Introduction

MSMEs form the largest portion of the economy of India and are critical to the growth of the country. They play a tremendous role in the Gross Domestic Product, employment generation and overall industrial growth. Realizing their significance, the Indian government has established many schemes and made it easy for the MSMEs to grow. This article offers a step by step procedure in; how to get MSME registration in India.

 

1. What is MSME?

MSME is the abbreviation of Micro Small and Medium enterprise. These businesses are further divided according to investment in plant & machinery in case of manufacturing company or equipment in case of service sectors and the different turnover limits. MSMEs are mainly categorized as:

• Micro Enterprises: Micro enterprises under them are defined for investment up to ₹ 1 crore and turnover up to ₹5 crore.
• Small Enterprises: Turnover up to ₹50 crores and Investment up to ₹ 10 crores.
• Medium Enterprises: The business having turnover of up to ₹250 crore and investment up to ₹50 crores

MSMEs are important in the Indian economy as they contribute nearly 30% of the GDP and have employment for more than 110 million people.

2. Advantages of MSME registration in India

The registration has the following benefits that apply to MSMEs in helping them to compete in the market and make operations successful. Some of the key advantages include:

1. Access to Government Schemes and Subsidies:

MSMEs which are registered can be availed of various government schemes, subsidies and grants.

2. Easier Access to Loans:

Financial institution, National and co-operative banks gives a concessional interest rate for the registered MSME’s.

3. Protection Against Delayed Payments:

This is well protected in the MSME Development Act where it provides that buyers shall pay for supplies made to MSMEs within a period of forty-five days.

• Tax Benefits: The MSMEs which are registered can benefit from the tax exemption and fiscal incentive.
• Credit Rating Assistance: In India, there are certain capacities that offer subsidies for acquiring credit rating and this adds more credibility in the MSMEs.

3. How to Register in MSME in India?

To start an MSME in India, we now have the easy to use online registration portal known as Udyam. Below are the steps to follow for MSME registration in India:

Step 1: Register on Udyam Registration portal.

Go to the official Udyam Registration website (Through this process, one has to register on the online portal developed by the Ministry of Micro, Small and Medium Enterprises at https://www.udyamregistration.gov.in.

Step 2: Provide Aadhaar Details

In this step, we are going to provide the Aadhaar number to get documents verification to complete the procedure of our registration. The Aadhaar card, a unique identification number awarded to every citizen of India is a compulsory document while filling the registration form for MSME.

Step 3: Enter the Required Information

You will be asked to provide the following details:

• Legal name of the business venture (Micro; Small; Medium)
• PAN number
• GSTIN (if applicable)
• Email and mobile number
• The sum of investment made in plant and machinery or equipment
• Overall provincial turnover of the business

Step 4: Verification and submission

Whenever the taxpayer applies for registration then he has to verify the information and facts which he has provided at the time of registration and then submits it to the department. Once all the relevant details are entered, check it out and then submit the form.

Step 5: Updating the Information if Necessary

In the future if there are changes in your business like an increase in the investment or turnover you can modify the particulars of registration through the Udyam portal.

4. How to Avail Loans for MSME?

MSME registration in India granted the fantastic of acquiring loans at cheap rates of interest as one of the major advantages. Significant number of banks and other financial institutions in India targeting MSMEs are public sector banks, as well as new-generation private sector banks. The government had also initiated a number of loan schemes to support the growth of MSMEs.

Below is a list of government-backed loan schemes that MSMEs can benefit from:

• Pradhan Mantri Mudra Yojana (PMMY) is an enabling program of the Government of India with an aim to facilitate entrepreneurship among the actual and potential borrowers. The Mudra loans have been extended to the MSMEs under the Prime Ministers Mudra Yojana or PMMY. There are three categories of loans under this scheme:
• Shishu: max ₹50,000
• Kishor: ₹50,001 to ₹5 lakh
• Tarun: ₹5 lakh to ₹10 lakh

The Mudra loans can be availed from banks, non-banking financial companies NBFCs and microfinance institutions for the MSM

• Credit Guarantee Fund Trust for Micro and Small Enterprise (CGTMSE)

The CGTMSE scheme also offers the micro and the small enterprises collateral free funds support. In this kind of scheme the government provides a credit guarantee to a financial institution which relieves the lenders. Businesses having an usher of ₹ 10 crore can borrow up to ₹2 crore without having to put up any collateral.

• Stand-Up India Scheme

The Stand-Up India Scheme has been formulated to provide funds to all the loan requirements of both women entrepreneurs and SC/ST business owners. The small scale industrial units can avail loans for different purposes concerning beginning of a new business, which range from ₹10 lakh to ₹1 crore.

• PSB Loans in 59 Minutes

This web-based loan platform helps to get quick approval of loans for the MSMEs. The loans available are from ₹ 1 lakh to ₹ 5 crore and the borrower can get approval within 59 minutes. The loans are credit facilities that are offered by a number of the public sector banks (PSBs) with the possibility of the credit being approved within a week.

5. To apply for an MSME loan,

The following documents are generally required:

• MSME registration certificate
• Proof of business address
• Business PAN and GSTIN
• Bank statements (of the last half year)
• Tin number Income tax returns with the previous two years.
• Particular specifications of the partners, directors, or proprietors
• Project proposal, or business plan
• The ID and address of the owner of the business, or several owners in the case that they are multiple.

Channels through which MSME loan can be availed

MSME loans can be availed through the following channels:

• Banks and NBFCs: You need to visit the bank of your choice or Non-Bank Financial Company, get the application form filled and attached with the necessary documents. There are also some of the banks that provide online application facilities as well.
• Government Loan Schemes: Directly through the concerned government link
• PSB Loan in 59 Minutes Portal: Through the internet one can easily sign up and has an option to apply for the cash loans with a fast approval.

6. New Formats for MSMEs and New Requirements of MSME Laws

The government of India at regular intervals has brought changes to the MSME rules to support the sector growth. Here are some of the latest updates:

GST-MSME registration and GSTIN – the arm’s length of these two concepts

There is a requirement for GSTIN to be given for the registration of MSMEs as per the feedback received from different MSMEs, but now the government has made it optional for the enterprises, which means that small businesses do not need to register for the GST registration when dealing with such a small business.

Emergency Credit Line Guarantee Scheme (ECLGS)

To provide relief to the MSMEs during the prevailing COVID 19 situation the government has come up with the ECLGS. This scheme is given through banks and NBFCs to existing micro and small enterprises and tweaks their credit limit. It has been elongated multiple times and this has made it possible for MSMEs to obtain more funds at lower interest rates.

Conclusion

At present, registering your MSME and seeking loans have been made easier unlike before. Thanks to Udyam Registration and the launch of a number of loans supported by the Indian government, it is now possible to register successfully. If you are already running a business or are planning to be an entrepreneur, it is even more beneficial if you are aiming under the MSME industry. However, it is also important to ensure that one is acquainted with the current rules and schemes to maximize on available benefits for the MSMES. Through proper registration as an MSME and acquiring the right kind of financial assistance, there is tremendous potential to boost the chances of the business’s growth and help in boosting the nation’s economy.