The Ministry of Micro, Small and Medium Enterprises, a branch of the Government of India, is the apex body for the formulation and administration of rules, regulations and laws relating to micro, small and medium enterprises in India. The Minister of Micro, Small and Medium Enterprises is Nitin Gadkari and the Minister of State is Pratap Chandra Sarangi since 31 May 2019.

The statistics provided by the annual reports of Ministry of Small and Medium Enterprises (MSME) shows a rise in the plan amount spent on the khadi sector from ₹1942.7 million to ₹14540 million, and non-plan amounts from ₹437 million to ₹2291 million, in the period from 1994–95 to 2014–2015. The interest subsidies to khadi institutions increased from ₹96.3 million to ₹314.5 million in this period.^[2]

History[edit]

The Ministry of Small Scale Industries and Agro and Rural Industries was created in October 1999. In September 2001, the ministry was split into the Ministry of Small Scale Industries and the Ministry of Agro and Rural Industries. The President of India amended the Government of India (Allocation of Business) Rules, 1961, under the notification dated 9 May 2007. Pursuant to this amendment, they were merged into a single ministry.

The ministry was tasked with the promotion of micro and small enterprises. The Small Industries Development Organization was under the control of the ministry, as was the National Small Industries Corporation Limited public sector undertaking).

The Small Industries Development Organisation was established in 1954 on the basis of the recommendations of the Ford Foundation. It has over 60 offices and 21 autonomous bodies under its management. These autonomous bodies include Tool Rooms, Training Institutions and Project-cum-Process Development Centres.

Services provided include:

Facilities for testing, toolmenting, training for entrepreneurship development
Preparation of project and product profiles
Technical and managerial consultancy
Assistance for exports
Pollution and energy audits

It also provides economic information services and advises Government in policy formulation for the promotion and development of SSIs. The field offices also work as effective links between the Central and State Governments.

Ministry of Agro and Rural Industries[edit]

The now-defunct Ministry of Agro and Rural Industries had the objectives of facilitating coordinated and focused policy formulation and effective implementation of programmes, projects, schemes, etc., for improving supply chain management, enhancing skills, upgrading technology, expanding markets and capacity building of entrepreneurs/artisans and their groups/collectives.

The Ministry deals with the khadi, village and coir industries through the Khadi and Village Industries Commission (KVIC) and the Coir Board. It coordinates implementation of two countrywide employment generation programmes, namely, the Rural Employment Generation Programme (REGP) and the Prime Minister’s Rozgar Yojana (PMRY) with the cooperation of State Governments, the Reserve Bank of India (RBI) and other banks. The KVIC, established by an Act of Parliament, is a statutory organization engaged in promotion and development of khadi and village industries for providing employment opportunities in the rural areas, thereby strengthening the rural economy. The coir industry is a labour-intensive and export-oriented industry. It uses a by-product of coconut, namely, coir husk. The Coir Board, a statutory body established under the Coir Industry Act 1953, looks after the promotion, growth and development of the coir industry, including export promotion and expansion of the domestic market.^[3]

It was headed by the Minister of Agro & Rural Industries and was based at Udyog Bhavan, Rafi Marg, New Delhi. Shri Mahabir Prasad was the last incumbent.

Related organisations[edit]

Coir Board
Central Tool Room, Ludhiana^[4]
Central Tool Room Extension Centre, Nilokheri earlier functional as Integrated Training Centre, Nilokheri
Indo Danish Tool Room, Jamshedpur

Integrated Training Center, Nilokheri[edit]

Integrated Training Center, Nilokheri was an employment and training agency in Nilokheri in Karnal district in the state of Haryana owned and managed by the Government of India and responsible for upgrading technical skills of technicians.

It was built around the vocational training centre that was transferred from Kurukshetra, in July, 1948 to the 1100 acres of swampy land on the Delhi-Ambala highway as one of several enterprises intended to provide employment and training for displaced persons following the partition of India This training center was under Small Industries belonged to subhash mukherjee Development Organisation and used to provided training to extension officers (industries of State Governments as well as managers and technician entrepreneurs both in modern small scale and traditional village industries. During the Year 1986-87 the center trained 200 technician, 85 women under core women training programme and 57 SIDO officers.^[5]

Functions[edit]

It provides technical training to artisans and workers sponsored by the state government. It also organises training of Extension Officers engaged in various developmental organisation. It provides summer training programs for Degree/Diploma Engineers.

ITC as Central Tool Room Extension Center, Nilokheri[edit]

Due to some conflict between the Principal and Vice-Principal of Integrated Training Centre was relinquished.^{[clarification needed]} Later in the year 2014 the center was taken over by Ministry of Micro, Small and Medium Enterprises which led to its development as Extension center for Central Tool Room, Ludhiana i.e. Central Tool Room Extension Center, Nilokheri. Currently running various technical short term courses.

