top of page

All about MSME | Benefits of MSME Registration

MSME or Micro Small Medium Enterprises are businesses classified by the amount of investment made in plant and machinery or equipment under the Micro, small Medium Enterprises Act, 2006. The Government of India provides various benefits to MSMEs. It is to promote small scale industries

Points covered in this article are

  1. What is MSME?

  2. Role of MSME in Indian Economy

  3. Registration process for MSME

  4. Documents required for registration

  5. Cost of registration

  6. Benefits of MSME

  7. Growth of new businesses

1. What is MSME?

In a developing country like India, the highest contribution to growth of a nation is made by the Industrial sector. To support the industrialist’s various laws and provisions were introduced. The classification of MSME is made on the basis of investment in plant and machinery or plant as below

This is the currently applicable classification. But under the 20 Crores stimulus package introduced by Government of India due to covid pandemic, the definition of MSME has been revised. The new definition given of MSME applicable w.e.f 1st July 2020 is

● Any firm with investment up to Rs. 1 crore and turnover up to Rs. 5 crore will be classified as Micro

● Any firm with investment up to Rs. 10 crore and turnover up to Rs. 50 crore will be classified as small

● Any firm with investment up to Rs 50 crore and turnover up to Rs 250 crore will be classified as medium

These changes were made under the Aatmanirbhar Bharat Abhiyan by the Central government. The criteria of classification was changed from 'investment in plant and machinery' to 'annual turnover'

2. Role of MSME in Indian Economy

MSME constitutes a large number of industries in Indian economy. Union Minister of MSME, Nithin Gadkari said that a change in criteria of classification of MSME was made in view to increase its contribution to Indian economy from 29% to 50%. Also, the share of MSME in total Export from India is 48% and has employment generation up to 11 crores. Being the nation's biggest contributors to GDP, the government is making more and more efforts to benefit MSMEs

3. Registration process for MSME

● Registration of MSME should be compulsorily made under The Micro, Small and Medium Enterprises Development Act, 2006

● Registration can be through online or offline mode

● For registration, a form is to be filled by the owner of the enterprise

● Online registration can be done through government's official website for MSME Registration

● Details such as Aadhar number, bank details, investment details and some personal details are to be filled and submitted

4. Documents required for registration

The process of registration for MSME is very easy and simple. You just need a aadhar card which should be linked with mobile number and just by filling personal details, address proof and bank details, registration can be done

5. Cost of registration

Cost of registration for MSME is zero. Any person who is bound to make registration under MSMED Act,2006 need not pay any registration fees

6. Benefits of MSME

● Enterprises registered under MSME can avail collateral loan from the government. In this loan scheme, security on the loan amount is given by government itself

● Registration is easy and simple unlike registration of other business forms

● Cost of registration is zero

● Upto 50% discount shall be provided on patent registration

● In order to promote MSMEs bank charges low rate of interest or no interest

● For enterprise’s who fail to repay the loan taken in time, revival committee is set up and they'll help in making a revival plan

● In any case if a third party has taken credit from MSME, and does not return the credit amount within 45 days then interest amounting to 3 times the RBI notified interest rate is to be paid by the payer to MSME.

● Concession from electricity board

● Relief upto 75% or 75,000 lowers will be given while availing ISO certificate

● Skill India training will be given to MSMEs free of cost

● Portal for new enterprise’s looking for employees free of cost

● Zero Defect Zero Effect : This scheme is specially introduced to promote exports among MSMEs. According to Zero Defect Zero Effect, the goods or services exported should be upto the mark of set standards. So if an entreprise exports a product they'll be able to avail tax rebates and concession.

7. Growth of new businesses

MSMEs help many people to start their business by providing financial aid such as loans and concessions. This leads to new ideas and innovations in business.

Government has taken all the necessary steps to promote MSMEs. From manufacturing to service, MSMEs has contributed to a big part of India's GDP. As exports rises growth, government gives special provisions and benefits to MSME exporters

Frequently Asked Questions

1. Is Aadhar mandatory for MSME Registration?

An Aadhar card is mandatory for registering. It applies for all forms of business (Proprietorship, Partnership, Company)

2. Can trading companies’ avail MSME benefits?

As trading does not involve actual production of goods or services it is not considered in MSME. Trader is a mere middleman while manufacturing and service sector introduces various products

3. Can an existing business apply for MSME registration?

If the existing entreprise meets the threshold limit for registration then it can apply

4. Is there a validity for an MSME certificate?

MSME has lifelong validity. No renewal is required after registering once for the first time

For more details on MSME watch our YouTube Video below

38 views0 comments

Recent Posts

See All


bottom of page