MSME is the abbreviated form for Micro, Small, and Medium Enterprises. To be classified as MSME the enterprises need the following criteria for Investment and Annual Turnover. These are the revised criteria for manufacturing and services industries that have let a good number of businesses be categorized under the MSME fold and avail the benefits offered.
- For Micro Enterprises- Investment under Rs 1 crore and Annual turnover under Rs 5 crore.
- For Small Enterprises-Investment under Rs 10 crore and Annual Turnover under Rs 50 crore
- For Medium Enterprises- Investment under Rs 50 crore and Annual Turnover under Rs 250 crore.
MSMEs have helped boost the economy and generate new employment opportunities. They have also helped create the infrastructure, introduce new technology, and helped in the economic and social upliftment of our country. MSMEs have a 30 percent share of India’s GDP. They also makeup to nearly 45 percent of the manufacturing sector and are responsible for nearly half of the country’s exports.
To cut red tape and bureaucratic interference, and facilitate the growth of MSMEs, the GOI introduced the MSME (Amendment) Bill Of 2018 and re-organized the MSME ACT of 2006. The amendments made clear that there will be no unnecessary inspections to check the number of investments under Plant & Machinery requirements and made the process transparent and less prone to corruption.
If your business falls under these categories then you can also avail of MSME registration benefits. Before mentioning the benefits of registering under MSMEs, let us look at the requirements for MSME registration.
MSME registration is an easy online process that requires the Aadhar number of the applicant. There are no additional wait times as you can easily download the certificate without the need for a physical copy.
MSME Registration Benefits
Let us look at the various benefits your business will get by registering under MSME.
Availing Licenses and Approvals Easily
By furnishing your MSME certificate you can easily obtain other licenses, registrations, and approvals required from the GOI during the course of the business.
Get Collateral Free Bank Loans
MSME registration benefits include getting collateral-free loans. But this facility is for micro and small businesses only. Existing and newly formed micro and small enterprises can avail of collateral-free credit under this scheme. This scheme aptly named the “Credit Guarantee Scheme” was jointly introduced by GOI, Ministry of Micro, Small and Medium Enterprises, and SIDBI (Small Industries Development Bank of India).
Exemption on Overdraft Interest Rate
Businesses frequently need overdraft to meet their payment obligations and have to pay interest on that which eats up a part of the profit generated. An MSME registered business can lower these expenses by claiming the exemption of 1% of the interest on the Overdraft. This scheme differs from bank to bank.
Patent Registration Subsidy
Innovation is the key to success. By creating new products, technologies, and tools you can take your business to new heights. The GOI understands this and has made provisions for MSMEs to get a 50 percent subsidy on patent registration fees. You can avail of this subsidy by submitting the application to the ministry your products fall under.
Eligibility for Industrial Promotion Subsidy
Continuing on the subject of subsidies, here is another one for you. MSME registered businesses are also eligible for various subsidies that are provided for Industrial promotion from time to time by the Government of India.
Concession on Electricity Bills
MSME registration benefits also include getting a concession on the business’s electricity bills. Electricity bills make up for a large chunk of expenses, especially for manufacturing businesses. Concession on them helps get more liquidity and invest the amount saved into upgrading machinery and equipment to boost production. This concession can be availed by all micro, small and medium enterprises by submitting an application to the electricity department along with a copy of MSME registration.
Protection against Delayed Payments
MSMEs and any business, in general, face the issue of delayed payments. The payments may even turn into bad debts and cause loss to the business. As per the Supreme Court of India’s mandate, any consumer that has availed the goods & services of a registered MSME is required to pay on or before the agreed date of payment or within 15 days from the day they received the goods or availed the services. If the payment is delayed by more than 45 days after receiving the goods and services, then the buyer has to pay the interest rate on the agreed amount. To further compensate the MSME registered enterprise on delayed payments, the interest rate is to be 3 times the rate of interest as notified by the RBI.
Reimbursement of ISO Certification Charges
MSME registration benefits also include reimbursement of ISO certification charges. ISO certification means that your business follows processes that are up to international standards. It helps raise your business credibility and also helps get business from international markets. Any MSME registered company can claim reimbursement for ISO certification expenses by submitting the application along with the copy of the MSME certificate to the respective authority.
So, these are some of the MSME registration benefits. Apply for registration today and grow your business and boost our country’s economy.
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