What are the Micro,Small And Medium Enterprises?
Micro Small & Medium Enterprises has contributes towards the growth of Indian economy. Industries take raw material and finished product from such entities due to which such entities are considered as a strong backbone of the Indian economy.
Classification of Micro, Small and Medium Enterprises on the basis of Investment are mentioned below:
Investment criteria in Plant & Machinery
- Micro Enterprise- Enterprise is considered as a micro enterprise where the investment in plant and machinery is upto Rs. 25 lakhs.
- Small Enterprise- Enterprise is considered as a small enterprise where the investment in plant and machinery is between Rs. 25 lakhs and 5 crores
- Medium Enterprise- Enterprise is considered as a medium enterprise where the investment in plant and machinery is between Rs. 5 crores and 10 crores.
Investment Criteria in Equipment
- Micro Enterprise- Enterprise is considered as a micro enterprise where the investment in equipments is upto 10 lakhs.
- Small enterprises- Enterprise is considered as a small enterprise where the investment in equipments is between 10 lakhs and 2 crores.
- Medium Enterprise- Enterprise is considered as a Medium enterprise where the investment in equipments is between Rs. 2 crores and 5 crores.
What do you mean by Micro, Small and Medium Enterprises registration?
Various schemes, incentives and subsidies are introduced by the Government of India to make the MSME enterprises a strong and a leading enterprise in India. Apart from Government, Loans by the banks are also provided at a concessional rate to foster the growth of the MSME enterprises. Hence to avail such benefits from governments and banks, one has to apply for registration under Micro, Small and Medium Enterprises and for this an application is filed using the official website of the Udhyog Aadhar which is verified by the Aadhar OTP. Aadhaar Number is compulsory to obtain registration under MSME.
Government has changed MSME registration into Udyog Aadhar Registration in 2015. The Gross Domestic Product (GDP) of the country does not only depend on large scale enterprises but also depend on such Small Scale Industries operating in the country. As vast amount of natural resources are available in India therefore the growth of such small scale industries become mandatory.
Why do Small Scale Industries need to register under Micro,Small and Medium Enterprises?
Authorized body established by the government is the MSME department which regulates and promotes the growth of Micro, Small and Medium Enterprises in India as this body enables the transparency and accountability of such Micro, Small and Medium Enterprises. As per Micro, Small and Medium Enterprise Development Act (MSMED) Act, the one who registers under MSME Act enjoy various incentives.
What are the Benefits of registering under Micro, Small and Medium Enterprises (MSME)/ Small Scale Industries (SSI)?
The Micro, Small and Medium Enterprises engaged in the manufacturing activities and service providing activities can obtain registration as MSME as it is not compulsory to obtain registration but quite beneficial as it offers many advantages such as:-
- Banks provide loans at lower rate of interest
- Tax Subsidy
- Schemes for Excise duty exemption
- Subsidy tariffs
- Subsidies of Capital investments etc.
- Banks even provide collateral free loans
- Reservation policies for the manufacturing sector and production sector
- In case of international trade fairs, special considerations are provided.
- Industrial Promotion Subsidy (IPS) subsidy.
- Reimbursement of certificate of International Organization for standardization (ISO).
Are there any other advantages / schemes under Micro, Small And Medium Enterprises in India?
Prime advantages of MSME registration/ SSI registration are the government subsidies and concessional bank loans.
Other several advantages are as follows:
Ease in claiming the Bank Loans
Banks are ready to provide collateral free loans to the Micro, Small and Medium Enterprises. Implementing such schemes take time and even become a lengthy process therefore Government of India and SIDBI work in coordination to implement such schemes.
No difficulties in opening the bank account
Certificate of registration acts as a legal status of the entity and with this certificate, bank account can be easily opened and other registration license can also be obtained such as GST registration.
Participation in International Trade Fairs
Participation in the international/ national trade fairs which is organized by the MSME Departments is also necessary in order to expand the business of MSME in all over the country.
Benefits of Octroi
Enterprises that obtain registration under Micro, Small and Medium Enterprise are eligible to obtain refund of octroi paid on goods and services. Otherwise Enterprises have to pay octroi charged on goods and services.
Charges of Registration and stamp duty are waived off
Micro, Small and Medium Enterprises are also eligible to obtain benefits of waiving registration charges and stamp duty as earlier it was only applicable to IT parks and SEZ units.
