This article sheds light on the advantages of registering under the MSME.
What is MSME?
The Ministry of MSME is working firmly to encourage MSME Enterprise engaged in the manufacturing and production and processing or preservation of goods. MSME stands for Micro, Small and Medium Enterprises. Enterprises are typically more labour-intensive than large corporates and provide tremendous employment potential at a very low capital cost. MSME also shares a major portion of industrial production and exports in India and plays a pivotal role in the development of an industrial economy.
Who is Eligible?
Enterprises engaged in Manufacturing/ providing or rendering of services and whose investment in equipment (original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006 are specified below.
|MICRO ENTERPRISE||SMALL ENTERPRISE||MEDIUM ENTERPRISE|
|Manufacturing Enterprises||Less than Rs. 25 lakhs||More than Rs. 25 lakhs but not exceed Rs. 5 crores||More than Rs. 5 crores but does not exceed Rs.10 crore|
|Service Enterprises||Less than Rs. 10 lakhs||More than Rs. 10 lakhs but does not exceed Rs. 2 crores||More than Rs. 2 crores but does not exceed Rs. 5 crores|
How to register under MSME?
- A person needs to fill out a single form either offline or online
- Documents required are Personal Aadhar Number, Industry name, Address, bank account details, and some common information
- The person can provide self-certified certificates
- There are no registration fees and once the details are filled you will get the registration number.
(If a person wants to do registration for more than one industry then also, he/she can do individual registration.)
Benefits of registration under MSME are as follows:
- Collateral free Loan from Banks
- Get the benefit of Reservation Policies in Production Sector and Special Consideration on International Trade Fairs
- Easy to Get License, approvals & Registration
- Eligible for IPS (Industrial Promotion Subsidy)
- Protection against in Delay Payment
- Concession in Electricity Bills
- Excise Exemption Scheme
- 1% exemption on the interest rate on OD
- 50% Subsidy for Patent Registration
The Disadvantage of not registering under MSME:
- The business will find it difficult to arrange the funds as they are not registered under MSME
- Since having a registration, a business will be safe and will be easily able to earn the trust of the customers
- The firms may survive in the short run by managing finance but will be difficult for them to survive in the long run
- Due to the uneasy accessibility of finance, the firms will not be able to adopt new technologies.
- It will be difficult to get access to talented and well-prepared employees.
Protection against delay in payments from Buyers – Major benefit
The Ministry of Micro, Small and Medium Enterprises gives protection to MSME Registered Business against delay in payments from Buyers and right of interest on delayed payment through conciliation and arbitration and settlement of dispute be done in minimum time. If any micro or small enterprise that has MSME registration, supplies any goods or services, then the buyer is required to make the payment on or before the date agreed upon between the buyer and the micro or small enterprise. The agreement between the seller and buyer shall not exceed more than 45 days. In case of failure by the buyer to make the payment on time, the buyer is required to pay compound interest with monthly interest rests to the supplier on that amount from the agreed date of payment or fifteen days of acceptance of goods or service. The penal interest chargeable for delayed payment to an MSME enterprise is three times of the bank rate notified by the Reserve Bank of India.
So, are you ready to register?