Micro-Small & Medium Enterprises (MSMEs) contribute largely in the socio-economic development of our country. MSMEs come under the Ministry of Micro, Small & Medium Enterprises and are required to be registered to avail benefits under the Micro, Small and Medium Enterprises Development (MSMED) Act. MSME registration is highly important, as it enables these enterprises in availing benefits from various government-initiated schemes. MSMEs are classified in two categories, such as manufacturing and service enterprises. The terminology like MSME, SSI or Udyog Aadhar is one and same thing. In other words, there is only one registration which a micro, small and medium enterprises has to obtain and that is UDYOG AADHAR. MSME is the backbone of the modern Indian economy and is considered as the growth engine for equitable and sustainable economic development of the country. Under MSME all kinds of enterprises can obtain registration, like manufacturers the service providers are also eligible for MSME benefits. Hence they are also required to get UDYOG AADHAR Registration.
An enterprise which is engaged in manufacturing can be classified as a Micro Enterprises in case the total investment in its plant and machinery is less than Rs. 25 Lakhs. However in case the enterprise deals in service sector then the said investment must be less than 10 Lakh, during the financial year
An enterprise which is engaged in manufacturing can be classified as a Small Enterprises in case the total investment in its plant and machinery is more than Rs. 25 Lakhs but does not exceed Rs. 5 Crores. However in case the enterprise deals in service sector then the said investment must be more than 10 Lakh but must not exceed Rs. 2 Crores.
An enterprise which is engaged in manufacturing can be classified as a Medium Enterprises in case the total investment in its plant and machinery is more than Rs. 5 Crores but does not exceed Rs. 10 Crores. However in case the enterprise deals in service sector then the said investment must be more than 2 Crores but must not exceed Rs. 5 Crores.
An MSME is entitled to many benefits such as a reduction in the fee for the filing of trademark, copyright, patent, and design applications. Further, all government department has to necessarily source their supplies from a MSME.
For faster resolution of disputes where MSME is struggling to recover money from other persons, there is a provision of MSME reconciliation centre which may provide for a speedy resolution of dispute and faster recovery.
While filing the trademark application in any class or multiple class, the MSME enjoys 50% less fee of filing in comparison to other corporates or firm. Similarly while filing patent 50% discount is granted to the MSME.
MSME registered under the MSMED Act, 2006 is eligible for many tax incentives and exemption both under the Direct Taxes and Indirect Taxes including GST such as capital gain subsidy schemes under income tax act.
TA registered MSME can avail concessional rate of electricity for their unit by making a written application along with the certificate issued after registration as MSME ( Udyog aadhar) to the electricity department.
Central or state government departments have been mandated to extend priority treatment to MSME while procuring goods or services for the consumption of goods or services for public purposes.
While availing bank overdraft facility from a bank, MSME has a reason to smile as Banks need to offer 1% less interest rate on the overdraft extended to the MSME which is registered with Udyog Aadhar.
The MSME is required to be paid as per the agreement between parties or within 45 days if there is no understanding between them. Failure entitles the MSME for an interest which is three times the bank rate.
Every MSME whether in manufacturing sector or service sector is entitled to collateral or mortgage free loan from Bank for an amount up to Rs. 1 Crore through SIDBI under Credit Guarantee Scheme.