Available exemption under the Income Tax
Income tax benefits are provided in the initial years to such enterprises which contribute towards the development an improvement of the society. Under the startup India scheme, government has also introduced the major benefits.
Provision of Reimbursement under the Registration of Bar Code
For taking benefits of subsidies under Bar Code registration Enterprises have to take bar code registration.
Credit Rating and National Small Industries Corporation
Subsidies benefits on various expenses can be availed by the enterprises through the performance of National Small Industries Corporation (NISC).
Subsidy of Industrial Promotion
To industrially promote the small scale industries, Government provides subsidies to such industries.
Protection where there is delay
In the short period, Enterprise can sue the buyer for dispute settlement.
Concessional rates of interest on loans by the banks
Some of the Bank Policy for the Micro, Small And Medium Enterprises regarding the bank loan are as follows –
1. For the following Micro, Small and Medium Enterprises (MSME), bank must be provide 40% of their total advance:
a. Enterprises engaged in manufacturing activities
Investment in plant and machinery is made up to Rs. 10 lakhs.
b. Enterprises which render services.
Investment in equipment is made upto Rs. 4 lakhs.
2. For the following Micro, Small And Medium Enterprises Bank must be provide 20% of their total advance:
a. Enterprises engaged in manufacturing activities
Investment in plant and machinery is made between Rs.10 lakhs and Rs. 25 lakhs.
b. Enterprises which render services.
Investments in equipment exceeds Rs. 4 lakhs
Benefits of Capital Subsidy
15% Capital Subsidy shall be provided to all the enterprises to purchase the plant and machinery as earlier it was 12% only.
Concession in Electricity Bills
Enterprises who have obtained Micro, Small and Medium Enterprises registration certificate will be provided with the electricity concession.
Benefits of ISO Certification
Subsidy for the ISO Certification will also be granted to enterprises registered under Micro, Small and Medium Enterprise (MSME).
Preferences in the government tenders shall be provided to the enterprises registered under Micro, Small and Medium Enterprises registration/SSI registration.
Subsidy In case of Registration of Patent
Government Registration fees for patent gets reduced to 50% for those MSME enterprises who want to protect their innovation and research.
What are the minimum requirements to obtain registration under Micro, Small and Medium Enterprise Act?
If you fulfill any of the below mentioned condition then you become eligible for registration.
- You are doing business as a sole Proprietor.
- You are engaged or a part of Hindu undivided family business.
- You work as a partner or have a partnership firm with other association party.
- You run the business as a one person company
- You work in a limited liability partnership
- You have incorporated private limited company
- You have established production company that produces materials
- You work in an association with other persons
- You are doing business as a co-operative society.
- Or any other undertaking
Which documents are needed for Micro, Small And Medium Enterprises Registration?
For collecting document for Registration, the steps are as follows:
- Proprietors, partners and all the directors are required to provide Permanent Account Number (PAN), Aadhar Card.
- Allotment letter/possession letter/lease agreement/property tax receipts are required to be provided as a proof of ownership of premises.
- Rent agreement and No Objection Certificate along with the utility bills of the premises from the landlord.
- Partnership Deed copy in case of partnership firms.
- Sale bill copy of each end product and purchase bill copy of the raw materials.
- In case of partnership firm copy of partnership deed required.
- Memorandum of Association (MOA) and Article of Association (AOA) and incorporation certificate is required along with the signed application by the director which is authorized by the Board's Resolution in case of Private Limited Company.
- Industrial License obtained from Industrial Development and Regulation Act,1951
- The status of machinery installed, power requirement is provided by the affidavit on Rs. 10/-non judicial stamp paper duly attested by Notary Public.
- In case of machinery and plant purchased, the copy of bill is required to be provided.
- Statement of Bank Account
Is it mandatory to obtain registration under for Micro, Small and Medium Enterprises?
As there are time to time amendments in the MSME Act, due to which you would require a professional who will file an application on your behalf and approval from the Micro, Small and Medium Enterprises Departments are required to be obtained. Each state has separate MSME department.
Manufacturing Enterprise can obtain the registration under MSME / SSI according to Notification released on 07th February 2018 subject to certain conditions which are need to follow:
- Micro Enterprise –Annual turnover of such enterprises is up to Rs 5 Cr.
