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Shalini Singh
| Updated: 14 Nov, 2019 | Category: MSME

MSME Registration – Know the Entire Procedure

MSME Registration

The skilled workers of today’s generation coming from rural areas are deprived of the primary resources and credit which confines them from starting their own business or work independently. With a perspective to help these Micro small and medium enterprises, the Government of India has provided collateral-free credit lending to them so that they can run and operate their enterprises efficiently.  Furthermore, the MSME sector of India has employed around 120 million persons and contributed approximately 45 per cent of the overall exports from India.

The Indian government has launched the MSMED Act to support the MSME sector via various schemes, subsidies and incentives. It’s a wise idea to have the MSME Registration because banks also provide the loans at the lower rate of interests to the MSME Sectors. Here in this blog, we will have an in-depth look at the procedure for the MSME Registration.

What are Micro small and medium enterprises?

MSME is the acronym for Micro small and medium enterprises. The MSME sector proves to be the mainstay of the Indian economy hence generating employment opportunities for around 120 million persons and contributed approximately 45 per cent of the overall exports from India.

According to the MSMED Act, 2006[1], the MSME Sector is classified into the following two categories:

  • Manufacturing Enterprises
  • Service Enterprises
Existing MSME Classification
Sector Criteria Micro Small Medium
Manufacturing Investment  < Rs.25 lakh < Rs.5 crore < Rs.10 crore
Services Investment  < Rs.10 lakh < Rs.2 crore < Rs.5 crore

Now, the government vide its notification dated June 1, 2020,  has revised the MSME classification under the Aatmanirbhar Bharat Abhiyan (ABA), by adding combined criteria of both the investment and annual turnover. The previous difference between the manufacturing and the services sectors under the MSME is now removed. The removal shall create uniformity between the sectors. The revised MSME classification is given below and the investment and annual turnover, both are considered for determining an MSME.

Revised MSME Classification

Criteria

Micro

Small

Medium

Investment   &  Annual Turnover

<Rs.1crore 

 &

 < Rs.5 crore

< Rs.10 crore

 &

 < Rs.50 crore

< Rs.50 crore

 & 

< Rs.250 crore

Who has the authority for the MSME Registration?

The MSME registration process is an online process, and there is a separate DIC (District Industries Centre) department in each state. The DIC department has the power to issue the MSME Registration certificate along with the MSME number.

What are the government initiatives in promoting the MSME Sector?

In a recent statement by the Union Minister Nitin Gadkari, the Minister told that the MSME Sector is contributing significantly in pushing the country’s economic growth and generating employment.  The MSME Ministry will work closely with its commerce counterpart to have an estimate of the percentage of goods which are being imported in our country. This study will help us to dig an alternative as if we can look for an opportunity that will decelerate the import of goods by manufacturing these particular items in our own country through the small scale industries. This edge will help in cutting the import bill of the nation, thus promoting the rural economy.

What are the Benefits of MSME Registration?

Let’s have a look at the specific benefits of the MSME Registration.

  • You can easily open the Bank account and avail the bank loan.

MSME Registration Certificate serves as a legal entity proof of the business, and so you can open your bank account quickly. The Banks offer collateral-free loans to MSME enterprises.

  • Octroi Benefits

The Government of India has to provide the benefits of the refund of the Octroi levied on the goods and services. But without the MSME Registration, these MSME Enterprises need to pay the Octroi for these goods and services.

  • Exempted from paying the Stamp duty and Registration charges

The MSME enterprises do not need to pay the Stamp Duty and registration charges, unlike the enterprises which expand their business in the IT park or SEZ.

  • Exemption from the Income Tax

The enterprises under the MSME Sector are exempted from the income tax benefits in the initial years.

  • Subsidy under the Bar Code Registration

Under the MSME Sector, the enterprises or the manufacturing units can avail the benefit of the subsidy.

What are the Documents required for the MSME Registration?

Here is the checklist of documents required for the MSME Registration:

  • PAN Card details of all the partners/ proprietor and directors.
  • Aadhar Card details of all the partners/ proprietor and directors.
  • Proof of the ownership premises such as the allotment letter or lease agreement.
  • Proof of the Rent agreement (if it is rented flat) and NOC from the landlord along with the utility bills.
  • Copy of the sale bill (for each end product) and purchase bill (raw material purchased).
  • Copy of Partnership deed ( for the Partnership firms)
  • Copy of MOA and AOA and Incorporation Certificate (for the Private limited company registration).
  • Copy of Industrial License (Industrial Development and Regulation Act,1951)
  • Purchase bill of any kinds of machinery installed.
  • Bank account statement.

Procedure for applying the registration process of MSME/SSI

The registration of MSME is to be done in the government portal of Udyam registration. The registration of MSME can be done under the given below two categories in the government portal –

  • For the New Entrepreneurs –  those who are not registered as MSME yet and
  • For those with the registration as EM-II or UAM and also those having registration as EM-II or UAM via Assisted filing

For New Entrepreneurs who are not Registered as MSME

The New entrepreneurs have to click on the home page “For New Entrepreneurs who are not Registered yet as MSME” for registering MSME. The New MSME registration is done by providing the Aadhaar card number in the given below two ways:

  • Registration With PAN Card or
  • Registration Without PAN Card

Fill the MSME Form

The MSME Registration is an online process in which the applicant has to fill all the required details in the application form and submit it to the concerned state department.

Gather all the documents

Prepare all the documents required as per the MSME Registration application form. Generally, the entire process usually takes about one to two working days.

File the MSME Application form

Now, you have to upload all the required documents and submit the application to the MSME Registrar. After this, the Regulatory authorities will verify the authenticity of all the submitted documents.

Approval of the application form and Certificate of Issuance

After the authority verifies all the documents, the company will get registered under the MSME.

What are the recent changes in the MSME Sector?


The Indian Government has taken several initiatives and has introduced a Fastrack loan approval facility for the MSMEs. Under this loan facility, the MSMEs can procure in-principal approval of the loan up to INR 1 crore within 59 minutes.

What are the MSME schemes launched by the Indian Government?

The Government of India is running various schemes to help the MSME Sector grow and work efficiently. In the recent budget presented in the Parliament on July 5, 2019, the finance minister Smt. Nirmala Sitharaman has focused on traditional industries such as bamboo, khadi, and honey to create an economic value chain.

  • ASPIRE ( A scheme for promoting Innovation, Rural Industry, and Entrepreneurship)
  • Credit Linked Capital Subsidy Scheme ( CLCSS)
  • Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
  • Prime Minister’s Employment Generation programme

Credit Guarantee Scheme for Micro and Small Enterprise (CGTMSE)

  • Udyog Aadhaar Memorandum
  • Zero Defect Zero Effect

Final Thoughts

The Indian Government is working closely to encourage micro small and medium enterprises engaged in manufacturing and production. Also, the MSME Sector has generated several job opportunities for the youth and other workers who are deprived of resources and credit.

Read our article:Is MSME and SSI the Same: An Overview

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Shalini Singh

Shalini is a B.tech graduate but her keen interest in writing impelled her to continue as a content writer. Further, She has a rich experience in Companies Act and Ammendment related topics.

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