Center structure and functions[edit]

The center comes under the Government of India and has a Principal and a Vice Principal. The Ministry regulates:

Khadi and Village Industries Commission
National Commission for Enterprises in the Unorganised Sector
National Small Industries Corporation Ltd.
National School of Leadership
National Institute of Micro, Small and Medium Enterprises^[6]
National Institute for Entrepreneurship & Small Business Development
Indian Institute of Entrepreneurship ^[7]

MSME Registration In India : Procedure, Documents Required

Ministry of Micro, Small and Medium Enterprises
	Emblem of India
Agency overview
Jurisdiction	Republic of India
Headquarters	Ministry of Micro, Small and Medium Enterprises; Udyog Bhawan; Rafi Marg; New Delhi,110011
Annual budget	₹6,552.61 crore(US$950 million) (2018-19 est.)
Ministers responsible	Nitin Gadkari, Cabinet Minister; Pratap Chandra Sarangi, Minister of State;
Website	msme.gov.in

Updated on Nov 27, 2019 - 02:07:47 PM

Budget 2019 Announcement!

GST registered MSMEs can get 2% interest subvention from Government for incremental loans of Rs 1 crores under the MSME Credit Scheme

MSME stands for Micro, Small and Medium Enterprises. In a developing country like India, MSME industries are the backbone of the economy.

The MSME sector contributes to 45% of India’s Total Industrial Employment, 50% of India’s Total Exports and 95% of all industrial units of the country and more than 6000 types of products are manufactured in these industries (As per msme.gov.in). When these industries grow, the economy of the country grows as a whole and flourishes. These industries are also known as small-scale industries or SSI’s.

What are Micro, Small and Medium Enterprise?
Registration Process
Benefits of MSME Registration
Documents Required for MSME Registration
MSME schemes launched by the Government are

Even if the Company is in the manufacturing line or the service line, registrations for both these areas can be obtained through the MSME act. This registration is not yet made mandatory by the Government but it is beneficial to get one’s business registered under this because it provides a lot of benefits in terms of taxation, setting up the business, credit facilities, loans etc.

The MSME became operational on October 02, 2006. It was established to promote, facilitate and develop the competitiveness of the micro, small and medium enterprises.

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What are Micro, Small and Medium Enterprise?

MSME are classified into two categories:

i. Manufacturing enterprise; and

ii. Service enterprise.

They are defined in term of investment in Plant and Machinery/ Equipment as below

	MICRO	SMALL	MEDIUM
Manufacturing Enterprises	Rs 2,500,000	Less than Rs 50,000,000	Less than Rs 100,000,000
Service Enterprises	Less than Rs 10,00,000	Less than Rs 20,000,000	Less than Rs 50,000,000

Registration Process

To do the registration the small and medium scale industry owner has to fill a single form which he can do online as well as offline.
If a person wants to do registration for more than one industry then also he/she can do individual registration.
To do the registration he/she has to fill a single form which is available at the website which is listed below.
The document required for the registration is Personal Aadhar number, Industry name, Address, bank account details and some common information.
In this, the person can provide self-certified certificates.
There are no registration fees required for this process.
Once the detail-filled and upload you would be getting the registration number.

Benefits of MSME Registration

Due to the MSME registration, the bank loans become cheaper as the interest rate is very low around ~ 1 to 1.5%. Much lower than interest on regular loans.
There are various tax rebates offered to MSME.
It also allowed credit for minimum alternate tax (MAT) to be carried forward for up to 15 years instead of 10 years
There are many government tenders which are only open to the MSME Industries.
They get easy access to credit.
Once registered the cost getting a patent done, or the cost of setting up the industry reduces as many rebates and concessions are available.
Business registered under MSME are given higher preference for government license and certification.
There is a One Time Settlement Fee for non-paid amounts of MSME.

Documents Required for MSME Registration

The entity has to submit documents like business address proof, copies of purchase and sale bill, and licenses from regulatory bodies.

Business Address Proof
Copies of Sale Bill and Purchase Bill
Partnership Deed/ MoA and AoA
Copy of Licenses and Bills of Machinery Purchased

Business Address Proof:

If the premise is self-owned– Allotment letter, possession letter, lease deed or property tax receipt. If there is a municipal license in the business name or in the name of the proprietor, partner or director of the business, no other possession document is required to be submitted.

If the premise is rented– Rent receipt and a no objection certificate from the landlord is required. Also, any utility bill or document evidencing the landlord’s ownership is to be submitted.

Copies of Sale Bill and Purchase Bill:

Business is required to submit a copy of sale bill related to each end product that it will supply. Also, for each raw material that it will purchase, a purchase bill has to be submitted.

Partnership Deed/ MoA and AoA

If the business is a partnership firm, it has to submit its partnership deed. If the partnership firm is registered, it has to submit registration certificate also.

In case of a company, a copy of Memorandum of Association and Articles of Association, and certificate of incorporation has to be submitted. With it, a copy of the resolution passed in general meeting, and the copy of board resolution authorizing a director to sign the MSME application is also to be submitted.

Copy of Licenses and Bills of Machinery Purchased

In few cases, the applicant has to submit a copy of industrial license which is to be obtained by giving an application to Govt. of India. Further, all bills and receipts related to purchase and installation of plant and machinery have to be kept safe and required to be submitted on demand.

