Benefits of MSME registration for small businesses

The Ministry of Micro, Small and Medium Enterprises (MSME) is an abbreviation for Ministry of Micro, Small and Medium Enterprises. It is the economic backbone of many developed countries, such as India. It is also known in India as “DE Development Driver.”

The Ministry of MSME was established on 9 May 2007 by the Act on the Allocation of Business Rules of 1961. On 1 July 2020, the GOI introduced the Udyam Registration Platform, the new MSME registration portal. Formerly called Udyog Aadhar Registration portal. You can use our Udyam registration portal to register your manufacturing company or service sector in India.

MSME Enterprise Accuracy:

• MICRO UNITS are companies with investments in Rs. 1 million and turnover lower than Rs. 10 crowns.
• Small units are companies with investments in Rs. 10 million and turnover lower than Rs. 50 crowns.
• MEDIUM UNITS are companies with investments in Rs. 50 million and turnover lower than Rs. 250 million crowns.

MSME benefits:

Unsecured Loans: The government has implemented a number of policies for MSME / SSI that allow them to obtain credit without raising guarantees. The initiative to provide unsecured loans was carried out by the Government of India, SIDBI (Indian Small Business Development Bank) and the Ministry of Micro, Small and Medium Enterprises, called The Credit Guarantee Trust Future.

Electricity concessions: Companies registered under the MSME Act receive a discount on energy bills, which is one of the most basic benefits of MSME registration.

Reimbursement of ISO certification costs: MSME licences will apply to reimbursement of costs related to ISO (International Organisation for Standardisation) certification.

Protection against late payments: The government provided assistance through commission and reimbursement insurance. Currently, MSME allows business owners and employees to take an interest in late customer payments. 

Interest Compensation and Conviction Tool: Under the Credit Guarantee Trust Program, companies licensed under the MSME Act are entitled to a 1% discount on their overdraft. This may vary from bank to bank.

MSME includes retail and wholesale:

Retail and wholesale are not included in the MSME umbrella. According to the revised guidelines, MSME has issued a mandate classifying retail and wholesale as MSME and providing priority funding in this sector based on RBI criteria. The changed behaviour will benefit 2.5 million retail and wholesale operators. 

The government has announced retail and wholesale MSME.

Shri Nitin Gadkari, MSME’s Minister of Road Transport and Highways, today announced updated MSME rules that include retail and wholesale as MSME. In a tweet, he said: “We are working on developing the MSME and creating the engines for economic growth under Prime Minister Shri Narendra Modi Ji.” The updated Shri Gadkari guidelines will help 2.5 million retailers and wholesalers. According to him, retailers and wholesalers were not previously included in the MSME program, but under the new rules, retail and wholesale will now be eligible for priority sector funding under the RBI guidelines. Retail and wholesale companies can register on the Udyam registration portal based on updated criteria.

MSMED Act, 2006: Activities (NIC code) for Udyam registration – Addition of retail and wholesale –

1. This memorandum of the Ministry of the Office on “Activities (NIC codes) not included in the MSMED Act 2006 for the registration of the Udyog Aadhaar Memorandum (UAM)” Some events are not permitted for registration on the UAM portal. This Office Memorandum has yet to be approved for Udyam registration. Some changes have been made to clarify that NICs 45, 46 and 47, as well as activities related to these NICs, are not eligible for registration on the Udyam registration portal.
2. After receiving many submissions, the government decided to classify retail and wholesale transactions as MSME, which allowed them to register on the Udyam registration portal. On the other hand, the benefits of SMEs for retail and wholesale are limited to priority sector loans.
3. As a result, the following new activities are eligible under NIC codes 45, 46 and 47:

• 45 Wholesale and retail trade of motor vehicles and motorcycles, eg repairs and repairs
• 46 Excluding motor vehicles and motorcycles, wholesale and retail trade
• 47 Excluding cars and motorcycles, Retail trade

1. The three NICs listed, as well as the actions listed against them, are eligible for Udyam registration.
2.  Companies with a Udyog Aadhaar Memorandum (UAM) under one of the following three NICs can now migrate to the Udyam registration portal or submit a new Udyam registration. 

Suggested Read- Udyam Certificate Download

Documents required during the MSME registration process:

• Your Aadhaar card number.
• Only PAN and GSTIN cards are required for company registration.