MSME (Micro Small & Medium Enterprise)

[RSY Associates]

MSME Registration and its benefits

1. What is MSME?

MSME stands for micro, small and medium enterprises (MSME). This sector, comprising of manufacturing, infrastructure, service industry, food processing, packaging, chemicals, and IT, has emerged as the most vibrant and dynamic engine of growth of Indian economy over the past few decades.

(Activities not covered under MSME. Click here)

2. Registration under MSME.

Since September, 2015, in view of promoting ease of business, an online filing system under Udyog Aadhar Memorandum (UAM) based on self-declared information has been put in place. Registration under UAM is free.

Link: https://udyogaadhaar.gov.in/UA/UAM_Registration.aspx

Revised MSME Classification (w.e.f. 14/5/2020)
Manufacturing & Services Industry
CLASSIFICATION	MICRO	SMALL	MEDIUM
Investment in Plant & Machinery	< ₹ 1 Crore	< ₹ 10 Crore	< ₹ 20 Crore
Turnover	< ₹ 5 Crore	< ₹ 50 Crore	< ₹ 100 Crore

*Both conditions are compulsory

Note: While computing the total investment, the original investment (purchase value of items) is to be taken into account excluding the cost of pollution control, research and development, industrial safety devices, and such other items as may be specified, by notification of RBI.

For E.g.: If an enterprise started with a set of plant and machinery purchased in 2008 worth ₹ 70.00 lakh has procured additional plant and machinery in the year 2013 worth ₹ 65.00 lakh, then the total investment in Plant & Machinery may be treated as ₹ 135.00 lakh.

3. Documents required for MSME registration.
   1. Aadhaar Card
   2. PAN Card
   3. Registration certificate of Business, if any;
   4. Address of Manufacturing plant or Registered office;
   5. Bank Account details
   6. Details of Product/Services

Note 1: The Proprietor in the case of a proprietary firm, managing partner in the case of a partnership firm and a Karta in the case of a Hindu Undivided Family (HUF), shall provide his Aadhaar Number in the memorandum;

If your Mobile Number is not linked with Aadhaar then select one of the following options:

1. List of Aadhaar Enrolment Centres to update / link Mobile no. Click here
2. Visit District Industries Centre (DIC) Office for Assisted Filling.
3. Submit Application Details using Government Approved photo ID Proof (Except Aadhaar Card). Ministry will validate it and then Udyog Aadhaar will be issued in due course.

Note 2: One applicant can have more than one enterprises doing business and each one can be registered for a separate Udyog Aadhaar and with the same Aadhaar Number as Enterprise 1 and Enterprise 2 etc.

Note 3: After registration MSMEs are to furnish information relating to their enterprises online to the Central Government in the data bank maintained by it at www.msmedatabank.in.

4. Benefits for a registered MSME.

1. a. Under COVID stimulus package:
   1. i. ₹ 50,000 Crore Equity Infusion for MSMEs through fund of funds;
   2. ii. ₹ 3 Lakhs Crore Collateral free Automatic loan. (Loan duration 4 year with moratorium for 12 months i.e. no Principal repayment for 12 months;
   3. iii. ₹ 20,000 Crore to be infused as subordinate debt for stressed MSME;
   4. iv. Etcetera.
2. b. Prevailing benefits:
   1. i. Subsidized loans from banks with low interest rates
   2. ii. Tax benefits specifically given to these enterprises under Income Tax and Goods and Service Tax (GST) in the form of rebates and concessions.
   3. iii. The MSME holders also get rebate and concessions on registration of Trademark and Patents. (upto 50%)
   4. iv. Eligible for Industrial Promotion subsidy;
   5. v. Right to manufacture the products reserved for these enterprises
   6. vi. Upto 1% exemption on the interest rate on overdraft;
   7. vii. Protection against delayed payments – Section 15 of MSME Act, 2006 mandates payment of supply maximum within 45 days;
   8. viii. Reimbursement of ISO Certification charges: Under this scheme, 75% of the certification expenses up to maximum amount of ₹75,000 to acquire ISO certification are reimbursed for each unit.
   9. ix.There are many tenders which are open only for MSME industries;
   10. x. Import of Capital Goods on zero duty subject to meeting export obligations;
   11. xi. Concession in Electricity Bills – Under this scheme, enterprises having MSME Registration can avail a concession in electricity bills by making an application to Electricity board along with MSME Registration Certificate.