MSME schemes launched by the Government are:

Udyog Aadhaar memorandum:

Aadhaar card is a 12 digit number given to all individuals by the government. In this, the Aadhaar card is a mandatory requirement. The benefit of registering in this scheme is ease in availing credit, loans, and subsidies from the government. Registration can be done both ways in the online mode or the offline mode.

Zero Defect Zero Effect:

In this model, goods that are manufactured for export have to adhere to a certain standard so that they are not rejected or sent back to India. To achieve this the government has launched this scheme. In this, if the goods are exported these are eligible for some rebates and concessions.

Quality Management Standards & Quality technology Tools:

Registering in this scheme will help the micro, small and medium enterprises to understand and implement the quality standards that are required to be maintained along with the new technology. In this scheme, activities are conducted to sensitize the businesses about the new technology available through various seminars, campaigns, activities etc.

Grievance Monitoring System:

Registering under this scheme is beneficial in terms of getting the complaints of the business owners addressed. In this, the business owners can check the status of their complaints, open them if they are not satisfied with the outcome.

Incubation:

This scheme helps innovators with the implementation of their new design, ideas or products. Under this from 75% to 80% of the project cost can be financed by the government. This scheme promotes new ideas, designs, products etc.

Credit Linked Capital Subsidy Scheme:

Under this scheme, new technology is provided to the business owners to replace their old and obsolete technology. A capital subsidy is given to the business to upgrade and have better means to do their business. These small, micro and medium enterprises can directly approach the banks for these subsidies.

Women Entrepreneurship:

This scheme is especially started for women who want to start their own business. The government provides capital, counseling, training and delivery techniques to these women so that they manage their business and expand it.

The government has launched a number of more schemes and support system for these enterprises. To know more about the MSME schemes.

The Micro Small & Medium Enterprises (MSMEs) are defined in India under the MSMED Act 2006 on the basis of capital investment made in plant and machinery, excluding investments in land and building.

[As per 2006 definition, Manufacturing units having investment below Rs 25 lakh (Rs 2.5 mn) were termed Micro, those between Rs 25 lakh and Rs 5 crore (Rs 50 mn) termed as Small and from Rs 5 crore to Rs 10 crore (Rs 100 mn) as Medium. Similarly, for Service units, corresponding investment thresholds were upto Rs 10 lakh (Rs 1 mn) Micro, between Rs 10 lakh to Rs 2 crore (Rs 20 mn) Small and between Rs 2 crore to Rs 5 crore (Rs 50 mn) Medium ]

From time to time, the MSME sector has been raising a demand for revision / amendment in the MSME definition. Recently the Cabinet has approved a draft which proposes to change the definition of MSMEs. The highlights of the proposal are:

It does away with investment criterion and instead proposes to define MSMEs on the basis of annual sales turnover

There is no distinction between manufacturing and service unit.

The proposed thresholds are: Micro- up to Rs 5 crore (Rs 50 mn); Small- up to Rs 75 crore (Rs 750 mn) and Medium- up to Rs 250 crore (Rs 2.5 bn).

However, it is currently a proposal that Government has agreed to. To be effective, the proposal will need amendment in the MSMED Act and passed through the Parliament.

A question being asked in many quarters is why was the change in definition required? I posit four reasons.

Firstly, the definition was freezed in 2006. After 12 years, with continued erosion of value of Rupee, the thresholds have become impractical. Adjusting for inflation would have required to enhance the limit by 2-3 times.

Secondly, many sectors where MSMEs have substantial share such as Pharmaceuticals, Auto-component, Food processing among others have been demanding a many-fold increase in the investment limit needed to be compliant of the new mandatory and industrial standards. The de minimis investment exceeded at least five crore even if one had low turnover.

Thirdly, the investment based definition creates an uneven field for older enterprises vis a vis new enterprises. Setting up a unit to produce a product today would require several times more investment than the one set-up ten or twenty years ago to produce the same product with similar quantity. What could be a micro unit because of historical investment figures, would become medium or large if set up today. It becomes a barrier for new entrants.

Finally, to prove that a unit fell in a specific category, the MSMEs ran around CAs to certify the value of plant and machinery. It is alleged that many large enterprises also under-reported the investment, got CA certificate and partook in the Public Procurement ear-marked for MSEs.

Therefore, change in criterion of defining MSMEs has been considered using Turnover as the basis. The advantages of having such a definition could be:

The Turn-over based criterion resolves many of the ills of earlier regime. It is transparent, as authorities could always cross check the turnover through platforms such as GSTN. No CA certificate would be required.

Secondly, it also levels the field for new and old enterprises as the comparison is not between historical investments and current investments but between current turnovers.

It would be realistic also: after inflation adjustment the definition of small enterprise on the basis of investment would have been Rs 15 core today. Keeping turnover five times the investment, a very conservative figure, we have Rs 75 crore as a threshold which is what is proposed in the new definition.

