MSME Registration
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MSME stands for Micro, Small and Medium Enterprises. In a developing country like India, MSME industries are the backbone of the economy.
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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.
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What are Micro, Small and Medium Enterprise?
The existing MSME classification was based on the criteria of investment in plant and machinery or equipment.
So, to enjoy the MSME benefits, the MSMEs have to limit their investment to a lower limit, as mentioned below:
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Existing MSME Classification:
These lower limits are killing the urge to grow as they are unable to scale their businesses further. Also, there has been a long-pending demand for the revision of MSME classification so that they can further expand their operations while continuing to avail the MSME benefits. Now, under the Aatmanirbhar Bharat Abhiyan (ABA), the government revised the MSME classification* by inserting composite criteria of both investment and annual turnover. Also, the distinction between the manufacturing and the services sectors under the MSME definition has been removed. This removal will create parity between the sectors. The following is the revised MSME classification*, where the investment and annual turnover, both are to be considered for deciding an MSME.
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Revised MSME Classification:
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Composite Criteria: Investment & Annual Turnover
* Further upward revision made by the government.
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.
It also allowed credit for minimum alternate tax (MAT) to be carried forward for up to 15 years instead of 10 years.
Once registered the cost getting a patent done, or the cost of setting up the industry reduces as many rebates and concessions are available.
MSME registration helps to acquire government tenders easily as Udyam Registration Portal is integrated with Government e-Marketplace and various other State Government portals which give easy access to their marketplace and e-tenders.
There is a One Time Settlement Fee for non-paid amounts of MSME.
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