Note on MSME Benefits

The Government of India has introduced MSME or Micro, Small, and Medium Enterprises in agreement with Micro, Small and Medium Enterprises Development (MSMED) Act of 2006. These enterprises primarily engaged in the production, manufacturing, processing, or preservation of goods and commodities.

Who can get registered under MSME?

Proprietorships, Hindu Undivided Family, Partnership Firm, One Person Company, Limited Liability Partnership, Private Limited Company, Limited Company, Producer Company, any association of persons, co-operative societies or any other undertaking can obtain MSME registration in India.

Criteria determining MSME?

Existing and revised criteria for classification of micro, small and medium enterprises under MSME Act:

While computing the turnover of the MSME enterprises, it is provisioned to exclude Exports turnover i.e. turnover with respect to exports will not be counted in the limits of turnover for any category of MSME units whether micro, small or medium. Now, MSMEs can export more.

The Government of India introduced the MSME (Amendment) Bill Of 2018 and re-emphasized on the MSME ACT of 2006. Under these legislations, there would be no need for frequent inspections to check the required investments needed to be made in the plant and machinery needed. In addition, the operations of MSMEs would be allowed to continue in a transparent, non-discriminatory, and objective manner.

Benefits under MSME registration:

1. 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. A trust named The Credit Guarantee Trust Fund Scheme was introduced by the Government Of India, SIDBI(Small Industries Development Bank Of India) and the Ministry of Micro, Small and Medium Enterprise to make sure this scheme is implemented (Credit Guarantee Scheme) for all Micro and Small Enterprises.
2. Overdraft Interest Rate Exemption                                                                                                              Businesses and enterprises registered as MSMEs can avail a benefit of 1% on the Over Draft in a scheme that differs from bank to bank. This helps to make small businesses secure during unfavourable markets.
3. Industrial Promotion Subsidy Eligibility                                                                                                      Businesses that have been registered as MSMEs are eligible for subsidies for Industrial Promotion as provided by the Government.
4. Protection against Payments (Delayed Payments)                                                                                       MSMEs constantly face the risk of delayed payments which in turn disturbs their entire business. In order to protect registered companies, the Supreme Court has mandated that any buyer of goods or services from registered MSMEs 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 or services. If the buyer delays the payment for more than 45 days after accepting the products or services then the buyer has to pay interest 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.
5. Fewer Electricity Bills                                                                                                                                      All companies that have the MSME Registration Certificate are entitled to concessions on their electric bill. This enables businesses to boost production and take in more orders without worrying about capital expenditure on costs like electricity and maintenance. Micro, small and medium enterprises can avail of the concession by providing an application to the department of electricity along with the certificate of registration.
6. ISO Certification Charges Reimbursement                                                                                                   Any registered micro, small and medium enterprise can claim reimbursement of the expenses that were made in order to obtain an ISO certification. This motivates entrepreneurs to get their respective businesses ISO certified which helps them to do business abroad in terms of high-quality exports.
7. 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. The subsidy can be availed by submitting an application to the respective ministries.
8. More export                                                                                                                                                     As per the MSME (Amendment) Bill Of 2018, while computation the turnover of the MSMEs, the export turnover is to be excluded. Such relaxation is going to encourage the MSMEs to export more and more without fearing losing the benefits of an MSME unit.
9. Various schemes by the Central Government for the development of MSMEs.                                        Various Ministries and Department of Government of India have been running Schemes targeted towards MSME Sector. The schemes under different departments can be accessed from the following link: https://msme.gov.in/sites/default/files/MSME_Schemes_English_0.pdf
10. Waiver of Stamp Duty and Registration Fees.                                                                                              At present, IT units in public IT Parks are exempted from Stamp Duty and Registration fees up to 31st March 2006. Now all new industrial units having MSME Registration and expansions will be exempted from payment of Stamp Duty and Registration fees.
11. Bar code registration subsidy                                                                                                                      Enterprises that have MSME registration can avail bar code registration subsidy as mentioned in the scheme.
12. Subsidy on National Small Industries Corporation (NSIC) performance and credit ratings.                    Enterprises that have MSME registration can avail subsidy on NSIC performance and credit ratings as mentioned in the scheme.
13. Eligible for Industrial promotion Subsidy (IPS) subsidy                                                                               Enterprises that have MSME registration are eligible for Industrial promotion Subsidy (IPS) as mentioned in the scheme.
14. Access to tenders                                                                                                                                           There are multiple government tenders which are only open to MSMEs to promote small business participation in India.
15. 15% CLCSS subsidy to purchase fully                                                                                                              The Ministry of MSME 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 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 Scheme.
16. Reservation policies to manufacturing/production sector.                                                                         Reservation of products for exclusive manufacture in SSI sector.
17. Extension of MAT                                                                                                                                           MAT for registered MSMEs van be extended to 15 years. Whereas the regular MAT applicability is for 10 years only.
18. One time settlement fee                                                                                                                               MSMEs can avail one time settlement fee for delayed or non-paid amounts of MSME.