But there is flip side too. There are few sectors where investment is low but turnover is high for example gems and jewellery units, units producing Aluminium conductor steel-reinforced cable (ACSR) among others. Many of the units have been under small category owing to investment criteria but having high turnover ranging from Rs 100 to 30 crore. They enjoyed benefits under Public Procurement Policy for MSEs which mandates 20% set-aside for Micro and Small Units in all central government purchases. Suddenly, the reserved pie of the cake is out of their reach. The PPP for MSE would not be available for units having more than Rs 75 crore annual turnover.

Keeping in view that in the proposed thresholds, there would be hardly any Micro and Small unit that could participate in high volume government tenders, it has been proposed by FISME that where smaller units have not bid, the reserved category benefits could be passed on to Medium enterprises.

One criticism about the new definition is that India still does not take into account the number of people employed. Globally, the two most important elements used to define MSMEs remain turnover and employment. I think the decision for not including the employment criterion may be because of inability of the system to cross check employment figures in a transparent manner. The practice of underreporting number of people employed is widespread especially in smaller units to remain below the threshold of 10 employees to save on very high social security and compliance costs. Lack of labour reforms has exacerbated the situation. Adding such a criteria would have led to more paper work and corruption.

Overall, the new definition is a vast improvement over the earlier definition and should help MSMEs to face new challenges in a better frame.

The Indian government has always been in favor of providing benefits to Micro, small and medium enterprises (MSMEs). There are many advantages of obtaining MSME registration in India, which can be only availed if the business had registered itself as an MSME/SSI under MSME Act. The following are a few advantages or obtaining SSI/MSME registration in India:

What Are The Benefits of Msme Registration In India

1. Bank Loans (Collateral Free)

Page Contents

1. Bank Loans (Collateral Free)

2. Subsidy on Patent Registration

3. Overdraft Interest Rate Exemption

4. Industrial Promotion Subsidy Eligibility

5. Protection against Payments (Delayed Payments)

6. Fewer Electricity Bills

7. ISO Certification Charges Reimbursement

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 GOI(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 Enterprise.

2. Subsidy on Patent Registration

A hefty 50% subsidy is given to the Enterprise that has the certificate of registration granted by MSME. This subsidy can be availed for patent registration by giving application to respective ministry.

3. Overdraft Interest Rate Exemption

Businesses or enterprises registered under MSME can avail a benefit of 1% on the Over Draft as mentioned in a scheme that differs from bank to bank.

4. Industrial Promotion Subsidy Eligibility

Enterprises registered under MSME are also eligible for a subsidy for Industrial Promotion as suggested by the Government.

5. Protection against Payments (Delayed Payments)

At times, the buyers of services or products from the MSME’s or SSIs tend to delay the payment. The Ministry of Micro, Small and Medium Enterprise lend a helping hand to such enterprises by giving them the right to collect interest on the payments that are delayed from the buyer’s side. The settlement of such disputes must be done in minimum time through conciliation and arbitration.

In case, if any MSME registered enterprise supplies any goods or services to a buyer then the buyer 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 and services from MSME or SCI registered business( if there is no mention of the date of payment).

If the buyer delays the payment for more than 45 days after accepting the products or services then the buyer has to pay compound interest along with interests (monthly) 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.

6. Fewer Electricity Bills

This concession is available to all the Enterprises that have the MSME Registration Certificate by providing an application to the department of the electricity along with the certificate of registration by MSME.

7. ISO Certification Charges Reimbursement

The registered MSME enterprises can claim the reimbursement of the expenses that were spent for the ISO certification.

Conclusion:

MSME’s are rapidly growing with regular support from the government and youths who are inspired and bold enough to start their own venture. Therefore, knowledge about the registration process and its benefits is an absolute must in order to give a boost to the entrepreneurial spirit of MSME & SSI founders.

We hope this article helps all of those who might have had any confusion related to the benefits of MSME registration in India and also to those who are willing to jump into an entrepreneur role or are having a Micro, Small to Medium scale business. Business Escalators are the best when it comes to MSME registration online and in providing all type of Startup, GST, MSME, legal and Accounting Support services too. So contact us and please feel free to mention in the comments section if we have missed any benefits Of MSME registration in India.

If you are asking for what type of activities come under MSME please refer to NIC 2008 (National Industrial Classification 2008) except for activities with code mentioned below most of them are eligible as enterprises (manufacturing and Services).

01 Some activities in this agriculture sector

02 Forestry and logging

03 Fishing and aquaculture

45 Wholesale and retail trade and repair of motor vehicle and motorcycles

46 Wholesale trade except of motor vehicles and motor cycles 47

47 Retail Trade Except of Motor Vehicles and motor cycles

97 Activities of households as employees for domestic personnel

98 Undifferentiated goods and services producing activities of private households for own use

99 Activities of extraterritorial organization and bodies

Definition of MSME is

Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below (Manufacturing)

A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh.
A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore.
A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.

Enterprises engaged in providing or rendering of services and whose investment in equipment are specified below (Service Enterprises)

A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh.
A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore.
A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore

MSME represents Micro, Small and Medium Enterprises it was developed under the MSMED Act 2006. MSME is classified into two different types:

Manufacturing Sector

Manufacturing enterprises are for the production or supply of goods relating to any industry as per the (Industries Development and Regulation) Act, 1951). The Manufacturing Enterprise is characterized for making an investment in the Plant and Machinery.

