nirmala Sitharaman has added ‘annual turnover’ as an additional principle along with the ‘investment in plant and machinery’.

Here’s the new MSME definition:

Revised MSME Classification
Classification  Micro Small  Medium



< Rs.1 crore


< Rs.5 crore

< Rs.10 crore


< Rs.50 crore

< Rs.20 crore


< Rs.100 crore


The changes have been announced to provide support and benefits of the economic package under ‘Aatma-nirbhar Bharat Abhiyaan’ during COVID-19 pandemic.

What are the documents required for MSME registration?

  • Aadhar number 
  • PAN number
  • Address of the business
  • Bank account number
  • The basic business activity 
  • NIC 2 digit code 
  • Investment details (Plant/equipment details)
  • Turnover details (as per new MSME definition)
  • Partnership deed
  • Sales and purchase bill copies 
  • Copies of licenses and bills of purchased machinery

How to register an MSME online?

Businesses who want to avail benefits announced by the Government for MSMEs will need to register their business on the ‘Udyog Aadhaar Memorandum (UAM) portal’. The registration process is quite simple and free for every user. 

Follow the below steps to register your business online

  1. Visit the UAM portal where you will be required to fill a form.
  2. If you are registering your business as an MSME for the first time, click on the first link on the page or simply click here to open the form.
  3. Enter the Aadhaar Number and Name and click on ‘Validate & Generate OTP’.
  4. Once verification is done, you will have to fill in the PAN details. You can select the No option if you don’t have a PAN card yet.
  5. Post this, you will have to fill the form having field numbers 5-24.
    MSME form
  6. At the end of the form, an OTP request will be sent to your phone again. Enter the OTP and verification code to submit the form successfully.MSME OTP
  7. After successful registration, a “Thank You” message will appear with a Registration Number. Keep that number handy for future reference.
    MSME message
  8. Once the application form is submitted, it can take 2-3 days for the approval and registration to complete.
  9. If the application gets approved, the registration will be done and the MSME certificate will be delivered to you via email.

Please note that the MSME registration on the government portal is free of cost.


How to register an MSME without Aadhaar Card?

First of all, the applicant who doesn’t have an Aadhaar card according to the section-3 act. Till the time the individual receives the Aadhaar, UAM registration shall be filed by the respective DIC or MSME-DE for the enterprise or business. 

Meanwhile, the individual can provide the below documents as an alternative for identification.

  • Aadhaar enrolment copy 
  • Aadhaar enrolment request copy 
  • Anyone of the following: Voter Id, passport, driving license, PAN card, employee ID, and bank passbook

What are the benefits of MSME registration?

Registration of your MSME is not mandatory. If you choose to register, then your business can enjoy an excise exemption scheme from direct taxes, avail special schemes from banks custom made for MSMEs and many more. 

Also, registered businesses with an MSME certificate will benefit from various government departments, including electricity. 

Here are some of the benefits: 

  • Lowest interest rates on bank loans 
  • Avail tax rebates customised for MSMEs credit for Minimum Alternate Tax (MAT) 
  • Very easily accessible credit for MSMEs 
  • Reimbursement of ISO Certification 
  • Avail special rebates and concessions on patents and industry set-ups 
  • One time settlement fee for the amount unpaid 
  • Government preference to MSMEs 
  • Concession in electricity bills 
  • Get credit guarantee schemes from the Government 
  • Special consideration on International Trade fairs
  • Bar code registration subsidy 
  • Support from your state government

What are schemes launched by the Government for MSMEs? 

Here are some of the schemes: 

  • Udyog Aadhaar memorandum scheme – Under this scheme, MSMEs can quickly get available loans for MSMEs, credit, and government subsidies 
  • Women entrepreneurship – This scheme was launched to boost and encourage women who wanted to create something or start their own business. Over here the Government provides financial help, counselling and training to women to help them better manage their business
  • Zero defect zero effect – Here, the Government ensures goods that are produced by MSMEs adhere to a certain standard and are not returned to India. Also known as the ZED, the scheme helps MSMEs enjoy rebates and concessions for their exported goods
  • Quality management standards and quality technology tools – This scheme intends to draw in the consciousness of quality in the products manufactured by MSMEs. It encourages healthy competitiveness among different establishments to ensure better production of goods
  • Grievance monitoring system – This scheme was launched to monitor and cater to complaints and suggestions by business and MSME owners 
  • Credit linked capital subsidy scheme – Registered MSMEs can avail funds to replace their old machinery and upgrade their business with new technology. To benefit from this scheme MSMEs can directly approach banks 

The Government has always conceptualised a vivid MSME sector and has often pushed to march upwards. For example, Finance Minister Nirmala Sitharaman raised the turnover threshold for the audit of MSME accounts to Rs 5 crore.  

She also said a new scheme would be announced to provide subordinated debt to MSME entrepreneurs. Besides that, the Government has requested the reserve bank to stretch the debt restructuring window for MSMEs till March 31, 2021. 

The Finance Minister ended it with a promise to introduce an app-based invoice financing loan product that will deal with the problems of delayed payments and cash flow. 


When I'm not gushing over World of Warcraft or playing Witcher you'll find me strumming my six strings and minting rhymes.


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