MSME (Micro, Small and Medium Enterprises)

Understanding MSME as per the Law: The Government of India has devised the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 on 02ndOctober, 2006. As per the Act, categorization of enterprises is done into micro, small and medium enterprises based upon investment in plant & machine for manufacturing & production industry and investment in equipment (service industry) can be best understood as:

Enterprise Category Investment in Plant & Machinery
(Manufacturing & Production Industry)
Investment in Equipment
(Service Industry)
Micro The investment in plant and machinery does not exceed Rs. 25 lakhs. The investment in plant and machinery does not exceed Rs. 10 lakhs.
Small The investment in plant and machinery is more than Rs. 25 lakhs but does not exceed Rs. 5 crores. The investment in plant and machinery is more than Rs. 10 lakhs but does not exceed Rs. 2 crores.
Medium The investment in plant and machinery is more than 5 crores but does not exceed Rs. 10 crores. The investment in plant and machinery is more than 5 crores but does not exceed Rs. 10 crores.

What are the benefits of getting registered?

There are many; from priority lending to cluster financing with encouraging bank loans, and an opportunity to adopt latest quality management standards, some of which are listed as follows:

  • Lending rate from Banks:Rate of Interests are lower for the registered ones as compared to other enterprises. 
  • Market assistance from the government and Export Promotion: The Government of India organizes several exchange programs, craft fairs, exhibitions, and trade-related events internationally. Being categorized as a micro, small or medium enterprise gives access to all of these platforms for international cooperation on trade-related aspects with different countries and fosters new business connections. The government also incentivizes export of goods and services by MSMEs by way of subsidies, tax exemption, and technical support.
  • Capital and other grants for infrastructure development: Since MSMEs is a sector generating employment and giving entrepreneurial ventures a boost, the government also identifies training sectors for MSME and gives capital grants for improvisation of the infrastructure and support for entrepreneurial development. 
  • Exclusive purchases and sheltering from competition: As part of the MSME Market Development Assistance scheme, the Central Government follows a Price and Purchase Preference policy under which more than 358 items are listed for exclusive purchases by Central Government from medium, micro and small units only. 
  • Reimbursement of ISO Certification: To promote the standards and certifications received by MSMEs in a bid to enhance their performance across sectors, all registered micro and small industries can avail an exemption of all expenses incurred for obtaining ISO 9000, ISO 14001 and HACCP certifications.
  • Protection against delayed payments: in any case, a payment due to a micro or small enterprise cannot exceed forty-five days from the day of acceptance or the day of deemed acceptance.

*Recently the Registrar of Companies has deployed Form MSME asking the Companies to share details of all outstanding dues to the Micro or Small Enterprises whose payments exceeds 45 days from the date of acceptance or the date of deemed acceptance of goods or services. The same return is to be filed on half yearly basis every year.

Such initiative from the Ministry of Corporate Affairs has enabled MSME registered Enterprises protection against delayed payments.

What all it requires to be registered as MSME?

 It is an online process that requires your Aadhar number which is linked to Mobile number to get it certified as the same is done through OTP verification . One can avail the certificate online without any need of the physical copy and the same can be downloaded at the time of registration.

Moreover, the process is simplified even further for the enterprises having the MSME Certificate to obtain licenses, approvals and registrations in any field for their business from their respective authorities. Such that they can produce the Certificate of MSME Registration while making an application itself.