MSMEs are the backbone of the Indian economy. According to the MSME Ministry of the Government of India, MSMEs account for 95% of all industrial units. Furthermore, MSMEs account for 50% of overall exports and 45% of industrial output, and they collectively produce nearly 6000 different items. As a result, the MSME sector accounts for roughly 70% of the country’s GDP. The government aggressively encourages the growth of this sector in order for the economy to expand as a whole. The government finds it easier to ensure that MSME units receive the full advantages of various initiatives by identifying and registering them as such.
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What criteria are used to identify MSME?
Manufacturing and service units are the two types of MSMEs. The level of investment in equipment and/or plant and machinery determines whether they are classed as micro, small, or medium. The following is a full breakdown:
Units of production:
a micro-enterprise with a budget of less than Rs. 25 lakhs
Small – under Rs. 50 lacs
Less than Rs. 100 lacs is considered medium.
Units of service:
Micro – less than ten lakh rupees
Small – under Rs. 20 lacs
Less than Rs. 50 lacs is considered medium.
Why should you register as a small business?
If you meet the aforementioned investment requirements, you should register as an MSME as soon as possible to take advantage of the following advantages:
- MSMEs are provided bank loans at interest rates that are much lower than market rates.
- Several government tenders are solely available to MSMEs, expanding your business options.
- MAT credit can be carried forward for 15 years for MSMEs instead of the customary 10 years for non-MSMEs.
- MSMEs have priority when it comes to certification and license applications.
- MSMEs are permitted to pay a one-time Settlement fee for unpaid government debts.
What government programs are available to MSMEs?
- Memorandum on Udyog Aadhaar:
By integrating the owner/Aadhaar proprietor’s number to the MSME registration, government subsidies and loans are easily available.
- Control of quality
Through government learning programs, registered MSMEs can put in place world-class quality standards, know-how, and technology. Seminars, trade shows, and campaigns are held on a regular basis for this aim.
- Incubation of a product/project
The government can fund up to 80% of the design costs of new MSME ventures.
- Capital subsidy based on creditworthiness
When it comes to replacing outdated technology and upgrading to more efficient methods, MSMEs might get help from banks.
What is the procedure for registering?
Although there is an offline phase, the full process can be completed online by filling out a single form via the udyam registration portal. A single registration is required for multiple businesses. A unique MSME registration number is granted once all of the requirements have been filled out and uploaded.
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What documents are required?
- Proof of business address
Possession letter/property tax receipt/lease deed/allotment letter/municipal license/utility bills/rent receipts, as well as the landlord’s No Objection Certificate.
- Bills of sale and purchase copies
For each raw material purchased during the manufacturing process, a copy of the purchase bill must be produced. A sale bill must also be produced for each good or service provided.
- Legal documents of incorporation
The partnership deed and registration certificate must be supplied in the case of partnership firms. Copies of the Memorandum and Articles of Association must be submitted if it is a corporation. Also necessary is a copy of the board resolution authorizing the company’s MSME registration.
- Other important documents
All bills verifying the acquisition and installation of machinery and plant equipment must be submitted, as MSME registration is largely influenced by the amount spent on plant and machinery. In some circumstances, you’ll also require an industrial license. Self-attestation is required for all of these documents.