Micro, Small and Medium Enterprises, coined as MSMEs, have come to become Indian economy’s major pillar of foundation. The classification of these enterprises is as follows:
MSMEs enable citizens of a nation to venture out on their own and in turn, give back to society by creating new jobs and diversifying an area’s gross domestic production(GDP). They have also slowly and steadily revived the artisan class in the far reaches of India by providing employment, and access to loans and other services to the said class. Furthermore, they constantly support the upgradation of technology, infrastructure development, and trigger the modernization of the country and our society as a whole.
In terms of numbers, micro, small and medium enterprises contribute a staggering 30% to the country’s GDP, and around 45% of the manufacturing output, and approximately 48% of the country’s exports.
It is due to this very fact that they’re so crucial to our economic development and the reason why they’ve constantly been in the news ever since the pandemic struck in early 2020. However, as the pandemic subsides and the economy is slowly brought back to life, it presents a greater opportunity for business owners to get their MSME registrations done and avail a wide array of benefits.
In order to help MSMEs, the government of India introduced the MSME (Amendment) Bill Of 2018 and re-emphasised on the MSME ACT of 2006. Under these legislations there would be no need for frequent inspections to check the required investments needed to be made in the plant and machinery needed. In addition, the operations of MSMEs would be allowed to continue in a transparent, non-discriminatory, and objective manner.
Some of the other added benefits of getting your MSME registered under the provisions of these laws are summarised in the section below.
1. Bank Loans (Collateral Free)
The Government of India has made collateral-free credit available to all small and micro business sectors. This initiative guarantees funds to micro and small sector enterprises. Under this scheme, both the old as well as the new enterprises can claim the benefits. A trust named The Credit Guarantee Trust Fund Scheme was introduced by the Government Of India, SIDBI(Small Industries Development Bank Of India) and the Ministry of Micro, Small and Medium Enterprise to make sure this scheme is implemented (Credit Guarantee Scheme) for all Micro and Small Enterprises.
2. Subsidy on Patent Registration
Under the current laws MSMEs registered with the MSME ministry stand to benefit a 50% subsidy on their patent registration fees. This encourages small businesses and firms to keep innovating and working on new projects and technologies. The subsidy can be availed by submitting an application at the respective ministries.
3. Overdraft Interest Rate Exemption
Businesses and enterprises registered as MSMEs can avail a benefit of 1% on the OverDraft in a scheme that differs from bank to bank. This helps making small business secure during unfavourable markets.
4. Industrial Promotion Subsidy Eligibility
Businesses that have been registered as MSMEs are eligible for subsidies for Industrial Promotion as provided by the Government.
5. Protection against Payments (Delayed Payments)
MSMEs constantly face the risk of delayed payments which in turn disturbs their entire business. In order to protect registered companies, the Supreme Court has mandated that any buyer of good or services from registered MSMEs is required to make the payment on or before the agreed date of payment or within 15 days from the day they had accepted the goods or services. If the buyer delays the payment for more than 45 days after accepting the products or services then the buyer has to pay interest on the amount that was agreed to be paid. The interest rate is three times the rate that is notified by the Reserve Bank of India.
6. Fewer Electricity Bills
All companies that have the MSME Registration Certificate are entitled to concessions on their electric bill. This enables businesses to boost production and take in more orders without worrying about capital expenditure on costs like electricity and maintenance. micro, small and medium enterprises can avail of the concession by providing an application to the department of electricity along with the certificate of registration.
7. ISO Certification Charges Reimbursement
Any registered micro, small and medium enterprise can claim reimbursement of the expenses that were made in order to obtain an ISO certification. This motivates entrepreneurs to get their respective businesses ISO certified which helps them to do business abroad in terms of high-quality exports.