Meaning and Top 15 Benefits and Schemes of MSME Registration And Eligibility
Meaning and Top 15 Benefits and Schemes of MSME Registration And Eligibility

 

The government of India in her continued effort to protect the participants in the economy of the country has introduced various policies in that regard. One of these policies includes the requirement of registration of micro, small and medium scale enterprise.

In the bid of the government to ensure the compliance with the requirement of registration Micro, Small and Medium scale enterprise proprietors are granted about 2% interest subvention by the government for credit facilities procured pursuant to the Micro, Small and Medium Scale Enterprise Credit Scheme in India.

The topic under review will be appreciated by answering the questions posed below:

  1. What is the meaning of MSME(s)?
  2. What are the classes of business which qualify as MSME?
  3. What is the procedure for the registration of MSME?
  4. What are the relevant documents for MSME registration?
  5. What are the benefits of MSME registration?
  6. What are the MSME schemes which are in operation in India?

What is the meaning of MSME(s)?

MSME is the abbreviation for Micro, Small and Medium Enterprises. The MSME became prominent and operational in India around October 2006. The intendment of the government of India was to promote and stimulate growth in the small and medium scale enterprise sector of the India economy.

It is believed that the micro, small and the medium scale enterprise is the heartbeat of the economic sector of developing economies which India is one of[1].

It is immaterial that the Company of interest is under a distinct sector i.e the manufacturing or service providing sector such company by virtue of its structure may qualify and consequently be registered as an MSME under the applicable laws.

At the moment the requirement of registration is not mandatory but the attendant incentives are numerous that small scale industry operators are left with little or no choice but to undergo the registration[2].

What are the classes of business which qualify as a Micro, Small and Medium Enterprise?

Principally MSME is stratified into two forms namely:

  1. Manufacturing enterprise; and
  2. Service-based enterprise.

Within the above-mentioned stratification of the MSME is a further division based on their tune of investment in Plant and Machinery/ Equipment which are stated below.

CLASSIFICATION MICRO SMALL MEDIUM
Manufacturing Enterprises Investments which worth at least 2,500,000 Indian Rupees Investments which are worth a sum above 2,500,000 Indian Rupees but not exceeding 50,000,000 Indian Rupees Investments which are worth a sum above 50,000,000 Indian Rupees but not exceeding 100,000,000 Indian Rupees
Service Enterprises Investments which are worth less than 10,000,000 Indian Rupees Investments exceeding the sum of 10,000,000 Indian rupees but not exceeding the sum of  20,000,000 Indian Rupees Investments exceeding the sum of 20,000,000 Indian rupees but not exceeding the sum of  50,000,000 Indian Rupees

 

What is the procedure for the registration of MSME?

  1. In order to register for the MSME, the owner or proprietor of the small and medium scale industry owner has to fill a single registration form manually or electronically on the website of the MSME scheme operator.
  2. Where a person is the proprietor of more than one business and such businesses cuts across various industries he may opt for an individual registration which is more convenient.
  3. The electronic registration can be done on the website of any of the listed MSME Scheme managers or in the alternative the form may be obtained/downloaded and filled manually by the proprietor seeking to register for the MSME scheme.
  4. The registration procedure will also require the proprietor to provide/upload ()in the case of online registration) copies of some documents which shall be discussed subsequently. These documents may include self-certified certificates.
  5. Most importantly considering that these enterprises are being encouraged to come into existence and flourish, there are no registration fees.
  6. Upon the completion and uploading of the forms and documents, the applicant will be given a registration number.

What are the relevant documents for MSME registration?

Some of the documents which are required to be uploaded by the registering MSME includes

  1. Business Address Proof
  2. Copies of Sale Bill and Purchase Bill
  1. Partnership Deed, Memorandum of Association and Articles of Association
  2. Copy of Licenses and Bills of Machinery Purchased

Business Address Proof:

In the case of a business which is wholly owned by the proprietor, the proof of address shall be the letter of allocation or allotment, Deed of a lease, proof of paid-up property tax receipt issued to the proprietor over the property used as the registered office of the business. But where the business is covered by a municipal license any other form of proof is no longer necessary.

In the case of a rented premise which serve as the business premises, the rent receipt and consent or no objection certificate emanating from the landlord accompanied with a utility bill shall serve as the proof of address.

Copies of Sale Bill and Purchase Bill:

The business to be registered is required to produce through its proprietor a copy or copies of the sale bill with respect to each end product that it will supply as well as for each raw material that it will be procured, a purchase bill must be submitted.

Partnership Deed/ Memorandum of Association and Articles of Association:

Any of the above-mentioned document must be provided at the point of registration in order to ascertain the legal personality of the business seeking to be registered under the MSME. A partnership deed is required where the business to be registered is a partnership and if registered then a certificate of registration must accompany the deed of partnership. A copy of Memorandum of Association and Articles of Association and the certificate of incorporation must be uploaded where the business to be registered is a company also the resolution at the general meeting and the board resolution must be provided before it can be registered under the MSME scheme.

