The government has taken several actions to support small and medium-sized enterprises in their growth and development as India continues to rank among the countries with the fastest expansion rates worldwide. Creating a specific portal for MSME registration in India is one of these actions. The platform assists aspiring business owners in registering their enterprises and receiving government advantages.
Full form of MSME
Full form of MSME is Micro, Small and Medium Enterprise.
What is MSME?
Micro, Small, and Medium Enterprises are the backbone of any developing economy and play a pivotal role in promoting inclusive economic growth. MSMEs are defined as enterprises that are engaged in the production or manufacture of goods or provide services.
New MSME Classification
The manufacturing and services sectors were split apart in the updated MSME definition. The most recent modification, which takes into account both investment and annual turnover, categorises an MSME as follows:
Highlights of new MSMEs
A new definition for MSMEs has been provided by the “Atma Nirbhar Bharat Abhiyan” or Self-Reliant India Scheme of 2020 by the Indian government.
Here are a few noteworthy features of new MSMEs:
- Collateral-free loans are made available to MSMEs
- A scheme for loans to MSMEs of Rs. 3 lac crore
- A proposal to provide MSMEs with a 12-month moratorium
- Considering MSMEs in manufacturing and services as the same entities
- MSME is given a 48-month repayment period.
- A 100% credit guarantee is provided for MSMEs.
- About 45 Lac units will gain from the reclassification of MSMEs.
Features of MSMEs
Here are some of the critical elements of MSMEs:
- MSMEs seek to improve the lives of employees and artisans. They assist them by offering loans, employment, and other services.
- MSMEs offer banks capital assistance or credit limits.
- They favour improving developmentally appropriate technology, the modernization of the industry as a whole, and the growth of infrastructure.
- MSMEs are renowned for offering proper support for increased access to both domestic and international markets.
- They also provide high-quality certification services and contemporary testing facilities.
Role of MSMEs in the Indian Economy
The Ministry of Small Scale Industries and the Ministry of Agro and Rural Industries merged in 1961, creating the Ministry of Micro, Small, and Medium Enterprises (M/o MSME).
MSMEs create and produce a wide range of goods for home and foreign markets. MSMEs work with relevant ministries, state governments, and stakeholders to promote the expansion and development of the Khadi, Village, and Coir Industries.
Opportunities in MSMEs
The following considerations make the opportunities in the MSME sector enormous:
- Potential for Indian products’ export promotion
- Financial Support & Subsidies
- Promotion and Assistance from the Government
- Increasing domestic market demand
- fewer financial resources are needed
- Project Profiles for Training of Manpower
- Purchasing of raw materials, equipment, tooling, and testing assistance, among other things
Factsheet of MSME Registration (2021-22)
- Micro: 8,70,4675
- Small: 3,73,456
- Medium: 36,951
9,11,5082 MSME registrations in total.
MSMEs’ estimated numbers in India between 2021 and 2022
Faqs on MSME
Who is eligible under MSME?
In India, MSME registration is available to proprietorships, Hindu Undivided Family, Partnership Firms, One Person Companies, Limited Liability Partnerships, Private Limited Companies, Limited Companies, Producer Companies, associations of persons, cooperative societies, and other undertakings.
What are the objectives of MSME?
There are several objectives of MSME, which include promoting entrepreneurship, encouraging the growth of small businesses, providing employment opportunities, and promoting economic development.
Which industries come under MSME?
There are two types of industries: Enterprises engaged in manufacturing goods are referred to as manufacturing enterprises. Enterprises providing services: These companies are further divided into different categories based on the amount of money they spend on equipment and their annual revenue.
What are the disadvantages of MSME?
Listed below are a few drawbacks of MSME
- Increasing interest.
- Lengthy process involved in loan applications.
- Processing charges.
- There is no indication of the total sum.
- A good credit rating.
What is the MSME loan scheme?
The Scheme includes collateral-free credit facilities (term loans and working capital) offered by qualified lending institutions to new and existing micro and small businesses, up to a maximum of Rs. 100 lakh per borrowing unit.
Is MSME registration mandatory?
No. If you opt to register, your company can benefit from an excise tax exemption program, access special banking programs explicitly designed for MSMEs, and much more.
Is GST registration mandatory for MSME?
Yes, as of April 1, 2021, having a PAN and GST number is required.
Is MSME loan interest-free?
No, MSME loans have interest rates that begin at 7.65% annually.
How do I get money from MSME?
The office of DC-MSME/MSME-DIs accepts applications from banks and financial institutions for help. To obtain loans, MSMEs must speak directly with the right banks. To improve the way credit is delivered and to make it easier for money to reach the MSE sector, CGTMSE was established.
What is the subsidy for MSME?
The Ministry of MSME will subsidise the consulting fees for Micro, Small, and Medium-Sized Enterprises at an average rate of 80%, 60%, and 50%, respectively.
Is there any scheme for helping MSMEs with the Rights of Intellectual Property?
There is a scheme called Building Awareness on Intellectual Property Rights (IPR) for the MSME that comes under the National Manufacturing Competitiveness Programme (NMCP). The goal of the scheme is to increase awareness of MSME about Intellectual Property Rights (IPRs) to safeguard business strategies and ideas. It allows the MSME sector to face the risks of liberalization that are being adopted below this scheme.
What assistance is offered by the Ministry for Promotion of Information & Communication Tools (ICT) in the sector of MSME?
The Ministry adopts the ICT (Information and Communication Technology) scheme to help Indian MSMEs implement ICT Applications and Tools in their business processes and products and boost their competitiveness and productivity in the National and International Market.
Can the Ministry of MSME indulge in matters of MSEFC?
Not at all. As per MSMED Act, only the MSEFCs have been authorized to make decisions with regards to its reference made with them. In short, the Ministry of MSME cannot indulge in the judicial activities of MSEFC.