Service Sector

The Sectors which provides services to the people are included in the Service Enterprises.

There are various kinds of business which comes under these two sections of MSME, which are mentioned below:

Leather products

Thermoplastic products like hair brushes, umbrella frames, plastic toys, etc.

Flavors &Natural Fragrance

Placement Consultancy Services

Educational Institute

Energy Efficient Pumps

Xeroxing

Beauty Parlour

Garages

X-Ray Clinics

Tailoring

Equipment Rental & Leasing

Photographic lab

Servicing of Agricultural Farm Equipment

Back Office Operation Relating to Computerised Data

STD/ISD Booths (Calling booths)

Retail Trade with low Capital

Dish cable T.V. with Dish Antenna

Laundry and Dry Cleaning

Automotive Electronic Component

Electronic Surveillance and Security

Mechanical Engineering Excluding Transport Equipment.

Engineering and Fabrication

Servicing Activities

Pharmaceutical Ingredients which are active & Ayurvedic Products

Khadi Products

Handicraft products

Paper Products

Wood Products

Poultry Farm

Bicycle parts

Stationery Items.

Computerized Call center

Rubber Products

IT Solution Provider.

Industrial Testing Labs

Auto Parts Components.

Glass and Ceramics.

What are Micro, Small & Medium Enterprises?

Micro, Small & Medium Enterprises often abbreviated as MSME, are small-sized business enterprises defined in terms of their investment. According to the provisions of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified into two classes.

Manufacturing Enterprises
Service Enterprises

A. Manufacturing Enterprises:

The Manufacturing Enterprise is defined in terms of investment in Plant & Machinery:

Enterprises	Investment in Plant & Machinery
Micro Enterprises	It does not exceed Rs. 25 Lakh (Rupees Twenty-five Lakh)
Small Enterprises	More than Rs. 25 Lakh (Rupees Twenty-five Lakh) but does not exceed Rs. 5 Crore (Rupees Five Crore)
Medium Enterprises	More than Rs. 5 Crore (Rupees Five Crore) but does not exceed Rs. 10 Crore (Rupees Ten Crore)

B. Service Enterprises:

The Service Enterprise is defined in terms of investment in equipment:

Enterprises	Investment in Equipment
Micro Enterprises	It does not exceed Rs. 10 Lakh (Rupees Ten lakh)
Small Enterprises	More than Rs. 10 Lakh (Rupees Ten Lakh) but does not exceed Rs. 2 Crore (Rupees Two Crore)
Medium Enterprises	More than Rs. 2 Crore (Rupees Two Crore) but does not exceed Rs. 5 Crore (Rupees Five Crore)

Objective of MSME Act:

The MSMED Act facilitates the promotion, development and also enhances the competitiveness of micro, small and medium enterprises and for matters connected therewith and incidental thereto.

How to register as an MSME?

In this fast-moving phase of economy and technology-driven processes, things are getting more organized and are paving ways to ease of doing business. The Indian Government too is taking various initiatives to encourage small-sized enterprises to exist and grow efficiently.

To register as an MSME all it takes is to file a web-based online form at the link https://udyogaadhaar.gov.in/UA/UAM_Registration.aspx wherein the applicant is required to have an Aadhaar card along with a linked mobile number to get it certified. The process has been so simplified that the certificate is generated while making an application itself and the fields of the e-form for MSME registration are listed out below:

19 Easy Steps of registration of MSME through “Udyog Aadhaar”:

Aadhaar Number: Fill 12-digit Aadhaar number issued to the applicant in the appropriate field.
Name of Applicant: Fill the name of the applicant strictly as mentioned on the Aadhaar Card issued by UIDAI.
Social Category: Fill the Social Category (General, Scheduled Caste, Scheduled Tribe or Other Backward Castes (OBC)
Gender: Fill in the gender of the applicant
Physically Handicapped: Select the status from provided options
Name of Enterprise / Business: Fill the name of Business / Enterprise which will get printed on MSME Certificate
Type of Organization: Select the type of organization from the given options which will get printed on the MSME Certificate.
PAN: Fill 10 Digit PAN Number in case of Co-Operative, Private Limited, Public Limited, and Limited Liability Partnership It. Will be optional in the remaining type of Organization.
Location of Plant: Fill the address of the plant. In the case of multiple plant locations, the applicant can click on the add plant button.
Office Address: Fill in the office address, if the office address is different from the plant address.
Date of Commencement of Business: Fill the date of Commencement of Business, the same shall be mentioned in the MSME Certificate.
Previous Registration Details(if any): If Applicant's enterprise, for which the Udyog Aadhaar is being applied, is already issued a valid EM-I/II by the concerned GM (DIC) as per the MSMED Act 2006 or the SSI registration prevailing prior to the said Act, such number may be mentioned in the appropriate place.
Bank Details: Fill the applicant’s bank account number and bank IFSC Code.
Major Activity: The major activity i.e. either "Manufacturing" or "Service" may be chosen by the enterprise for Udyog Aadhaar.
National Industry Classification Code (NIC Code): Fill in the NIC Code of the business activity.
Person employed: Fill in the total number of persons employed who are directly been paid salary/ wages by the enterprise.
Investment in Plant & Machinery / Equipment: Fill in the total investment made in the plant & Machinery/Equipment.
DIC: The Applicant, based on the location of the Enterprise, has to fill in the location of DIC. This Column will be active and show the option only when there is more than one DIC in the district.
Submit: Click on the submit button and enter the OTP that will be shared on the registered/linked mobile number.

