What is MSME Registration?
The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is given below.The Ministry of Micro, Small and Medium Enterprises, a branch of the Government of India, is the apex executive body for policy making and administering laws relating to micro, small and medium enterprises in India
To promote the growth of Micro, Small & Medium Enterprises, the government of India gives various concessions and extends financial assistance exclusively to the units or enterprises which qualifies to be a micro, small and medium enterprises. The Micro Small & Medium Enterprises Development Act 2006 makes it mandatory for MSME to register themselves with government and to obtain Udyam for availing benefits provided under MSME Development Act.
The terminology like MSME, SSI or Udyam is one and same thing. In other words, there is only one registration which a micro, small and medium enterprises has to obtain and that is Udyam. MSME is the backbone of the modern Indian economy and is considered as the growth engine for equitable and sustainable economic development of the country. Under MSME all kinds of enterprises can obtain registration, like manufacturers the service providers are also eligible for MSME benefits. Hence they are also required to get Udyam Registration.
Based on investment and turnover criteria a business falls in one of the three categories of Micro, Small or Medium.If a business crosses the specified ceiling limits for its present category in either of the two criteria of investment or turnover, it will stop to fall in that category and be placed in the next higher category but no business shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover.
What Are The Different Types of MSMEs?There are 3 types of MSME which can be classified as under:
1. Micro Enterprises
Micro-enterprises are the smallest entities, of course. The investment under Micro manufacturing enterprises should be less than Rs. 25 lakhs in plant and machinery, whereas, the micro service enterprises should not exceed Rs. 10 lakhs investment.
2. Small Enterprises
In small manufacturing enterprises, the investment should be in between Rs. 25 lakh and Rs. 5 crores in plant and machinery, while in small service enterprises this investment limits between Rs. 10 lakh and Rs. 2 crores.
3. Medium Enterprises
Medium manufacturing enterprises, then the investment should be in between Rs. 5 crore and Rs. 10 crores in plant and machinery, and for small service enterprises it should be in between Rs. 2 crore and Rs. 5 crores.
Benefits Of MSME RegistrationThere are multiple benefits of MSME registration for small businesses:
Cheaper bank loans : The rate of interest on loan offered to MSMEs is 1-1.5% lower compared to typical business loan interest.
Easy access to credit : PM Modi has introduced the Mudhra Loan scheme, which provides loans to MSME without collaterals.
Quicker approvals from state and central government bodies: Business registered under MSME are given higher preference in terms of government license and certification.
Tax rebates : MSME / SSI registered businesses enjoy multiple income taxes and capital gains tax subsidies from the government.
Cheaper infrastructure : Charges are lower for MSME registered company for facilities such as electricity and VAT exemptions. In fact, other business services such as patents are also cheaper for MSMEs.
Access to tenders : There are multiple government tenders which are open only to MSMEs to promote small business participation in the India.