Are you wondering how to register your MSME online? Are you wondering if your business is eligible for an MSME registration? Well, this article will help you find answers to the above questions.
MSME stands for Micro, Small and Medium Enterprises. Under the Micro, Small and Medium Enterprises Development (MSMDE) Act, 2006, these industries are broadly classified into
- Manufacturing sector business
- Service sector business
Under the above classifications, turnovers define the three types of enterprises-
1. With an investment up to Rs. 1 crore and turnover up to Rs 5 crores, the business is a micro-enterprise
2. With an investment up to Rs. 10 crores and turnover between Rs. 5 crores and Rs. 50 crores, the business is a small enterprise
3. With an investment up to 50 crores and turnover between Rs. 50 crores and Rs 100 crores, the business is a medium enterprise
The MSMED Act provides a lot of benefits, subsidies and incentives to these businesses. However, to avail the benefits under the act, it is important to get a business registered as MSME. The business could be a public or private sector company. The ownership of the business can also be a sole proprietorship or a partnership business.
Documents required for MSME registration
Documents related to identity and citizenship of the business owner(s), especially Aadhaar and PAN card
1. Address proof of the business
2. Bank account details and bank records of the business
3. Cancelled cheque
4. Sale bill or purchase bill or both of the products the company deals in
5. Partnership deed in case of a business having multiple owners or shareholders.
6. Registrations and licenses of the business
7. Bills of machinery purchased for the business, if any
8. An authorisation letter from the company board agreeing to an MSME registration if the business is a company
9. A copy of the Memorandum of Association and Articles of Association are also required if the business is a company
What is the registration process?
The form for MSME registration can be found online on the government portal
1. The form needs to be filled with all the required details.
2. After submitting the form and all required documents, verification takes place
3. The process of verification takes about 2 days
4. Once the sign-up and registration are done, the application will be approved
5. The MSME certificate will be delivered to the applicant after approval
6. One registration can be utilised to sign up for multiple industries
Under changes since July 1st, there are some modifications to the registration, which are as follows-
• The MSME ministry is now known as ‘Udyam’ and the government portal www.udyamregistration.gov.in and its single window facilitation systems – is officially the only portal to apply for MSME registration.
• The registration process is also absolutely free of cost.
• Any business that had previously registered would have to re-register with the MSME ministry with the previously generated registration number of Entrepreneur Memorandum (EM-II).
What are the benefits of MSME registration?
1. Technological Upgradation: Under the Capital Aid for Technological Upgradation Scheme, the government encourages the acquirement of the best technological equipment in an MSME. With Government aid, loans from banks are provided at very low-interest amounts to help the businesses upgrade their infrastructure with technological advancements.
2. Reservation Policy: To enable MSMEs to provide considerable employment, the government has reserved the rights of production of about 300 consumer goods solely with MSMEs. The Government Stores Purchase Program enables the reservation. This law also prevents corporations from encroaching onto the MSME market space.
3. 50% subsidy on Patent Registration: The MSME registration allows businesses to register their patents at a 50% subsidy. This helps small businesses not shell out a whole lot of cash to get patents registered which in certain cases can be extremely expensive.
4. Collateral-free Loans: Banks and other financial companies enable MSMEs to avail loans without putting up collateral. This is highly beneficial for especially micro and small businesses. Loans are complicated financial commitments in general for businesses. The lack of collateral simplifies MSME loans to an extent.
5. Protection against delayed payments: The government protects businesses registered with MSME against delayed payments from clients. A buyer must pay within the date mentioned in the contract or within 15 days from receipt of the product, in case date has not been pre-set. On failing to do the above, the buyer has to pay a fine to an MSME business to make up the default. This reservation helps MSMEs stabilise cash flow. Debts are also reduced.
6. ISO certification charges reimbursement: MSME businesses can apply for reimbursement for the charges required for ISO certification on presentation of certain documents.
7. Marketing schemes: On registration as an MSME, the government also provides certain avenues to assist with the marketing of a business. Getting the word out about a business and its products is very important in modern times to help with the growth of the business.
MSME registration is beneficial to business loan schemes
MSME registration enables businesses to take advantage of several MSME loan schemes that the government offers through banks and NBFCs. Working Capital Loan, Line of Credit, Invoice Financing, Overdraft benefits with 1% interest exemption, Merchant Cash advance – all these MSME loan benefits can be easily available. There are certain separate government schemes which are specific to MSME needs that have been launched over the years to benefit small businesses. MUDRA Yojana, Stand-Up India, Bank Credit Facilitation scheme, are just three of the many government schemes for MSME loans.
As we have already noted, the process of registration with the MSME ministry is extremely simple and is a quick process. The certification then can go on to affect the business positively in a multitude of ways. From loans to cash flow to marketing advantages – all are taken care of by government schemes for MSME businesses. MSME businesses are an important part of the economy and are supremely beneficial for skill development and preservation and elevation of indigenous arts. These are also the support structure for many bigger industries.
If you have an MSME, sign up with the Udyam ministry and enable your business to grow.