In this write up, I have penned some absolute advantages which are enjoyed by Micro, small and medium enterprises in our country. The MSME registration is not statutory. However, the MSME registration process in India has been conceptualized to provide maximum benefits to all types of enterprises. After registration, any enterprise becomes qualified to reap the benefits offered under the MSMED Act. The Indian government has always been in favor of providing benefits to Micro, small and medium enterprises (MSMEs). There are many advantages of obtaining MSME registration in India, which can be only availed if the business had registered itself as an MSME/SSI under MSME Act.
For Enterprises engaged in the manufacture or production, processing or preservation of goods, the definition is as follows:
· Micro Enterprise: An enterprise where investment in plant and machinery does not exceed Rs. 25 lakh.
· Small Enterprise: An enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore.
· Medium Enterprise: An enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.
In case of the above enterprises, investment in plant and machinery is the original cost excluding land and building and other items as specified by the Ministry of Small Scale Industries.
For Enterprises engaged in providing or rendering of services, the definition is as follows:
· Micro Enterprise: An enterprise where the investment in equipment does not exceed Rs. 10 lakh.
· Small Enterprise: An enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore.
· Medium Enterprise: An enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.
The following are a few advantages on obtaining SSI/MSME registration in India:
Industrial Promotion Subsidy Eligibility
Enterprises registered under MSME are also eligible for a subsidy for Industrial Promotion as suggested by the Government.
Bank Loans (Collateral Free)
The Government of India has made collateral-free credit available to all small and micro business sectors. This initiative guarantees funds to micro and small sector enterprises. Under this scheme, both the old as well as the new enterprises can claim the benefits. A trust named The Credit Guarantee Trust Fund Scheme was introduced by the GOI(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 Enterprise.
Subsidy on Patent Registration
A hefty 50% subsidy is given to the Enterprise that has the certificate of registration granted by MSME. This subsidy can be availed for patent registration by giving application to respective ministry.
Overdraft Interest Rate Exemption
Businesses or enterprises registered under MSME can avail a benefit of 1% on the Over Draft as mentioned in a scheme that differs from bank to bank.
Deduction Electricity Bills
This concession is available to all the Enterprises that have the MSME Registration Certificate by providing an application to the department of the electricity along with the certificate of registration by MSME.
Protection against Payments (Delayed Payments)
At times, the buyers of services or products from the MSME’s or SSIs tend to delay the payment. The Ministry of Micro, Small and Medium Enterprise lend a helping hand to such enterprises by giving them the right to collect interest on the payments that are delayed from the buyer’s side. The settlement of such disputes must be done in minimum time through conciliation and arbitration.
In case, if any MSME registered enterprise supplies any goods or services to a buyer then the buyer is required to make the payment on or before the agreed date of payment or within 15 days from the day they had accepted the goods and services from MSME or SCI registered business (if there is no mention of the date of payment).
If the buyer delays the payment for more than 45 days after accepting the products or services then the buyer has to pay compound interest along with interests (monthly) on the amount that was agreed to be paid. The interest rate is three times the rate that is notified by the Reserve Bank of India.
ISO Certification Charges Reimbursement
The registered MSME enterprises can claim the reimbursement of the expenses that were spent for the ISO certification.
MSME’s are rapidly growing with regular support from the government and youths who are inspired and bold enough to start their own venture. Therefore, knowledge about the registration process and its benefits is an absolute must in order to give a boost to the entrepreneurial spirit of MSME & SSI founders.
I believe this article helps all of those who might have had any confusion related to the benefits ofMSME registration in India and also to those who are willing to jump into an entrepreneur role or are having a Micro, Small to Medium scale business.
The entire contents of this article are solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation by the Author. Compliance Calendar LLP and the Author of this Article do not constitute any sort of professional advice or a formal recommendation. The author has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify and confirm the updates from the genuine sources before acting on any of the information’s provided hereinabove. Compliance Calendar LLP shall not be responsible for any loss or damage in any circumstances whatsoever.