The expansion of a country's industrial and service sectors is a major factor in determining its economic growth. These industries now comprise a large number of young, small businesses in developing nations. Due to these industries' importance in the growth of an economy, the government ensures they get a variety of advantages and cultivates an atmosphere that is conducive to their development.
These small-scale industries (SSIs) are known as MSMEs in India (Micro, Small and Medium Enterprises). The Central and State Governments do all possible to support the growth of SSIs, from MSME registration to offering a variety of incentives for greater performance.
How do MSMEs fit into the Indian economy?
Micro, Small, and Medium-Sized Enterprises, or MSMEs, are crucial to India's manufacturing and service industries. More than 120 million people are employed by these SSIs, which also increase GDP more than the agriculture sector.
The GDP contribution of the manufacturing sector is around 6.11%, whilst the contribution of the service sector is 24.63%. The MSMEs are appropriately referred to be the "Engine of Economic Growth" in India, with an export share of 45% and a growth rate of 10%.
The SSIs have remained robust during economic downturns and are the driving force for the emancipation of the economically underprivileged segments of society.
Given the importance of MSMEs, the government will provide them with a wide range of incentives after they are registered under the MSMED Act. They're frequently referred to as the benefits of MSME registration. Small-scale industry registration is not required, but it is necessary if you want to get the most from these advantages.
However, let's look at how they are categorised first before moving on to the advantages of MSMEs being registered.
Classification of MSMEs and Small-Scale Industries
There are two groups into which the SSIs are divided:
· Service sector
· Manufacturing sector
In the manufacturing industry, raw materials are used to make final goods. The industries are described in this section as follows:
· Micro enterprises are those that have invested up to 25 lakhs in machinery and plant.
· Small businesses are defined as those having a plant and equipment investment of more than 25 lakh rupees but less than or equal to 5 crores.
· Medium Enterprises are those enterprises that have invested more than 5 crores but less than or equal to 10 crores in equipment.
Intangible products are produced by the service industry. In this industry, the SSIs are:
· Micro Enterprises are those sectors of the economy where the equipment investment is less than or equal to ten lakh rupees.
· Small businesses are defined as those with an equipment investment of more than 10 lakh rupees but less than or equal to 2 crore rupees.
· Medium Enterprise – The industries with an investment of more than ₹2 crores not exceeding ₹5 crores in equipment.
The micro, small and medium enterprises need to be registered under the MSMED Act to avail the MSME benefits. The Government has provided Udyog Aadhar facility to ease the MSME Registration process.
What is Udyog Aadhar?
Udyog Aadhar is a system provided by the Government to let people register their business enterprises under the MSMED Act. In return, the entities are provided with an MSME Registration certificate and a unique number which helps them in availing the MSME Registration Benefits.
The MSME Udyog Aadhar facility is here to simplify the process of certification. Earlier, MSME registration was a complex and time-taking process that involved a lot of paperwork. Now, with Udyog Aadhar system, things have become easier. One just needs to do the SSI online registration and enjoy the MSME registration benefits like a BOSS!
MSME Registration Benefits
The Central and State Governments make sure the SSIs grow and develop gradually, and their interests are always taken care of. The benefits can be enjoyed by the businesses that have an MSME registration certificate. Let’s take a look at the benefits a small business can enjoy:
Financial support from banks facilitated by Government
It is easy to raise funds for the financial needs of the Micro, Small and Medium Enterprises once they’re registered under the MSMED Act. The Government helps in providing subsidized loans from banks with low-interest rates. It is one of the most significant MSME registration benefits in India.
Schemes by the Central Government for development of SSIs
With schemes like Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), collateral-free loans are provided to the MSMEs. Further, Small Industries Development Bank of India (SIDBI) provides financial aid to the MSMEs through Pradhan Mantri MUDRA (Micro Units Development and Refinance Agency) Yojana.
Tax Benefits
Taking into consideration the kind of business you do, you can avail excise duty exemption. Moreover, you can also enjoy direct tax exemption benefits in the initial growth phase of your business.
Reservation of Products to be produced by MSMEs only
Since the SSIs operate on a smaller scale, the Government makes sure that they do not die down due to the prevailing competition in the market. For this reason, it has reserved certain products that must be produced by the Micro, Small and Medium Enterprises only. Moreover, the Government stores are bound to purchase certain products like wooden furniture, jewelry, pickles, etc from these industries.
No More Delayed Payment Troubles
The Government helps the MSMEs against buyers that do not pay on time. During the supply of goods and services, if there is a date that has been mentioned in the agreement between the MSMEs and the buyers, the payment is supposed to make on or before it. If no due date has been mentioned, the buyer has to initiate the payment within 15 days after the goods and services have been accepted. No payment, however, shall exceed forty-five days after the goods and services have been supplied. In case the buyers do not comply with these provisions, they have to pay the penalty due to the delay in payments. The MSME registration makes sure the needs of small entrepreneurs like you aren’t compromised.
Reduced Fees for Trademark Registration
The MSME registration certificate can help you in trademark registration as well. It gives you the opportunity of having a 50% subsidy in the payment of fees while you’re registering for trademark or a patent.
Foreign Business Expo
The Government, helps the Micro, Small and Medium Enterprises in participating in foreign expo’s by providing financial assistance. This way, your export and import interests are well taken care of. MSME benefits like these motivate people to become entrepreneurs and run businesses successfully.
An exemption in interest on Overdraft
If your SSI is registered under the MSMED Act, you can enjoy a 1% exemption on the interest rate on overdraft facilities. The OD facility, however, differs from one financial institution to the other.
Facilities for Upgradation of Technology used in the industry
The SSIs run low on financial capital as compared to the other industries. This may be a reason behind their use of obsolete machinery for the production of goods and services. Hence, the Government makes sure the small-scale industries are provided funds under the Capital Aid for Technological Upgradation Scheme to upgrade the equipment they use. The MSME benefits are all-round. Isn’t it?
Subsidies and Government Schemes to promote your industry
The State Governments have launched a number of schemes that help in promoting the business of SSIs. Some schemes like Pradhan Mantri Employment Generation Programme and Skill Development Programme go a long way in developing your enterprises. Also, the Government provides subsidies to help raise your revenues.
Remuneration for ISO certification expenses
The industries that own an MSME registration certificate is liable to receive compensation if and when they incur any expenses on ISO certification.
Reduction in Electricity Bills
If your business enterprise is registered under the MSMED Act, you can enjoy a huge concession on your electricity bills. This way, you can reduce the amount of fixed cost you incur in managing your business. The MSME registration benefits give way to proper development and growth of your industry.
So, you can see how one MSME registration registration with Meraprofit can help in establishing your business. With the simplified Udyog Aadhar process, you will be able to open the gateway to a multitude of advantages and become a successful entrepreneur. Thereby, you will be able to make a valuable contribution to the growth of your economy.
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