As India is still a developing country, it relies on MSMEs to remain resilient against global economic adversaries. The MSME sector makes a contribution of up to 45% towards the total Industrial Employment. They have a contribution of 6.11% in the manufacturing GDP and 33.4% in the manufacturing output. Having around 120 million individuals contributing towards this industry makes a contribution of 45% towards the total exports from India.
MSMEs have a direct impact on the country’s GDP. Therefore, the government offers several benefits to the MSME sector, such as MSME loan for new business, tax benefits, business setup, credit facilities, etc. To avail of such benefits, you must register your small business under the MSME Act. Although MSME registration is not mandatory by law, you can avail of several benefits that an ordinary business can not.
How are MSMEs categorized?
A crucial part of MSME registration is defining your business based on the money invested in machinery or plant and the annual turnover. This classification has been revised by the Government of India under Aatmanirbhar Bharat Abhiyan.
This classification covers both investment and turnover. Unlike before, there is no distinction between the manufacturing and service sector. Here is how MSME registration is classified:
|Micro||< Rs. 5 crores||< Rs. 1 crore|
|Small||< Rs. 50 crores||< Rs. 10 crores|
|Medium||< Rs. 250 crores||< Rs. 50 crores|
MSME registration process
If you wish to register your business under MSME registration, you will need to visit www.udyamregistration.gov.in. The MSME registration is classified under two categories:
MSME registration for entrepreneurs who are applying for the first time.
Those who have already done MSME registration under Udyog Aadhar Memorandum (UAM) or EM-II.
MSME registration for entrepreneurs applying for the first time
The process of registering your business as MSME is simple and easy. You will need to ensure that you are registering with a PAN card. Follow the underlying steps to understand how to register yourself.
- Visit www.udyamregistration.gov.in and click on the ‘For New Entrepreneurs who are not registered yet as MSME’ tab.
- You will need to enter your full name and Aadhaar number.
- You will receive a one-time password (OTP). Enter that to begin with the process.
- Fill in your ITR details. If you have a PAN card, the website fetches your details from the government database.
- Validate your PAN card and provide details of your plant or industry.
- After entering all your details, click Submit.
- Enter the one-time password generated on your mobile number.
- You will receive a reference number. It will take a few days until you receive your Udyam Registration Certificate.
It is worth noting that if you do not have a PAN card, you need to follow the same steps except that you have to answer “No” to the question regarding your PAN card. Also, make sure to update your PAN and GSTIN to avoid MSME registration suspension.
MSME registration for those who already have UAM or EM-II
If you have already been registered as EM-II or UAM, you will need to visit the Udyam Registration Portal and click on ‘For those having registration as EM-II or UAM tab’. After that, enter your Udyog Aadhar number and verify it with OTP generated on your registered mobile number. Your MSME registration process will complete, and you will have to wait for a few days to receive your Udyam Registration Certificate.
Advantages of MSME registration
You can avail of several benefits after getting your MSME registration certificate.
- You can avail of an MSME loan for new business.
- As an MSME, you will enjoy a lower business loan interest rate. For instance, you can get a minimum 1% to 1.5% lower rate.
- After MSME registration, you are eligible to avail of tax benefits and rebates.
- The credit limit of MAT will be extended to 15 years.
- As an MSME owner, you can file the government tender.
- Getting loans to meet your small business requirements is easy and quick.
- You can enjoy rebates and concessions on getting a patent or setting an industry.
- MSMEs are given priority in all government certificates and licenses.
- As an MSME, you can also get compensation for the ISO certification cost.
If you want to register your business as an MSME, you will need to follow the above-said steps. You must also have certain documents with you, such as business address proof, purchase bill, sales bill, partnership deed, Memorandum of Association, Articles of Association.