What is MSME?
MSME stands for Micro, Small, and Medium Enterprises. These are businesses that fall under a certain size threshold in terms of annual turnover, number of employees, and investment in plant and machinery. The specific definition of MSME varies by country, but in general, these are considered to be the backbone of most economies, as they generate employment, contribute to GDP, and foster innovation and entrepreneurship. MSMEs typically have limited access to credit and resources, which can make it challenging for them to grow and compete with larger firms. Governments and other organizations often provide support to MSMEs through initiatives such as funding programs, training, and policy reforms.
MSME stands for Micro, Small and Medium Enterprises. The MSMEs are key contributors to the socio-economic development of the country. The MSMEs cover almost 95% of industrial units, 50% of exports and 45% of employment and more than 6000 types of products are manufactured in these industries (As per msme.gov.in). Opting for MSME registration is not a statutory mandate; however, it is advisable to obtain the benefits of the Mirco, Small and Medium Enterprises Act. The initiative of MSME started functioning in 2006 to create a competitive environment and encourage small businesses to ensure speedy development and boost the economy.
Even if the Company is in the manufacturing line or the service line, registrations for both these areas can be obtained through the MSME act. This registration is not yet made mandatory by the Government but it is beneficial to get one’s business registered under this because it provides a lot of benefits in terms of taxation, setting up the business, credit facilities, loans etc.
The MSMEs are categorized in manufacturing sectors and service sectors. These two sectors have been further classified based on the investment. The classification has recently been reset based on investment and annual turnover to create a greater scope of growth for the MSMEs. Below is the reset classification of the micro, small and medium enterprises.
Criteria Micro Small Medium
Investment Less Than ₹1 Cr. Less Than ₹10 Cr. Less Than ₹50 Cr.
Annual turnover Less Than ₹5 Cr. Less Than ₹50 Cr. Less Than ₹250 Cr.
These lower limits are killing the urge to grow as they are unable to scale their businesses further. Also, there has been a long-pending demand for the revision of MSME classification so that they can further expand their operations while continuing to avail the MSME benefits. Now, under the Aatmanirbhar Bharat Abhiyan (ABA), the government revised the MSME classification* by inserting composite criteria of both investment and annual turnover. Also, the distinction between the manufacturing and the services sectors under the MSME definition has been removed. This removal will create parity between the sectors. The following is the revised MSME classification, where the investment and annual turnover, both are to be considered for deciding an MSME. Or changes are applicable as per updated guidelines by Indian Governments.
MSME registration is to be done in the government portal of udyamregistration.gov.in. New entrepreneurs need to click the button “For New Entrepreneurs who are not Registered yet as MSME” shown on the home page for registering MSME. New registration of MSME is done by entering the Aadhaar card number with or without PAN Card. Also you can contact us for MSME registration. Contact Us at- www.lawsathi.com
Benefits of MSME Registration
> Due to the MSME Registration, the bank loans become cheaper as the interest rate is very low around ~ 1 to 1.5%. Much lower than interest on regular loans.
> It also allowed credit for minimum alternate tax (MAT) to be carried forward for up to 15 years instead of 10 years.
> Once registered the cost getting a patent done, or the cost of setting up the industry reduces as many rebates and concessions are available.
> MSME registration helps to acquire government tenders easily as Udyam Registration Portal is integrated with Government e-Marketplace and various other State Government portals which give easy access to their marketplace and e-tenders.
> There is a One Time Settlement Fee for non-paid amounts of MSME.
Frequently Asked Questions For MSME Registration
Q. Is MSME updated to Udyam Registration?
A. Yes, MSME registration has been replaced with the Udyam Registration. If any micro, small and medium industries want to start any business; they need to do the registration with MSME/Udyam Registration. This registration with MSME/Udyam Registration is completely online. This facility provides the business with a lot of benefits and subsidies.
Q. Can existing and new businesses both need to apply MSME Registration?
A. Yes, an existing and new business can apply for MSME/Udyam Registration, provided the existing unit is functioning and meets the threshold limits for registration. UAM Registration has to be re-registered for Udyam registration to avail the benefits of MSME.
Q. Is aadhar card compulsory for registration?
A. Yes. For registration under the Udyam registration, an Aadhaar card is compulsory. In case an applicant is other than the proprietor, the Aadhaar card of the partner and the director will be required.
Q. Do I need multiple registrations in different cities?
A. No. The MSME/Udyam Registration Certificate is for a single entity irrespective of multiple branches or plants. However, information about multiple branches or plants must be furnished.
Q. What is the validity of the certificate?
A. There is no expiry of the Udyam Registration Certificate. As long as the entity is ethical and financially healthy there will be no expiry of the certificate.
Q. Can trading companies register under MSME?
A. No. MSME covers only manufacturing and service industries. Trading companies are not covered by the scheme. MSME is to support startups with subsidies and benefits, trading companies are just like middlemen, a link between manufacturer and customer. Hence not covered under the scheme.
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