What is an MSME and how does one register it in India?

What is an MSME and how does one register it in India?


MSME or Micro, Small and Medium Enterprises act as the strength of the economy especially when it comes to the developing countries like India. The investment varies in the following ways:

 Micro Enterprise: Enterprise where the investment is not more than 25 crore in case of plant and machinery.

Small Enterprise: Where the investment of plant and machinery is between 25 lakhs to 5 crores.

Medium Enterprise: Where the investment of plant and machinery  involves 5 crores to 10 lakhs.

Usually, enterprises dealing on small scale and wants to grow their business with the motive to contribute towards the economic growth get registered under MSME .Though, it is not important for a company/enterprise to get registered under MSME, as it is the discretion of the owner whether to get registered or not.However, when it comes to MSME registration various benefits are provided by the Government like tax benefits, smooth credit facility,international trade etc.

Why MSME Registration is required:

When it comes to the new entrepreneurs, MSME registration encourages them to grow their enterprises and provides certain benefits so that they can thrive their business and contribute to the economic growth of the country at a large scale.

Also,the Government of India and RBI has launched certain schemes in order to support MSME Units by benefiting them with the same.Some scheme provided by them are as follows:

  1. Scheme to restructure the debt.
  2. Scheme to link capital subsidy for the purpose of technology upgradation.
  3. Scheme to programme Micro finance.
  4. Proposal on (TREAD) for women.
  5. Scheme to Credit Assaurance.
  6. Scheme to programme small industry cluster development.
  7. Scheme to integrate infrastructural development.       

Therefore, the process of MSME registration is very simple to follow through which small and medium enterprises can register and seek certain benefits from the Government.

Benefits of MSME Registration:

1.MSME Registration provides cheaper interest rates of 1% to1.5% on bank loans which is comparatively less than regular interest rates for loans.

2.It provides various kinds of tax rebates.

  1. The Government gives higher preferences to businesses registered under MSME.

4.The minimum alternate tax credit was extended from 10 to 15 years.

5.Business under MSME are required to pay one time settlement fees.

6.It also provides subsidies on electricity bills.

Process to Register MSME:

The Government of India has established a web portal for registration of MSMEs. One is required to fill an online form through the website or offline through the concerned zonal department.

Aadhar details have to be mentioned to generate OTP.

Documents Required for MSME Registration are:

  1. Aadhar card of the applicant.
  2. Details of the Enterpriseand and its type.
  3. Pan Card of the applicant or the company/firm(in case of company or partnership).
  4. Details of the bank account of the applicant or the company(in case of company or partnership).
  5. Location of the Enterprise.
  6. Details regarding the objectives of the enterprise.
  7. Details regarding number of employees.
  8. Details regarding the total investment of the plant and machinery done by the enterprise.

Importance of MSME:

MSME plays a major role when it comes to economic growth. It promotes equitable development and is majorly known for generating the highest rate of growth in the economy. It has driven India by promoting low investments, flexible operations and has developed appropriate native technology.Following are the reasons why MSME is important:

  1. MSMEs is the second largest employment generating sector after agriculture.
  2. It contributes about 6.11% of the Country’s GDP.
  3. It contributes about 45% to the overall Indian exports.
  4. It uplifts the weaker section of the society by providing employment opportunities.
  5. It also promotes innovation by providing opportunities to the new entrepreneurs to build innovative products and thereby boost competition in business.
  6. By 2025, MSME ministry targets to increase its contribution towards GDP by up to 50%.

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