A country’s true economic growth does not only depends on the big industries and MNCs, but the MSME sector (Micro, Small, and Medium Enterprises) as well. India is a developing country whose economy is primarily dependent on the agricultural and related industries. Hence, MSMEs could be considered as the heartbeat of the economy.
MSME Registration in India
To create more accountability and provide support to the small enterprises in India, Government of India has classified them under MSME. MSME is an official body that promotes the MSMEs through the MSMED Act. The Indian government has also provided subsidies and incentives to the enterprises that come under the MSMED Act. However, it is compulsory to subscribe under the MSMED Act to gain benefits. Apart from Micro, Small, and Medium Enterprises, LLPs, proprietorship firms, and public and private limited companies can also register themselves with the Act.
For MSME registration, the business owner should know the category in which he has to classify his company. So, the Government has set some rules and regulations and definitions for the industries. These definitions help in classifying each enterprise based on the investment in plant and machinery.
- Micro Industries: for micro industries, the investment should not exceed more than Rs. 25 lakh in manufacturing companies and Rs. 10 lakh for the service sector.
- Small Industries: investment in small industries should not exceed Rs. 5 crores in the manufacturing sector and Rs. 2 crores in the service sector.
- Medium Industries: for medium industries, the investment should not exceed Rs. 10 crores in the manufacturing sector and Rs. 5 crores in the service sector.
What are the Benefits of MSME Registration?
Registering your business under MSMED Act offer several benefits. The enterprise gets covered under the Central and State Govt. schemes. It helps the business owners to have better awareness about new government schemes. Some of the benefits of this are easy access to a business loan, subsidies (power tariff, tax, capital investment, etc.), eligibility to apply for government schemes, etc.
Is MSME registration compulsory?
No, it is not compulsory to register an enterprise under the Act. But registration is advisable as it offers many benefits apart from government backing the enterprise. So, many micro and small businesses are coming to register their enterprise. The registration process requires an application that has to be submitted to the respective office of the government.
In the application, the business owner has to fill the complete details of the industrial nature and provide supporting documents. The average time required for the entire registration process is between 15 and 20 days. It depends upon the completion of all the formalities correctly.