MSME Registration and its Benefits
Introduction
The Micro, Small and Medium enterprise is the major contributor in the economic development of the country.
The government also believe that small businesses are the backbone of the country as they have a large contribution in the GDP of the country.
In India, this sector has vital role in respect to entrepreneurship development especially in semi urban and rural areas.
According to the provisions of the MSMED (Micro, Small & Medium Enterprises Development) Act of 2006, MSME is mainly classified into two sectors i.e.
- Manufacturing Enterprises
- Service Enterprises
These enterprises are further bifurcated based upon the Investment and Annual turnover.
The revised MSME classifications made as a part of the Atmanirbhar Bharat Abhiyaan relief package and now the investment and turnover figures were changed to larger values as indicated below are: –
| Composite Criteria: Investment in Plant / Machinery and Turnover | ||
| Criteria | Investment in Plant and Machinery or Equipment | Annual Turnover |
| Micro Enterprises | Less than Rs. 1 Cr. | Less than Rs. 5 Cr. |
| Small Enterprises | Less than Rs. 10 Cr. | Less than Rs.50 Cr. |
| Medium Enterprises | Less than Rs. 50 Cr. | Less than Rs. 250 Cr. |
Benefits of MSME
- Collateral Free Bank Loan:-Banks provide collateral free loan to the MSME enterprises. This initiative guarantees funds to micro and small sector enterprises. A trust named The Credit Guarantee Trust Fund Scheme was introduced by the Government Of India, SIDBI(Small Industries Development Bank Of India) and the Ministry of Micro, Small and Medium Enterprise to make sure this scheme is implemented (Credit Guarantee Scheme) for all Micro and Small Enterprises.
- Low Electricity Bill:- The Businesses registered under MSME are entitled to concessions on the electricity bills just by filing application along with MSME registration certificate in the electricity department. This scheme helps small business to amplify the production, bringing down their cost per unit eventually increasing their profit margin.
- Overdraft Interest Rate Exemption:-Businesses registered under MSME can avail benefit of 1% on the overdraft that differ from bank to bank. This scheme helps usually small and Micro businesses in unfit market condition or when working cycle is too long.
- Subsidy on Patent Registration: –Under this scheme, Businesses registered under MSME can avail benefit of 50% subsidy on their patent registration fee. This benefit encourages them to work on new ideas and innovate newer technology which is beneficial for the society.