Copy of Licenses and Bills of Machinery Purchased:

Though rarely required some businesses requires to be operated under a licence issued by the municipal authority in the district where it is operated, where the business under this circumstance is seeking registration under any scheme of MSME the applicant must submit a copy of the licence so granted by any of the regulatory agency.

Benefits of MSME Registration

  1. Once a business is registered under the MSME with the subsidy provided by the government, loans and other credit facilities becomes free or in most cases the interest rate does not exceed 1.5% as opposed to the regular interest rate for other borrowers who did not register under the MSME.
  2. The registration under MSME makes it easier for such registered business to easily access the lw or free interest credit facilities availed by the government and other donor agencies.
  3. The loans which are availed to MSME subscribers are also in most cases without collateral.
  4. With the registration, a business is entitled to a varying degree of tax waiver and holiday in order to encourage the growth of the enterprise that is registered.
  5. Upon registration, a business enterprise is entitled to a period of about 15 years for the minimum alternate tax as opposed to the regular 10 years.
  6. The central and state government in India in some cases restrict government tenders to businesses which are registered under the MSME. In other words where a business is not registered under the MSME automatically such business cannot bid for a government contract.
  7. The rebates offered by the government even extends to where such enterprise is seeking for registration of patents and other licenses which automatically becomes less cumbersome due to the MSME registration.
  8. In addition to the flexibility in patent registration for a business registered under an MSME, the government offers a 50% discount on the fees to be paid by such business while seeking to register a patent.
  9. It is also an important benefit of registration under the MSME that there is a rebate or an outright waiver on the electricity bill in favour of most these growing registered businesses.
  10. The ministry in charge of MSME ensures that there is no delay in the payments due and payable to the businesses under MSME. And when such delay occurs they ensure the most amicable settlement through ADR in favour of the both parties.
  11. Whhere business registered under MSME obtains overdraft generally therate is fixed at 1%
  12. In the case of Aadhar Scheme, the card and the unique 12 digits numbers serves as a means of identification and one of the most acceptable means of identification for Indians on a global scale.
  13. The use of Aadhar card as one of the popular MSME scheme is that the subscriber enjoys a zero balance on any RUPay account opened using Aadhar card.
  14. Aadhar number also serves as the only access code for someone  to store data with the government free data base.
  15. Business registered under MSME are given special consideration b y the Indian government for the purpose of international trade fairs and promotions.

 MSME schemes launched by the Government

The government did not only require the registration of MSME but went ahead to introduce some which are in operation in India. Some of these MSME schemes are:

Udyog Aadhaar memorandum:

Aadhaar card is a unique 12 digit number given to all individuals by the government. At inception, the use of Aadhaar card was made mandatory and the private sectors even went as far as requesting for the card before attending to their customers[3]. Registration can be done both manually or electronically.

Zero Defect Zero Effect:

In this MSME scheme, goods are manufactured within the stipulated standard or quality for the purpose of export. The essence of this scheme is to ensure that goods meant for export are not rejected by the receiving countries. In this scheme where manufacturers produce goods which meet up to the standard set by this scheme, they are entitled to rebates and incentives which will further boost their productivity.

Incubation:

This scheme is intended to assist the innovators with the actualization of their new designs, business ideas or products. In this regard, the government undertakes the cost up to the tune of 80% of the investment in order to encourage the emerging business.

Other MSME schemes which are in operation in India are as follows:

 

a.      Quality Management Standards & Quality technology Tools

b.     Grievance Monitoring System

c.      Credit Linked Capital Subsidy Scheme

d.     Women Entrepreneurship

 

 

 

Conclusion

The government of India has realized the relevance of the small and medium scale enterprises in the economic life of the country. The government did not only seek to protect the small and medium scale investors but also to create the opportunity for the business to grow.

It is obvious that with the growth of the small and medium scale enterprises in India productivity is increased thereby giving a boost in the economy by creating more employment for the teeming youths and citizens of India.

 

 

[1] At the moment the small and medium scale enterprise aacounts for about 46% of the employment ratio in india. The said 46% of the employment ratio in India sees to the increasing export ratio (which exceeds 7000 different export products) of india.

[2] Some of these incentives include tax waiver (which may be partial or absolute), the government may go ahead to set up the business for the proprietor whp has egistered the business, the government provides credit facilities, loans and subsidy at the point of rpayment of the credit facilities.

[3] See the case of Justice K.S .Puttaswamy (Retd) vs Union of India Writ Petition (Civil) No. 494 of 2012 for the legal status of Aadhaar.

 

 

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