The Government of India has introduced the micro, small and medium enterprises for the development of the smallest & medium level of enterprises so that the benefits for business is properly availed by the maximum numbers and even to the rural areas.
MSME as an Engine for the Economic Growth
The enterprise which was earlier known as SSIs (Small Scale Industries) was changed to MSME. The Government of India enacted the same under Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. MSME was introduced mainly for the socio-economic growth of our country and providing interests and benefits for business. The primary function of the enterprise is in the production, manufacturing, preparing, or in preserving the goods and commodities.
MSME has proved to be an engine for the economic growth, industrial development and generating employment rate in the country. It has its reach at all the levels including under developed, developed and developing enterprises. MSME serves both the urban market and rural market but focuses mainly in industrialization of rural and backward areas which in turn reduces the existing imbalance amongst the enterprises in the market and ensures that there shall be equal distribution of national income and wealth.
Read our article:An Overview of RBI Loan Restructuring Policy which Benefits MSMEs
Registration under MSME to Avail Benefits for Business
The main reason for registration under MSME will be to avail the advantage of schemes and benefits for business as provided by the Government for running the micro, small and medium enterprises. Therefore, for opening or availing any benefits for business under MSME the enterprise will get the advantage only if such enterprise is registered under the MSMED Act.
The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 of India expedites the advancement and growth of the enterprises through various different incentives, schemes and subsidies.
For obtaining these advantages, the MSME registration is a mandatory procedure and any proprietorship firms, partnership firms, LLPs, Private Limited Company’s and Public Limited Companies can register. Although the MSME registration is not a statutory requirement but it is contemplated to provide maximum benefits for business and other enterprises.
Essentials of MSME Registration
Benefits of Registration: Why the Enterprises should register under MSME?
Micro, Small and Medium Enterprises (MSME) sector is a rising and highly powerful sector in the Indian economy now. Our father of the nation Mahatma Gandhi started with the Khadi during the national freedom movement which is still running as a proud legacy of our country. The two national heritages of India which is still running and has a massive customer support are the Khadi and Village Industries (KVI).
The most phenomenal aspect of these industries is that they are generating employment at a very low capital investment are providing high benefits for business. Because KVI has been here since traditional times its product have both heritage and ethnic touch due to which they have a strong client base in the rural as well as urban and sectors.
Ministry of Micro, Small & Medium Enterprises has a vision for the growth and development of MSME Sector especially in Khadi, Village and Coir Industries, with the cooperation of the respective Ministries and State Governments by aiding and supporting the already existing enterprises and motivating the new enterprises to come up with business plans and register their enterprises under MSME.
Loans from Bank without Collateral
The best benefits for business by MSME registration is that Credit Guarantee Fund Scheme (CGS) launched by Government of India makes it possible to have collateral free loans.
Reduction of Interest Rate and Greater Credit
Without collateral security, it will be difficult for banks to offer loans. So, banks are advised to offer lower rates.
Exemption of Income Tax
MSME certification, enterprises are exempted to pay huge amounts of income tax, which saves a lot of their expenditure only if they are registered under MSME.
Patent Registration Amount is Subsidized and Industrial Promotion
Enterprises which are registered are given a huge subsidy of 50% by Government of India for patent registration, and because of the Government’s involvement Industrial promotion benefits for business are availed.
Delayed Payment Protection
This is one of the best benefits for business because often payments are delayed in business. If the enterprise is MSME registered, then the enterprise is protected against delayed payments.
If the client is not being able to pay within the 45 days of the time limit then the payment with interest has to be paid to the MSME by the buyer. The penal interest that is charged for delay in payment is three times of the bank rate notified by RBI.
ISO Certification Charges can be Reimbursed
The Enterprises which are registered under MSME has the right to claim reimbursement of the expenses of ISO Certification.
Electricity Bills Concession
The Enterprises can have the benefit of concession in paying their electricity bills if they are MSME registered.
Promotion of Export
The enterprises on registration gets the benefit of export promotion which is incentivized by the Government and goods and services of the enterprises are subsidized and exempted from tax and other technical support are often offered by the Government[1].
Support in Updated Technology
The registered enterprises will get technology support by the Government which can save their cost in upgrading their technology. The government can even reimburse the expenditure of projects which aims towards MSME sector. And the enterprises can get their expenses back from the Government which was spent by them for executing clean technology.
Benefit of Manufacturing Rights
Manufacturing is needed at the starting of the business and often small enterprises have lack of sufficient fun to invest likely. Therefore, the Government provides with the security of exclusive manufacturing rights and benefits for business which will make their progress much smooth.
Benefit in Developing Market
Small businesses has the benefit that that certain products will be purchased only from them and Government has ensured the same benefit so that these small enterprises can come in the competition market with other enterprises.
Employment Generation Programme by Prime Minister
Government has come up with scheme which gives subsidy for generating Employment. Khadi and Village Industries Commission (KVIC) which are the national level agency nodals have applied this scheme. Directorates of State KVIC, State Khadi and Village Industries Boards and banks are generating the program at state level.
Conclusion
MSME is the foundation of development and growth in our country now and it has managed to face the pressure and come out successful even during the pandemic times. Because of its focus towards the micro, a small and medium enterprise has helped the underprivileged part of the society to take part in business and avail benefits for business. Thus, it has generated employment to millions. Moreover, with its schemes and advantages it has always proved to be beneficial for start-ups and business initiates to actually register their enterprise under MSME and avail these benefits for business.
Also, one of the major reasons of MSME being under the authority of Government of India it will always be safe to invest and plan for business. Government backup will always protect the enterprises and their businesses from any kind of adversity. Therefore, it will always be beneficial for the enterprises to register itself under the MSME and with the registration Certification they can avail various kinds of benefits for business which will add value and will be advantageous for the enterprises.
Read our article:An Outlook on the New Structure of MSME Classification
