The Micro, Small, and Medium Enterprises (MSME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades. MSME sector contributes around 40% to the GDP of India and counting with the aim at facilitating the promotion and development of small and medium Enterprises.
MSMEs are complementary to large industries as ancillary units and this sector contributes enormously to the socio-economic development of the country. According to the Federation of Indian Micro and Small & Medium Enterprises (FISME), reduction in Customs Duties on steel and ferrous and non-ferrous scrap is a major direct benefit to the MSMEs as it will help reduce the raw material prices. This was one of the main demands of the sector.
According to Section 7 of the MSMED Act, 2006, the government has prescribed specific turnovers and investment limits to reckon whether an enterprise falls under the micro, small or medium category.
In terms of this Act definition of micro, small, and medium (MSME) enterprises is as under:
- A micro enterprise is an enterprise where, Manufacturing Enterprises and Enterprise Rendering Services – Investment in plant and machinery for equipment’s: not more than Rs. 1 Crore and Annual Turn Over: not more than 5 Crore.
- A small enterprise is an enterprise where, Manufacturing Enterprises and Enterprise Rendering Services – Investment in plant and machinery for equipment’s: not more than Rs. 10 Crore and Annual Turn Over: not more than 50 Crore.
- A medium enterprise is an enterprise where, Manufacturing Enterprises and Enterprise Rendering Services – Investment in plant and machinery for equipment’s: not more than Rs. 50 Crore and Annual Turn Over: not more than 250 Crore.
Benefits of Getting MSME’s / UDYAM Registration…
- MSME Samadhan – 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 the 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.
- Fewer 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.
- 15% CLCSS subsidy to purchase fully
The Ministry of Micro, Small, and Medium Enterprises is operating a scheme namely “Credit Linked CGSTI Subsidy Scheme (CLCSS) for technology up-gradation of Micro and Small Enterprises. The scheme was launched in October-2000 and revised from 29.9.2005. The revised scheme aims at facilitating technology up-gradation of Micro and Small Enterprises (MSEs) by providing a 15% capital subsidy (limited to a maximum Rs.15 lakhs) for the purchase of Plant & Machinery. The maximum limit of eligible loans for calculation of subsidy under the scheme is Rs.100 lakhs. Presently, more than 1500 well established/improved technologies under 51 sub-sectors have been approved under the Scheme.
Few of the industry which can benefit from the CLCSS scheme are:
- Biotech Industry
- Common Effluent Treatment Plant
- Corrugated Boxes
- Drugs and Pharmaceuticals
- Dyes and Intermediates
- Industry based on Medicinal and Aromatic plants
- Plastic Moulded/ Extruded Products and Parts/ Components
- Rubber Processing including Cycle/ Rickshaw Tyres
- Food Processing (including Ice Cream manufacturing)
- Poultry Hatchery & Cattle Feed Industry
- and other 30 sectors
- Fewer interest rates and availability and access to greater credit:
In the absence of collateral security (any property/cash given as a security against a loan), many business owners may find it extremely hard to secure a loan for starting in their industry. However, with an MSME Registration, all banks are specifically instructed to offer loans at interest rates lower than the usual and one may be able to avail this benefit from several banking institutions for their financing needs.
- Priority Lending:
Our first MSME benefit is priority lending. Whether you’re the proud owner of a cutting-edge technology business or a masala packing company, employing rural women, credit and loan is something that your business will inevitably require for long- and short-term financing. Banks, by virtue of the directions issued by the Reserve Bank of India, have certain earmarked funds that have to mandatorily be given to MSME businesses. Producing MSME certificate benefits entitle one to avail of this loan on a priority basis with fewer hassles.
Note: On or before 31st March 2021, all existing enterprises must convert to Udyam registered company to avail latest Udyam Benefits. If you have any queries, talk to our expert. You can fill the MSME / Udyam Registration form @ https://www.msmeregistration.org, and our team will get in touch with you.