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.
According to the MSMED Act, 2006, also known as Micro, Small and Medium Enterprises Development Act:
- 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
- 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
How to register an MSME online?
By registering with Udyog Aadhaar by MSME department businesses can benefit prevalent opportunities, and yes, you can also register offline.
Follow the below steps to register online:
- Keep your Aadhaar card handy (Mandatory)
- File an online form using Udyog Aadhaar registration
- Use e-Aadhaar OTP for verification
- Provisional registration is issued, which is valid for five years
- Temporary registration will make it easy to apply for loans from banks
- Post commencement you can apply for a permanent licence
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 licence, 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 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)
- Partnership deed
- Sales and purchase bill copies
- Copies of licenses and bills of purchased machinery
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.