Any Changes in the Investment: If there are any changes in the investment in plant & Machinery or the equipment and the enterprises have already filed Udyog Aadhaar Memorandum (UAM) shall inform the District Industries Centre of the same in writing within three months of the change.

What are the benefits which an MSME derives post registration?

MSME enterprises can get finance facility from Banks without collateral requirements
Preference in procuring Government tenders,
Stamp duty and Octroi benefits,
Concession in electricity bills
Reservation policies to manufacturing/production sector enterprises
Time-bound resolution of disputes with Buyers through conciliation and arbitration
Reimbursement of ISO Certification Expenses

What is the process for computation of Investment limits in Plant & Machinery or Equipment?

Computation of Investment in Plant & Machinery: As per the Central Government vide notification S.O. 1722(E) dated 5th October 2006:

While calculating the investment in Plant & Machinery the original price is to be taken into count irrespective of whether the Plant & Machinery is new or old. The cost of below mentioned 11 items shall be excluded while computing investment in plant & Machinery:

Equipment such as tools, jigs, dyes, molds and spare parts for maintenance and the cost of consumables stores;
Installation of plant and machinery;
Research and development equipment and pollution controlled equipment;
Power generation set and extra transformer installed by the enterprise as per regulations of the State Electricity Board;
Bank charges and service charges paid to the National Small Industries Corporation or the State Small Industries Corporation;
Procurement or installation of cables, wiring, bus bars, electrical control panels (not mounted on individual machines), oil circuit breakers or miniature circuit breakers which are necessary to be used for providing electrical power to the plant and machinery or for safety measures;
Gas producer plants;
Transportation charges (excluding sales-tax or value-added tax and excise duty) for indigenous machinery from the place of their manufacture to the site of the enterprise;
Charges paid for technical know-how for erection of plant and machinery;

Such storage tanks which store raw material and finished products and are not linked with the manufacturing process; and
Firefighting equipment.

In the case of imported machinery calculations, the following items shall be included:

Import duty (excluding miscellaneous expenses such as transportation from the port to the site of the factory, demurrage paid at the port);
Shipping charges;
Customs clearance charges; and
Sales tax or value-added tax.

Further, investment in Land, Building, Vehicles, Furniture and fixtures, Office Equipment, etc shall not be considered in determining the threshold limit of plant and machinery or equipment as the case may be

Consequences of delayed payments to MSMEs’:

The most important benefit which is available to the enterprises registered under the Act is given in Chapter V of the Act which is mentioned below:

The buyer has to make payment on or before the date agreed on between him and the supplier in writing or, in case of no agreement before the appointed day (Appointed date means the day following immediately after the expiry of a period of 15 days from the date of acceptance or the date of deemed acceptance of the goods and services). Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed 45 days from the date of acceptance or the day of deemed acceptance.

If the buyer fails to make payment of the amount to the supplier, he shall be liable to pay interest at the rate as mentioned in the agreement entered or as per the law in force or be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or, on the date agreed on, at three times of the Bank Rate notified by Reserve Bank.

In case of dispute concerning any amount due, a reference shall be made to the Micro and Small Enterprises Facilitation Council, constituted by the respective State Government.

As per the provisions of the Act, every buyer is required to get his annual accounts prepared under any law in force and such buyer shall furnish the following additional information in his annual statement of account namely:

The principal amount and the interest due thereon (to be shown separately) remaining unpaid to any seller at the end of each accounting year.

The amount of interest paid by the buyer as per section 16, along with the amount of the payment made to the supplier beyond the appointed date during each accounting year.

The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed date during the year) but without adding the interest specified under this Act.

The amount of interest accrued and remaining unpaid at the end of each accounting year.

The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are paid to the small enterprise for disallowance as a deductible expenditure.

In short, if the payment has not been made to the Supplier registered under the MSMED Act, 2006:

The buyer has to disclose the total amount due to the supplier in his annual statement of accounts. If the buyer defaults in disclosing the said amount, then he shall be punishable with a fine which shall not be less than Rs. 10,000.

Further, the supplier can also opt for Micro and Small Enterprise Facilitation Councils to settle the disputed amount. Any reference of the dispute to the council shall be settled within 90 days from the date of referring.

As per the provisions of Section 23 of the MSMED Act, 2006 the amount of interest payable or paid by the buyer under the provisions of this Act shall not be allowed as a deduction for computation of income under Income Tax Act, 1961.

