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Breaking Down MSME Registration and its Advantages in India

With the rise of startups and existing MSMEs, India's business landscape is rapidly transforming. As a young nation, India is embracing innovation and advancement. The Government has introduced supportive schemes for MSMEs to grow swiftly.


The Ministry of MSME encourages manufacturing, production, and processing enterprises to show entrepreneurs that starting up is feasible.



MSME Registration in India by Vyapaar Pundit

MSME Categories as per Investment Thresholds


1. Micro Enterprise

  • Manufacturing & Production: Investment in plant and machinery under Rs. 25 lakhs

  • Service: Investment in equipment under Rs. 10 lakhs

2. Small Enterprise

  • Manufacturing & Production: Investment between Rs. 25 lakhs and Rs. 5 crores

  • Service: Investment between Rs. 10 lakhs and Rs. 2 crores

3. Medium Enterprise

  • Manufacturing & Production: Investment between Rs. 5 crores and Rs. 10 crores

  • Service: Investment between Rs. 5 crores and Rs. 10 crores


In summary, the MSME Development Act defines micro, small, and medium enterprises based on investment thresholds made in plant, machinery, and equipment. The manufacturing and service sectors have partially different investment slab limits that qualify an entity as a micro, small, or medium enterprise to avail registration benefits.


Understanding MSMEs Legally


The Government devised the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.


MSME Registration Requirements


It's an online process needing your Aadhaar number for certification. Enterprises can obtain the certificate digitally without needing physical copies. Further, MSME-registered entities can directly submit their certificate while seeking licenses, approvals, and registrations from authorities, simplifying the process.


Additionally, applicants can claim reimbursements on ISO Certificate expenses by furnishing their MSME Certificate.


Policies ease entrepreneurs' friction during MSME registration while incentives promote the message that starting up need not break the bank any more thanks to government backing.

The Advantages of MSME Registration


There are numerous benefits to obtaining MSME registration, from preferential lending to cluster financing with supportive bank loans and the opportunity to implement the latest quality management standards.


Let's examine the key benefits:


All newly registered MSMEs and expansions are exempted from paying Stamp Duty and Registration fees. They also receive direct tax exemption and applicable subsidies in the first year of operations.


Helpful Subsidies:


  1. Enterprises can get a 50% Bar Code Registration subsidy for patent registration through respective authorities, including Trademark registration for specific categories.

  2. 75% subsidy on expenditures for acquiring product certification from National/International bodies, up to Rs. 1.5 lakhs for National Standards and Rs. 2 lakhs for International Standards.


Preferential Banking Terms:


Interest Rates are lower than for unregistered enterprises. Banks can categorize branches with over 60% MSME lending as specialized units to serve this sector better.


RBI allows a composite loan limit of Rs. 1 crore for registered MSMEs, dated July 1, 2010.


Incubation Support:


The Ministry runs an Entrepreneurial and Managerial Development scheme through Incubators. It nurtures innovative commercialized ideas by providing financial assistance up to 85% of project costs, capped at Rs. 6.25 Lakhs per idea. Rs. 3.78 lakhs were also provided for infrastructure and training expenses to incubate ten ideas.


Individuals or MSEs with near-commercialization stage innovative ideas can approach approved Business Incubators under this scheme. Various institutions like Engineering Colleges, Management Institutions, Research labs, etc., with in-house incubation facilities can also apply.


Collateral Free Loan:


As highlighted before, acquiring financing is often an obstacle for MSMEs. However, upon MSME registration, banks and financial institutions are more inclined to extend collateral-free credit. This results from government-furnished credit guarantee programs to lending agencies, mitigating risks in funding MSMEs. Consequently, registered MSMEs can tap essential capital for bolstering business activities minus asset mortgage requirements. The benefit promotes financial access to fuel growth for MSMEs.


Conclusion


With government support and youth interest in starting businesses, registered MSMEs are rapidly growing. The article clarifies confusion around commencing and funding enterprises. While registration alone may not realize all dreams, it can spark the entrepreneurial spirit toward the path to success. 


At Vyapaar Pundit, we're here to guide you through the nuances of MSME registration and beyond, facilitating your path to success. Embark on this empowering journey with us, as we bridge the gap between aspirations and achievements. Contact Vyapaar Pundit today, and let's set the wheels of your entrepreneurial dreams in motion.


 

Written by Chinmayee B. for Vyapaar Pundit

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