Note: The above benefits are available on making application to the concerned ministry/authorities.

Note 2: Some benefits are available only in the initial year of enterprise.

5. Estimated numbers of MSMEs in the country.

As per the National Sample Survey (NSS) 73^rd round, conducted by National Sample Survey Office, Ministry of Statistics & Programme Implementation during the period 2015-16, there were 633.88 lakh unincorporated non-agriculture MSMEs in the country engaged in different economic activities

- 196.65 lakh in Manufacturing,

- 0.03 lakh in Non-captive Electricity Generation and Transmission

- 230.35 lakh in Trade and

- 206.85 lakh in Other Services

excluding those MSMEs registered under (a) Sections 2m (i) and 2m (ii) of the Factories Act, 1948, (b) Companies Act, 1956 and (c)construction activities falling under Section F of National Industrial Classification (NIC) 2008.

(Source: MSME Annual report 2018-19)

6. Disclaimer

• The above information is published in public interest and does not qualify as opinion or promotion.
• The above information is based on facts and figures available in public domain. The undersigned shall not be held liable for any incorrect fact based on public domain search.

Compilation by:

CA. Saurabh Verma

mailto:[email protected]?subject=MSME Enquiry

Discussions to this article

[SUDHIRKUMAR SHAH]

Import of Capital Goods on zero duty subject to meeting export obligations;

is this subject to EPCG licence or without EPCG licence?

[RSY Associates]

The export obligation for zero import duty is with respect to EPGC scheme only. The complete text can be found at:

Link: "https://msme.gov.in/sites/default/files/MSME_Schemes_English_0.pdf"

[Bayyareddy DK]

Dear Sir,

Purchase of land and construction and sale of apartments is a trading activity or service activity with reference to MSME.

[KASTURI SETHI]

Dear Sir,

You have quenched my thirst for knowledge on the issue. Your article has answered my queries which people used to ask me but I could not response. Pl. continue contributing to the visitors of TMI. Your article is very informative and timely. TMI can service as a springboard in your profession. There is a large number of silent visitors who never like to react (respond). I have saved your article as a ready reckoner. Thanks a lot.

K.L.SETHI

[RSY Associates]

Dear Bay.yareddy DK Ji,

The registration in MSME is governed by National Industrial Classification (for all economic activities).

Link to download such file: https://udyogaadhaar.gov.in/UA/Document/nic_2008_17apr09.pdf

As observed, the construction is mentioned under the head Manufacturing, Section F - Division 41. However, whether sale of completed flats is covered under such heading is subject to further research. Since i have never came across such case. I cannot comment upon it.

[RSY Associates]

Dear Kasturi Sethi Ji,

Receiving appreciation from such senior and experienced expert, is a matter of proud to me. I thank you for your kind words, and assure you that i am here to learn and share among all the participants whether silent or responsive.

Thank you once again!

[mehta pradip]

Dear Sir ,

Is there any notification for change in criteria for MSME !

Or it is just declaration by Minister !

Last time a bill to similar effect was cleared by Loksabha & not by Rajyasabha .

[YAGAY andSUN]

Thanks for clubbing of relevant information pertaining to MSME in one Article. Keep it up.

[YAGAY andSUN]

Cabinet Committee on Economic Affairs (CCEA)

Cabinet approves Upward revision of MSME definition and modalities/ road map for implementing remaining two Packages for MSMEs (a)₹ 20000 crore package for Distressed MSMEs and (b) ₹ 50,000 crore equity infusion through Fund of Funds

Fully paved way for Energising the MSME Sector through entire gamut of 'Atmanirbhar Bharat Package'

Posted On: 01 JUN 2020 5:43PM by PIB Delhi

In line with Government of India's top focus on energising MSMEs in the country, a special meeting of Cabinet Committee on Economic Affairs (CCEA) was convened under the Chairmanship of Prime Minister Shri Narendra Modi, here today, which approved the upward revision of MSME definition and modalities/ road map for laying down effective implementation mechanism for the remaining two announcements under the Atmanirbhar Bharat Package. These include:

• In the package announcement, the definition of micro manufacturing and services unit was increased to ₹ 1 crore of investment and ₹ 5 crore of turnover. The limit of small unit was increased to ₹ 10 crore of investment and ₹ 50 crore of turnover. Similarly, the limit of a medium unit was increased to ₹ 20 crore of investment and ₹ 100 crore of turnover. It may be noted that this revision was done after 14 years since the MSME Development Act came into existence in 2006. After the package announcement on 13th May, 2020, there were several representations that the announced revision is still not in tune with market and pricing conditions and it should be further revised upwards. Keeping in mind these representations, it was decided to further increase the limit for medium manufacturing and service units. Now it will be ₹ 50 crore of investment and ₹ 250 crore of turnover. It has also been decided that the turnover with respect to exports will not be counted in the limits of turnover for any category of MSME units whether micro, small or medium. This is yet another step towards ease of doing business. This will help in attracting investments and creating more jobs in the MSME sector. The following table provides the details of revised limits:

Category	Old Capital	Old Turnover	New Capital	New Turnover
Micro	25 Lakh	10 Lakh	1 Crore	5 Crore
Small	5 Crore	2 Crore	10 Crore	50 Crore
Medium	10 crore	5 Crore	50 Crore	250 Crore

• Approval for provisioning of ₹ 20,000 crore as subordinate debt to provide equity support to the stressed MSMEs. This will benefit 2 lakh stressed MSMEs.

• Approval for equity infusion of ₹ 50,000 crore for MSMEs through Fund of Funds (FoF). This will establish a framework to help MSMEs in capacity augmentation. This will also provide an opportunity to get listed in stock exchanges.

With today's approval, implementation Modalities and Road Map for entire components of the Atmnirbhar Bharat Abhiyan package are in place. This will help in attracting investments and creating more jobs in the MSME sector.

In the aftermath of COVID-19 pandemic, Prime Minister Shri Modi was quick to recognise the role of MSMEs in building the Nation. As such, MSMEs formed a very prominent part of the announcements made under the Atmanirbhar Bharat Abhiyaan. Under this package, the MSME sector has not only been given substantial allocation but has also been accorded priority in implementation of the measures to revive the economy. To provide immediate relief to MSME sector, various announcements have been made under the Package. The most important ones also included:

• Rupees Three lakh crore collateral-free automatic loans for MSMEs to meet operational liabilities, buy raw material and restart businesses.

• Revision of MSME definition to render maximum benefits to the sector;

• Disallowing global tenders in procurements upto₹ 200 crores- to create more opportunities for domestic players,

• And clearing of MSME dues by the Government and Public Sector Units within 45 days.

Government of India has been taking all necessary steps to ensure that the benefit of these landmark decisions reaches to the MSMEs at the earliest. In this regard, following necessary policy decisions have been already taken and the implementation strategy has been put in place.

• The scheme for Rs. Three lakh crore col lateral-free automatic loans was earlier approved by CCEA and has been formally launched.

• Modalities have been worked out for Upward revision of MSME Definition making it more inclusive broad-based providing greater avenues to MSMEs to harness their potentials.

• Similarly, amendments in General Financial Rules mandating no global tenders for procurement upto 200 crore have been carried out. The new rules have already been issued and effected. This will open up new business avenues for Indian MSMEs.

• To ensure that MSME payments are released within the timeframe of 45 days, directions have been issued at the level of Cabinet Secretary, Expenditure Secretary and Secretary, MSME.

• To further ease the burden on MSMEs, RBI has extended moratorium on repayment of loans for another three months.

To manage all this, a robust ICT based system called CHAMPIONS has also been launched by the Ministry of MSME. The portal is not only helping and handholding MSMEs in the present situation, but is also providing guidance to grab the new business opportunities and in the long run, become national and international Champions.

MSME Ministry is committed to support the MSMEs, and the people who depend on them. All efforts are being made to encourage MSMEs to take benefit of the initiatives under the Atmanirbhar Bharat package and our other schemes.

Background:

Micro, small and Medium Enterprises (MSMEs) popularly called as MSMEs are the backbone of Indian economy. Silently operating in different areas across the country, more than 6 crore MSMEs have a crucial role to play in building a stronger and self-reliant India. These small economic engines have a huge impact on the country's GDP-making a contribution of 29 percent. They contribute to almost half of exports from the country. Additionally, more than 11 crore people are employed in the MSME sector.

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VRRK/SH

[giri gattupalli]

respected sir,

recently nursing homes and clincs are included in msmes. now can i regester under udyam and get benefit of msmes.

lplease discuss

giri

[Prakalp Mehta]

Could you give more information on the kind of concessions can a MSME can avail in electricity bills in Maharashtra?

Thanks