Filing Form MSME-1 with the Ministry of Corporate Affairs [MCA]

The Ministry of Corporate Affairs [MCA] has introduced a new e- Form ‘MSME I ‘vide Companies (Furnishing of information about payment to micro small enterprise suppliers) Order, 2019 Notification dated 22th Jan 2019.

All Companies who have outstanding dues to micro or small enterprises more than 45 days from the date of acceptance or the date of deemed acceptance of the goods or services shall report the same by filing e-form MSME I wherein they shall mention the amount of payment that is due to the MSME, the reason for such delay along with the particulars of suppliers details.

Form MSME I is a simple Form to be uploaded by companies Firstly Initially and then half-yearly. It is a small step by the Ministry of Corporate Affairs towards the protection of small and medium enterprises and improves their competitiveness which is one of the Objectives of the MSME Act, 2006.

Consequences of Non- Filing of e-form MSME -I: Non-filing of e-form will lead to punishment and penalty under the provision of Section 405 (4) of the Companies Act, 2013 which states:

If any company fails to comply with an order or knowingly furnishes any information or statistics which is incorrect or incomplete in any material respect, the company shall be punishable with fine which may extend to Rs. 25,000 (Rupees Twenty-five thousand) and every officer of the company who is in default, shall be punishable with imprisonment for a term which may extend to 6 (Six) months or with fine which shall not be less than Rs. 25,000 (Rupees Twenty-five thousand) but which may extend to Rs.3,00,000(Rupees Three lakh) -or with both.

What are the Major Highlights of MSMEs’?

Over the past five decades, Micro, Small and Medium Enterprises (MSME) has contributed enormously to the socio-economic development of the country. MSME has a got major share of jobs, production, and exports. They contribute nearly 8 %( percent) of the country’s GDP, 45 %(percent) of the manufacturing output and 40% (percent) of the exports. They provide the largest share of employment after agriculture. It’s the primary responsibility of the State Government to promote and develop MSMEs’.

As per the reports of the Ministry of Micro Small and Medium Enterprises, Government of India; the MSME sector is serving numerous benefits towards the inclusive growth of the Indian economy. Major contribution of MSMEs is as follows:

It provides opportunities at comparatively lower cost;
It helps in the industrialization of rural and backward areas;
Reduce Regional imbalances through the optimum utilization of their resources;
More equitable distribution of national income and wealth;
Major partner in the process of inclusive growth.

Disclaimer:

The entire contents of this document have been developed based on relevant information and are purely for private circulation. Though the authors have made

utmost efforts to provide authentic information however, the authors expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.

https://msme.gov.in/faq

What is the definition of MSME?

The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under:

Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below:
- A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh;
- A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore;
- A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.
  In case of the above enterprises, investment in plant and machinery is the original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide
  its notification No.S.O.1722(E) dated October 5, 2006 .
Enterprises engaged in providing or rendering of services and whose investment in equipment (original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006 are specified below.

A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh;
A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore;
A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.

How MSMEs are classified?

The government has given a new turnover based classification of MSMEs in February 2018. As per this new classification, the MSMEs are categorized in term of business turnover. This is in place of the previous classification based on investment made in plant and machineries if they are operating in the manufacturing sector and investment in equipment for service sector companies. As per the new classification, the same turnover based criteria have been applied for all type of MSMEs including those operating in the services sector.

Though the primary responsibility of promotion and development of MSMEs is of the State Governments, the center has passed an Act in 2006 to empower the sector and also has formed a Ministry (Ministry of MSMEs). It was the Micro, Small and Medium Enterprises Development (MSMED) Act which was notified in 2006 that defined the three tier of micro, small and medium enterprises and set investment limits. The new turnover criteria will better suit with the GST Network (GSTN) and other formats of segregating the MSMEs.

The new turnover based classification of MSMEs

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 will accordingly be amended to define units producing goods and rendering services in terms of annual turnover as follows:

A micro enterprise will be defined as a unit where the annual turnover does not exceed Rs 5 crores;
A small enterprise will be defined as a unit where the annual turnover is more than Rs 5 crore but does not exceed Rs 75 crore;
A medium enterprise will be defined as a unit where the annual turnover is more than Rs 75 crore rupees but does not exceed Rs 250 crore.

Additionally, the Central Government may, by notification, vary turnover limits, which shall not exceed thrice the limits specified in Section 7 of the MSMED Act.

Table: Classification of MSMEs

Classification of the MSME	New Classification (annual turnover)	Previous classification – Ceiling on Investment in Plant and Machinery (in Rs)
Micro	Not exceeding Rs 5 crores	Below 25 lakhs
Small	Between Rs 5 crores to Rs 75 crores	25 lakhs to 5 crores
Medium	Rs 75 to Rs 250 crores	5 crores to 10 crores

Under the previous classification a separate methodology was adopted for service sector. Now the classification was made similar to the goods MSMEs as the general turnover-based criteria was made applicable to service sector also.

In 2015, the government has introduced an amendment bill to change the limit in all categories and it was adopted in February 2018.

Though the primary responsibility of promotion and development of MSMEs is of the State Governments, the center has passed an Act in 2006 to empower the sector and also has formed a Ministry (Ministry of MSMEs).