- Small enterprise- Annual turnover of such enterprises should be between Rs 5 Cr and Rs. 75 Cr.
- Medium Enterprise- Annual turnover of such enterprises should be between Rs 75 Cr to Rs 250 Cr.
Note: This is a proposed classification
Such registration is not compulsory but to avail the benefits provided by the government such as incentives, subsidies along with tax rebates and exemption, registration under MSME Act is must. Moreover before applying for the proper registration you can opt for provisional certificates under Small Scale Industries (SSI) / Micro, Small and Medium Enterprises (MSME). Such benefits are provided so that the enterprises can grow at a faster rate and can contribute towards the growth of the country.
Who governs the Micro, Small And Medium Enterprises Registration?
Each state has separate DIC (District Industries Centre) department which issues MSME certificates and MSME numbers and in order to claim certain benefits, enterprises have to contact with their nearby DIC departments.
What are the steps for Micro, Small And Medium Enterprises/ SSI Registration?
If the prescribed amount of turnover and investments is exceeded by the government, then in such case Micro, Small and Medium Enterprise (MSME) registration/ Small Scale Industries (SSI) registration can be cancelled anytime.
Online application forms are filled to obtain registration under Micro, Small and Medium Enterprises (MSME) and approval is obtained from the departments. Some of the steps of registering are mentioned below:
- Application is filed with the respective government department according to the rules and regulations.
- Industries details are required to be provided by the applicant along with the necessary documents as below:
- Applicant has to provide Name, Aadhar number, Permanent Account Number, Email address and contact number.
- Applicant has to provide details of organization in application form like Permanent Account Number (PAN) of organization, location of setting up a plant, address of the organization, date of the commencement of the business, number of employees etc.
- Bank Account Number and Bank’s IFS code.
- Enterprise’s main business activities
- National Industry Classification Code which is 2 digit code
- Amount of Investment in Plant & Machinery / Equipment
It usually takes around 2-3 days to obtain registration. Applicants are required to provide the necessary details and documents in order to avoid any future difficulties.
Why do any choose us for Micro, Small and Medium Enterprises Registration?
- India Financial has one of the best team of experienced and talented professionals.
- Reasonable fees are charged for services.
- No hidden charges.
- Client satisfaction and excellent work with proper focus is the main focus of our company.
- Proper and complete assistance to solve your query.
What are the recent amendments in Micro, Small and Medium Enterprises Sector?
Government of India takes time to time initiatives to promote and support Micro, Small and Medium Enterprises sector in India as the government has just introduced the fast track loan approval facility for Micro, Small and Medium Enterprise. Within 59 minutes, loan of Rs. 1 crore can be obtained by the MSME after being approved by the principal.
Various leading professional services are provided by the India Financial such as FSSAI registration, Business plan, Finance based services and assistance, registration under IEC where the businessman plans to carry out the import and export activities and many more such activities.
Frequently Asked Questions about MSME Registration
It is a Micro, Small & Medium Enterprises, the criteria of which is defined through the investment made in plant and machinery and equipments under Micro, Small and Medium Enterprises Act, 2006.
For obtaining clearance from the various government bodies you have to apply for registration under Micro, Small and Medium Enterprises Act before commencement of the business.
Validity period of Provisional registration certificate is 5 yrs, after the end of this 5 years provisional registration certificate (PRS) shall lapse.
To avail various government benefits such as subsidies and incentives etc. one should obtain registration under Micro, Small and Medium Enterprises.
It is 12 digits identification Aadhar number for business entity provided by Micro Small and Medium Enterprise department.
Banks prefer Micro, Small and Medium Enterprises over other normal enterprises while granting loans and moreover loans are provided at a concessional rate of interest. In case of delay in repayment of loans, marginal periods are also provided by banks.
In case of Micro, Small and Medium Enterprises, the value of plant and machinery is computed on the basis of its original value.
Eligibility of an Enterprises regarding whether it would be capable of fulfilling their financial needs which is based on their past dealings is defined by the Credit Rating. Obtaining credit rating points is not compulsory but it is always preferable for Micro, Small and Medium borrowers and as a result banks and financial institutions does not hesitate in sanctioning loans to them.