India is such a country that welcomes everyone with numerous opportunities. And at Anakeen Business, the India entry expert; all the innovative ideas of the budding entrepreneurs are appreciated with a boost. Adding more to the services of Anakeen, they also help new entrepreneurs of the market industry to enter, establish and flourish differently among the existing market.
However, before you enter in India with your product, you need to know about the policies which can further assist you in the ease of doing business in India. In this article, I’m going to tell you about one such policy by the Indian government and that is the MSMED Act for micro, small and medium types of business startups.
MSMED Act, Registration, Benefits
MSME is the abbreviated form of Micro-Small-Medium Enterprise. The Micro, Small and Medium Enterprises Development Act came into existence in the year 2006.
The basis of categorization of three types of business enterprises are as follows:
1. Micro Enterprise:
In a micro enterprise, there is an investment on machinery and plants don’t exceed beyond Rs. 25 lakh and on equipments will be wrapped within Rs. 10 lakh only.
2. Small Enterprise:
A particular enterprise is said to be small when the investment on the machinery and plats can exceed Rs. 25 lakhs but it shouldn’t go beyond the Rs. 5 crores. Also, on equipments, investments can go further beyond the 10 but not more than 2 crores.
3. Medium Enterprise:
We can consider an enterprise as medium once the investment on the plants and machinery exceeds 5 crores of rupees but doesn’t go beyond of Rs 10 crores. Also, over the equipments for doing business, the investment can exceed beyond Rs. 2 crores but not more than Rs. 5 crores.
As mentioned above, we can put these three types of business enterprises in the categories of micro, small and medium ones. MSME enterprises are the backbone of the economy of any nation. Apart from this, they are also an engine of the economic growth that promotes equitable development for everyone. Basically, an MSME enterprise majorly deals with the labor-intensive rather than the large corporate sectors. Also, an MSME enterprise promotes employment at a very high potential and lowest capital cost. Majorly, it contributes to the industrial production and exports in India. Adding more to it, an MSME enterprise plays a pivotal role in the development of the industrial economy.
As MSMEs are highly beneficial in the overall development of the nation, henceforth, in order to promote it on a high level, the MSMED or the Micro, Small & Medium Enterprises Development Act of India, 2006 came into existence. Adding more benefits, the MSMED Act facilitates the promotion and development of enterprises through incentives, schemes, and subsidies. For availing the benefits of MSMED Act, you should be registered through MSME Registration.
Who Can Register In MSME Registration?
- Hindu Undivided Family (HUF)
- Private limited company
- One person company
- Partnership firm
- Producer company
- Limited company
Benefits Of MSME Registration:
1. Collateral Free loans from banks:
A policy was launched by the government of India specifically for the Micro and Small Enterprises and that is the Credit Guarantee Fund Scheme (CGS). This scheme helps in the availability of the collateral-free credit to the micro and small enterprise sector. Under this scheme, either new or the existing business enterprises are there, both of them are eligible for collateral-free loans from the banks. The Ministry of Micro, Small and Medium Enterprises, Government of India and Small Industries Development Bank of India (SIDBI), established a Trust that was named as Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). This was done for the implementation of the Credit Guarantee Fund Scheme for the Micro and Small Enterprises.
2. 50% Subsidy On Patent Registration:
There is another benefit of MSME Registration is that all those enterprises who have the MSME Registration Certificate can get a subsidy of upto 50% on the patent registration. Enterprises can get it done by an application to the concerned ministry
3. 1% Exemption On Interest Rate On Overdraft:
Enterprises can now avail upto 1% of exemption in the interest rates on overdrafts who have the MSME Registration.
4. Eligible For Industrial Promotion Subsidy:
All those enterprises that possess the MSME Registration become eligible for the Industrial Promotion Subsidy. This may also be prescribed on behalf of the government of India.
5. Concession In The Bills Of Electricity:
Enterprises who have registered themselves under MSME become eligible for the concession in the electricity bills. You can avail this benefit via an application to the electricity department along with the MSME Registration Certificate.
6. Reimbursement Of ISO Certification Charges
Enterprises that have MSME Registration Certificate can claim reimbursement of ISO Certification expenses by making application to respective authority.
7. Protection Against Delayed Payments:
There is a proposal by the government of India under the Ministry of Micro, Small and Medium Enterprises specifically for those business enterprises that . Under this proposal, enterprises will get a protection against the delay in the payments from the Buyers and right of interest on delayed payment through conciliation and arbitration and settlement of dispute will also be done in the minimal time. In case, if any micro or small enterprise has the certificate of MSME Registration, then the buyer has to make the payment right over there or by the date agreed or else, it can be done in between of the time period. In case, there is no agreement over the dates of the payment, then the buyer has to make the payments within fifteen days of acceptance of goods and services. Adding more to this, if there is a payment which is due to micro or small enterprise cannot exceed forty-five days from the day of acceptance or the day of deemed acceptance. The penal interest chargeable for delayed payment to an MSME enterprise is three times of the bank rate notified by the Reserve Bank of India.
I hope, you might have got an idea about the relevance of the MSME Registration. As we at Anakeen Business do care for you and appreciate your innovative ideas for the business startups, henceforth, it becomes crucial that we do impart all the information that can help you in ease the process of entry in the Indian market. For more details and any queries or if you wish to take experts’ advice for your startup, then you can undoubtedly connect to the professionals of Anakeen Business.