Small and Medium-sized enterprises (SMEs) are important for a country’s GDP, especially in a country like India. In India, these Small & Medium-size enterprises contribute to around 30% of the country’s overall GDP; along with creating & providing employment opportunities to a large chunk of population. That’s the reason, SMEs are the backbone of India’s Economy. In order to support and promote these businesses, the Government of India has come up with the Micro, Small and Medium Enterprises Development (MSMED) Act, which offers various benefits and incentives to SMEs that register under this Act. Some of the major benefits are Easy Access to credits, financial assistance through grants, loans on guarantee, preference to priority sector, subsidies and so on.
What are the benefits of MSME Registration in India?
MSME Registrationprovides a number of benefits to MSMEs which support them in their growth and back them in staying ahead in their relevant industry/sector. The MSME Registration benefits are quick & easy access to credit, reduced rates on interest, subsidy on patent registration, industrial promotion subsidy, obtaining timely payments from buyers (distributors, suppliers or final consumers), and also free ISO Certification.
With this section, you will learn about the benefits of MSME Registration in a detailed manner along with how they can help MSMEs improve their operations and financial stability.
Salient features of Udyam Registration
- The process for Udyam Registration is fully Paperless.
- And digitalized. The applicant does not need to upload any documents.
- The registration process is free. No Fees are to be paid to anyone.
- An e-certificate, namely, the “Udyam Registration Certificate,” shall be issued on completion of the registration process. This UR certificate will have a dynamic QR Code from which the details about the enterprise can be accessed.
- Whoever intentionally misrepresents in the Udyam Registration or updating process shall be liable to a penalty as prescribed under section 27 of the MSME Act.
- The Udayam online system is fully integrated with Income Tax and Goods and Service Tax Identification Number (GSTIN) systems; details on investment and turnover of enterprises are taken automatically from Government databases.
- Exports are not taken as part of the turnover calculation.
Key Advantages of MSME Registration in India include
1. Collateral Free Loans
Obtaining loans is often challenging for Small & Medium-size businesses. However, SMEs that get registered under MSME, banks and other financial institutions easily grant loans to such businesses without asking for any asset as security. This has become possible as the government provides credit guarantee schemes to the banks, due to which giving loans to registered SMEs has become less risky for them. This initiative helps MSMEs to access much-needed funds to grow and expand their business operations.
2. Overdraft Interest Subvention
MSMEs can avail the benefit of interest subvention or low interest rates on their overdraft facilities, up to a certain limit. The government provides interest subvention, which means it provides a facility of reduced interest rate to MSMEs who sincerely & promptly repay their loans. The subsidy on interest makes it easier for MSMEs to manage their cash flow and reduces their financial burden, especially during challenging or tough times.
3. Subsidy on Patent Registration
MSMEs can reap almost 50% subsidy on the total cost of Patent registration, which makes it highly affordable for them to protect their inventions and innovations.
Patent registration is crucial for MSMEs that invest heavily in research and development, as it helps them protect their intellectual property rights and prevent competitors from copying their ideas.
4. Industrial Promotion Subsidy
MSMEs can take benefits of the industrial promotion subsidies given for the purchase of plant and machinery, which is helpful in upgrading their technology, machinery and thus overall infrastructure. The subsidy provides financial assistance to MSMEs in order to help them improve their production processes, increase efficiency, and become more competitive.
5. Timely Payments by Buyers
Micro, Small & Medium-size enterprises mainly face financial issues due to delay in payments from their suppliers, or customers. Due to which, their cash flow is affected which leads to financial stability.
In order to address this issue, the government has introduced the Samadhan portal, which gives a legitimate platform to these businesses to file complaints against the buyers/customers who make delayed payments. This initiative ensures that MSMEs can receive payments on-time for their products/services, which further helps in improving their financial stability.
6. Free ISO Certification
ISO certification is important for Small & Medium-size businesses as it helps build credibility and trust among their potential customers, suppliers or other business associates. However, obtaining ISO certification can be expensive, especially for smaller businesses. After MSME registration, businesses get their ISO certification for free, as this registration also offers financial assistance in obtaining the necessary certification. This benefit helps MSMEs uplift their quality standards to keep pace with the latest industry trend and stay competitive.
Requirement for Registration
- Only an Aadhar number is enough for Registration
- Having PAN & GST numbers is mandatory
FAQs
Is MSME registration mandatory in India?
No. Registering under MSME is not mandatory but if a business wants to enjoy unmatched benefits of various government schemes and initiatives tailored for small and medium-sized enterprises, as well as the favorable provisions of the MSMED Act, it needs to be registered as MSME.
What is the importance of the Samadhan portal for MSMEs?
The Samadhan portal identifies the issue of delayed payments by enabling MSMEs to raise complaints against those buyers or customers who delay payments, so as to ensure timely payments for the businesses
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