Understanding MSME as per the Law: The Government of India has devised the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 on 02nd October, 2006. As per the Act, categorization of enterprises is done into micro, small and medium enterprises based upon investment in plant & machine for manufacturing & production industry and investment in equipment (service industry) can be best understood as:
|Enterprise Category||Investment in Plant & Machinery
(Manufacturing & Production Industry)
|Investment in Equipment
|Micro||The investment in plant and machinery does not exceed Rs. 25 lakhs.||The investment in plant and machinery does not exceed Rs. 10 lakhs.|
|Small||The investment in plant and machinery is more than Rs. 25 lakhs but does not exceed Rs. 5 crores.||The investment in plant and machinery is more than Rs. 10 lakhs but does not exceed Rs. 2 crores.|
|Medium||The investment in plant and machinery is more than 5 crores but does not exceed Rs. 10 crores.||The investment in plant and machinery is more than 5 crores but does not exceed Rs. 10 crores.|
What are the benefits of getting registered?
There are many; from priority lending to cluster financing with encouraging bank loans, and an opportunity to adopt latest quality management standards. Some of the benefits are listed as follows:
- Lending rate from banks: Rate of Interests are lower for the registered ones as compared to other enterprises.
- Market assistance from the government for export promotion: Being categorized as a micro, small or medium enterprise gives access to several exchange programs, craft fairs, exhibitions, and trade-related events internationally organized by government which fosters new business connections. The government also incentivizes export of goods and services by MSMEs by way of subsidies, tax exemption, and technical support.
- Capital and other grants for infrastructure development: Training programs, capital grants are provided by government for improvisation of the infrastructure and support for entrepreneurial development.
- Exclusive purchases and sheltering from competition: As part of the MSME Market Development Assistance scheme, the Central Government follows a Price and Purchase Preference policy under which more than 358 items are listed for exclusive purchases by Central Government from medium, micro and small units only.
- Reimbursement of ISO Certification: All registered micro and small industries can avail an exemption of all expenses incurred for obtaining ISO 9000, ISO 14001 and HACCP certifications.
- Protection against delayed payments: A payment due to a micro or small enterprise mandatorily need to be made within forty-five days from the day of acceptance or the day of deemed acceptance.
Recently Ministry of Corporate Affairs (MCA) has deployed Form MSME asking companies to share details of all outstanding dues to the Micro or Small Enterprises whose payments exceeds 45 days from the date of acceptance or the date of deemed acceptance of goods or services. The said return is to be filed on half yearly basis every year.
MSME registration procedure:
It is an online process that requires Aadhar number which is linked to mobile number of the applicant for certification via OTP verification. The registration certificate can be generated and downloaded online.
Apart from few compliance burdens, getting MSME registration is fruitful for the enterprise which synergizes the business opportunities and provide ease of doing business to such enterprises.
Disclaimer : This content is meant for information only and should not be considered as an advice or opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.
CA Mitika Batta
AKGVG & Associates