What are the benefits of MSME registration for your business?

The Micro, Small and Medium Enterprises Development Act, 2006 was enacted which mainly aimed at the promotion, enhancement of competitiveness and development of Micro, Small, and Medium Enterprises. Today, the MSME has emerged into the competitive sector. The Act provides the framework to conceptualize the enterprise that focuses on the manufacturing and other service sector. The registration under the MSMED Act is easy and simplified. Once being registered, the entity can be benefited under the various schemes in place, which is being discussed in this article.

Need for Registration of MSME

Micro, Small, and Medium Enterprises or businesses are considered as the backbone of economic growth which promotes the equitable development. They are typically intensive towards labour which provides the great employment opportunities at low capital. The Micro, Small, and Medium Enterprises share the major portion of the industrial production as well as the exports in India.

To promote the Development of the Micro, Small, and Medium Enterprises, the MSMED Act of India facilitated many incentives, Schemes and subsidies. In order to obtain all those benefits under the MSMED Act, the MSME online registration is must for the businesses entities.

Classification of Micro, Small, and Medium Enterprises

Who can apply for registration?

Any entity that falls under any of the above classification can make an online application of registration subject to activities. The business organisation such as Company, LLP, Partnership Firm, Association of Persons (AoP), etc. can apply for MSME online registration. On review of the registration process on the Udyam Registration portal , it is been observed that the list of major activities contains a specific head for trading activities, land transport as well as an option for selecting 'Others'. Thus, it may be concluded that trading, transportation, and such other activities are included under activities of a service enterprise and shall be required to be registered as an Micro, Small, and Medium Enterprises on the Udyam Registration portal. Click here to know in detail about the new MSME Registration Process on Udyam Portal.

Benefits of MSME Registration

Online MSME registration enables the enterprises to claim various benefits offered by the Governments under theMicro, Small, and Medium Enterprises Development Act. Here are benefits to claim through online SSI registration.

1. Subsidized Loan Support

The finance can be availed easily based on this registration with lower rate of interest. To aid these financial needs of the Micro, Small, and Medium Enterprises sector in a better way, the Government has profoundly participated to ease the fund raising through registered institutions such as SIDBI (Small Industries Development Bank of India) and State Financial Corporations. Government also extended financial assistance to Micro, Small, and Medium Enterprises in form of Pradhan Mantri MUDRA Yojana (launched in April, 2015). Micro Units Development & Refinance Agency Limited (MUDRA) is set up for refinancing activities relating to micro units. Read details at MUDRA Loan - Financial Assistance to Micro, Small, and Medium Enterprises.

2. Rebate on Trademark Application

The Businesses which have obtained the MSME Registration certificate can get 50% rebate of the Government Fees during the registration of trademark. The Government fee prescribed for the partnership firms, LLPs and Companies etc. is Rs 9000/- for online Trademark Registration Application. In given case, said entity can get itself registered under the Act and claim rebate based on the Micro, Small, and Medium Enterprises certificate.

3. Repayment Period

With the implementation of the Goods and Services Tax laws the existence of the micro, small and medium enterprises is formalized through their registration. The said formalisation has adversely affected the cash flow that led to difficulties in repayment of the obligations. Reserve Bank of India, the Apex bank has liberalised the criteria of the asset classification for Micro, Small, and Medium Enterprises enterprises registered under GST as on 31st Jan 2018. If the amount payable to banks or other financial institutions are overdue for a period not exceeding 180 days, it is classified as Standard Assets by the banks. Being said, to get benefited by above condition, the said enterprise shall also be accounted as Standard Assets as on 31st day of August, 2017.

4. Credit Guarantee Scheme

The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE) which is also called as a Credit Guarantee Scheme provides the credit and income input from various sources to support the small scale industries which are under struggle. This scheme comes with the modifications that are more supportive to the small enterprises.

5. Other benefits and Schemes

• The registered entity can get protection against the delayed payments from the buyers and the buyers are also liable to make payment on time

• The Micro, Small, and Medium Enterprises may manufacture any product. However, there is a list of 20 items, which are reserved exclusively for this sector of enterprises

• A separate Council 'Micro and Small Enterprises Facilitation Council' is established for timely resolution of disputes with the consumers

• Market Development Assistance for Micro, Small, and Medium Enterprises

• Upgradation support in the technology and Quality support for the Micro, Small, and Medium Enterprises

• Online sanction of loans is also planned through Trade Electronic Receivable Discounting System (TReDS) platform

• Subsidies from government for small business for cold chain

• Tariff subsidies on Power, Excise exemption and regulations, Subsidy on Capital investment, and several other advantages and benefits.

Conclusion

Putting altogether, it is beneficial to register your business under the MSME subject to the eligibility to get the potential benefits from the MSMED Act. Enterprises can get good support to boost your Micro, Small and Medium scale enterprises by registering in a right way said Act and scheme. The registration is not mandatory yet it is mandatory to avail the benefits of running a business and access other benefits.

Also Read:
The new MSME Registration Process on Udyam Portal