MSME Registration

An MSME is a micro, small, or medium enterprise that is involved in the production, manufacturing, processing, or preservation of goods and commodities in India. MSMEs are the backbone of the Indian economy, as they contribute to 30% of the country’s GDP, 45% of the manufacturing output, and 48% of the exports.

MSMEs are classified based on their investment and turnover, as per the MSME Act, 2006 and the revised definition under the Aatmanirbhar Bharat Abhiyan. The following table shows the criteria for each category of MSMEs:

MSME registration is not mandatory, but it is beneficial for businesses to avail various benefits in terms of taxation, credit facilities, loans, etc. Some of the benefits of MSME registration in India are:

• 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.
• Subsidy on patent registration: Under the current laws, MSMEs registered with the MSME ministry stand to benefit from a 50% subsidy on their patent registration fees. This encourages small businesses and firms to keep innovating and working on new projects and technologies.
• Overdraft interest rate exemption: Banks and other financial institutions often provide overdraft facilities to MSMEs. The government of India has announced an exemption of 1% on the interest rate for these overdraft facilities.
• Industrial promotion subsidy: Some state governments offer industrial promotion subsidies to MSMEs to encourage them to set up or expand their businesses in their regions. These subsidies may vary from state to state and depend on the type and scale of the industry.
• Protection against delayed payments: The MSME Act, 2006 provides protection to MSMEs against delayed payments from their buyers. The act states that the buyer has to make payment within 45 days of the acceptance of the goods or services. If the buyer fails to do so, the MSME can approach the Micro and Small Enterprises Facilitation Council (MSEFC) for arbitration and recovery of dues.
• Preference in public procurement: The government of India has implemented a Public Procurement Policy for MSMEs, which mandates that 25% of the total purchases of goods and services by the central government and its agencies should be from MSMEs. The policy also reserves 4% of the total purchases for MSMEs owned by women and 3% for MSMEs owned by SC/ST entrepreneurs.
• Free ISO certification: ISO certification is a mark of quality and standardization that enhances the credibility and reputation of a business. The government of India provides financial assistance to MSMEs for obtaining ISO certification. The assistance covers upto 75% of the certification expenses.

These are some of the benefits of MSME registration in India that can help you grow and become more competitive in your business.

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