Importance of MSME Sector in India

by DEVYASH PATEL

MSME- an abbreviation of Micro, Small & Medium enterprises- is the pillar of economic growth in many developed, and developing countries in the world. Often rightly termed as “the engine of growth” for India, MSME has played a prominent role in the development of the country in terms of creating employment opportunities-MSME has employed more than 50 million people, scaling manufacturing capabilities, curtailing regional disparities, balancing the distribution of wealth, and contributing to the GDP-MSME sector forms 8% of GDP. Though India is still facing infrastructural problems, lack of proper market linkages, and challenges in terms of flow of institutional credit, it has seen a tremendous growth in this sector.

The advantage of this sector is it requires less investment, thus creating employment on a large scale, and reducing the employment and underemployment problems. Moreover, this sector has survived almost all threats emerging out of still completion from both domestic and international market.

Importance of MSME ACT 2006:

With the introduction of the MSME Act in the year 2006, the service sector that was not yet included in this sector was included in the definition of the Micro, Small & Medium sized Enterprises making a historic change to this Act, thus leveraging the scope of the sector even now government simplified the MSME Registration Online with the paperless work.

Share of MSME in Manufacturing, Exports and Employment sectors in India:

Sector Percentage(%) share

1 Manufacturing 45

2 Exports 40

3 Employment 69

The contribution of MSME to other sectors has been immensely instrumental. It is the biggest employer after agriculture sector, despite the fact that agriculture sector’s contribution to GDP is less than MSME. While it contributes about 45% to manufacturing sector, and perhaps 40% to Exports, it forms the highest share of Employment sector in India, contributing around 69% to it.

Let us take a look at some of the key importance of this sector in the development of India both in terms of economic, and social development:

1. Creates large scale employment:

Since the enterprises falling in this sector require low capital to start the business, it creates huge employment opportunities for many unemployed youth. India produces about 1.2 million graduates per year, of the total number about 0.8 million are engineers. And, there is no economy in the world that can provide jobs to so many fresh graduates in one year. MSME is the boon for many of these fresh manpower.

2. Economic stability in terms of Growth and leverage Exports:

MSME is a significant growth driver in India, with it contributing to the tune of 8% to GDP. As mentioned in the table, Exports sector in India constitutes about 40% of contribution from MSME alone. Looking at the kind of contribution of MSME to manufacturing, exports and employment, other sectors are also benefitting from MSME. MNCs today are buying semi-finished, and auxiliary products from small enterprises, for example, buying of clutches, and brakes by automobile companies. It helps create a linkage between MSME and big companies.even after the implementation of the GST 40% msme sector also applied GST Registration which increase the government revenue by 11%.

3. Encourages Inclusive Growth:

About 50% of wealth in India in owned by just 100 people which is due to unequal distribution of wealth. Inclusive growth is on top of the agenda of Ministry for Medium, and Small, and Medium sized enterprises for several years. While poverty and deprivation are a deterrent to the development of India, including marginalized sections of society is a key challenge lying before the Ministry of MSME.

4. Cheap Labor and minimum overhead:

In large scale organizations, one of the key challenges is to retain the human resource through an effective human resource management professional manager. But in case of an MSME, the requirement of labor is less, and it does not need a highly skilled laborer. Hence, the indirect expenses incurred by the owner is also low.

5. Simple Management Structure for Enterprises:

MSMEs do not require a huge capital to start. With limited resources available within the control of the owner, decision-making becomes easy and efficient. As in case of a large corporation wherein a specialist is required for every departmental functioning because of complex organizational structure, a small enterprise does not need to hire an external specialist for its management. The owner himself/herself can manage it. Therefore, it can be run single-handedly.

6. Plays an important role in making “Make in India” possible:

Post the inception of ‘Make in India’, a signature initiative by the prime minister of India, the process of incorporating a new business has been made easy. Since the MSME is the backbone in making this dream a possibility, the government has directed the financial institution to lend more credit to enterprises in MSME sector.

Final Conclusion on MSME Sector:

Micro, Small and Medium-sized Enterprises (MSME) are one among the most important sectors, forming the backbone of the Indian economy. This sector has been instrumental in the growth of the nation, leveraging exports, creating huge employment opportunities for the unskilled, fresh graduates, and the underemployed, also extending the opportunities to banks for giving more credit to enterprises in this sector. The government should take utmost care of this sector in terms of providing more and more MSME Registration benefits through better regulations, Government simply , and enabling financial institutions to lend more credit at less interest rate for sustainability of this sector.

Small Scale Industries

Small scale industries (SSI) are those industries in which manufacturing, providing services, productions are done on a small scale or micro scale. For example, these are the ideas of Small scale industries: Napkins, tissues, chocolates, toothpick, water bottles, small toys, papers, pens. Small scale industries play an important role in social and economic development of India. These industries do a one-time investment in machinery, plants, and industries which could be on an ownership basis, hire purchase or lease basis. But it does not exceed Rs. 1 Crore. Let us discuss in detail about it.

MSME - Ministry of Micro Small and Medium Enterprises

Ministry of Micro, Small and Medium Enterprises

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