MSME Registration

The Micro, Small and Medium Enterprises are considered as a very significant piece of India’s legacy economic model and a part of the critical supply chain for products and services. This sector is the job creator as well as play a crucial role in providing large-scale employment and industrialization of rural and backward areas. In 2015-2016, according to the National Sample Survey (NSS) 73rd round, there were around 633.8 lakh unincorporated non-agriculture enterprises in the country which are dealing in different economic activities providing employment to 11.10 crore workers.

Although getting MSME online registration is not mandatory but it is always suggested to small and medium enterprises to get it done it provides a variety of benefits. Benefits such as rate of interest charged would be very less, tax subsidies, capital investment subsidies and much other support from the government sector.

    Get More Detail

    What is MSME Registration

    In India, MSME introduced in the year 2006. Actually, there are still some service sector that was not yet included in this sector was included in the definition of the Micro, Small and Medium-sized Enterprises making a historic change to this Act. Hence, leveraging the scope of the sector even now the government simplified the MSME Registration online with the paperless work.

    The benefits of MSME registration include priority sector lending, power tariff subsidies, capital investment subsidies and excise and direct tax exemptions. Following are the conditions which need to be fulfilled to qualify under MSME Act.

    All the manufacturing enterprises which have invested less than 10 crores in machinery and plant are allowed to be registered as MSME.
    In service enterprises, the investment in plant and machinery should not be more than 5 crores.
    And in near future, if your enterprise exceeds the maximum limit, then it will not sum up as MSME.

    What Are The Different Types of MSMEs?

    There are 3 types of MSME or SSIs which can be classified as under:

    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.

    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.

    Medium Enterprises

    And if we’ll talk about the 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 Registration

    There are multiple benefits of MSME / SSI 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 / SSI 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.

    Frequently Asked Questions

    Although, there is no compulsion to get MSME registration but is always advised to do so as it provides lots of benefits to the enterprises registered under MSME Act. It will save you from a lot of inconveniences later on. After assigning you the Provisional MSME Certificate and you can begin with your production and even apply for a Permanent Certificate which will add more advantages for you. Always apply for provisional registration at an initial stage of the business.

    Credit rating is an estimate to figure out the capability of an enterprise to meet all the financial needs based on the previous year dealings. Although credit rating is not compulsive but it is in the interest of the MSE borrowers to get their credit rating done as it would help in credit pricing of the loans taken by them from banks.

    It is advisable to get a Provisional SSI Registration Certificate (PRC) before starting your operation in your enterprise. The PRC will work smoothly for you and will help you out with particular NOCs and clearances from regulatory bodies.

    If your business or enterprise is listed under Schedule –III of Industrial Licensing Exemption Notification, then you can easily apply for PRC without an industrial license. Other units must first acquire an industrial license. All the clearances should be obtained by enterprise whether it be statutory or administrative. For example, a drug license under the drug control order, if required. The PRC is issued based on the application form. No field enquiry is made.