Benefits of MSME Registration in India

Introduction to MSME Registration:

For the purpose of understanding the MSME Registration in India, firstly we need to know what exactly MSMEs are. The MSME in India has been divided into two categories by the government. These are-

  1. Those enterprises that are engaged in the activities like manufacturing, production, processing or preservation of some kind of goods.
  2. The enterprises that are engaged in providing or rendering of services.

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 has been enacted by the Government of India to govern and regulate the MSME Registration in India. The definition of micro, small and medium enterprises as per the said Act is as followed-

  1. Enterprises that are engaged in the activities like manufacture, production, processing or preservation of goods are specified as under-
  • A micro enterprise is a type of enterprise where investment does not exceed Rs. 25 Lakhs in plant and machinery.
  • A small enterprise is a type of enterprise where the investment is more than Rs. 25 Lakhs but less than Rs. 5 Crores in plant and machinery.
  • A medium enterprise is a type of enterprise where the investment is more than Rs.5 crore but does not exceed Rs.10 crore in plant and machinery.
  1. Enterprises engaged in providing or rendering of services are specified as below-
  • A micro enterprise is an enterprise where the investment made in the equipment does not exceed Rs. 10 lakhs.
  • A small enterprise is an enterprise where the investment in made in the equipment is more than Rs.10 lakh but less than Rs. 2 crores.
  • A medium enterprise is an enterprise where the investment is more than Rs. 2 Crores but does not exceed Rs. 5 Crore in equipment.

Benefits of having registration of MSME under Udyog Aadhar:

There are so many advantages of having registration of MSME under the Udyog Aadhar. These have been discussed in detail as under-

  1. Easy Bank Mortgages: A business having registration of MSME under the Udyog Aadhar, enjoys the benefits of getting bank loans easily. They are provided with collateral free mortgages from the banks.
  2. Advantages of Reservation: Various acts have been amended by the Government of India, in order to provide multiple benefits to the registered MSMEs. Under this they are given a special preference in the schemes and programmes initiated by the government to boost their overall production and business activities.
  3. Bank Accounts can be opened easily: With the registration of MSME, a business firm can easily open a bank account in any bank in India. Having a bank account on the name of the business is so valuable these days as it provides authenticity to the business and also increases its goodwill.
  4. Chance to participate in International Business Fairs: Through the MSME registration online/ Udyog Aadhar registration an enterprise gets a fair chance to participate in fairs and conferences at international level that can be profitable for the business.
  5. Stamp duty is waived off: The charges that are paid as stamp duty for various registrations and programmes to the central government or state governments are waived off once the business gets the registration of MSME. This can save a lot of money for the micro, small and medium enterprises.

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    Author: Anil Agrawal
    EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.
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