#GrowingBusinessesTogether : All you need to know about MSME Sector before getting into it!


It is a well-known fact that MSME (Micro, small and medium enterprises) are back bone of Indian economy. They played a vital role in providing large number of employment opportunities and contribute extensively in socio-economic development of country.  

What is MSME? What is previous and revised classification of MSME? What is role of MSMEs in improving Indian economy?  What is MSME registration process and amazing benefits of MSME registration? Read the post to know more! 

First, begin with the basics! 

What is MSME (definition)? 

MSME stands for Micro, small and medium enterprises. As per Wikipedia, “The Ministry of Micro, Small and Medium Enterprises, a branch of the Government of India is the apex executive body for the formulation and administration of rules, regulations and laws relating to micro, small and medium enterprises in India”. 

As per 2006, act the enterprises are divided into two major divisions.  

  • Manufacturing division: engaged in manufacturing or production of products.  
  • Service division: engaged in providing any kind of services.  

Here are details about existing classification of MSME (as per 2006 act): 

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Revised definition and new classification 0f MSME 

Government of India has revised the definition and classification of MSME in year 2020 as a part of Atamnirbhar stimulus package. The aim of this revision was providing more benefits to MSMEs and creating more jobs in MSME section.  

As per revised definition and classification, now service and manufacturing divisions are merged into a single division.

Here are details: 

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Role of MSME in improving Indian economy 

Here are some impressive facts about MSMEs. In following ways, MSMEs support and improve Indian economy.  

  • MSMEs play a major role in contributing India’s Gross domestic products (GDP). It contributes approximate 30% of India’s GDP.  
  • MSME also responsible for country’s 40-50% of total exports.  
  • There are about 11 crore people are employed in MSME sectors.  
  • MSMEs play an important role in improving rural economy as majority of MSMEs operates in rural areas.  
  • They also help in fulfillment of SDG (sustainable development goals) and creating more green jobs in India.  

MSME registration (step by step process) 

MSME registration offers lots of amazing benefits for MSMEs. The process is simple and easy to follow. Before sharing, step by step process, here are few important things that every MSME should keep in mind.  

  • MSME registration process in totally free. You need not to pay a single penny for MSME registration.  
  • The registration process is completely online and based on self-declaration. Those who have already registered for other kind of registration (like UAM or EM-2), they need to re-register for MSME registration.  
  • After registration process, a registration certificate is generated that you can print out for future reference.  
  • Having PAN and GSTIN (As per applicability of CGST Act 2017 and as notified by the ministry of MSME vide S.O. 1055(E) dated 05th March 2021) Is required for Udyam Registration (effect from 01.04.2021) (Information source: 

Here is an infographic to summarized the important guidelines for MSME registration.  

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Step by step process of MSME registration 

Documents required for MSME registration process 

Here are some important documents that you need for MSME registration process (keep remember, you do not need to upload any of these documents, you just need the important numbers like Aadhar number and pan number for filling the form correctly) 

  • Aadhar number 
  • Permanent account number of enterprise 
  • GST details (applicable when enterprise is required to get registered under GST law) 
  • Bank account details (bank account number and IFSC code) 

While filling the registration form, you have to select NIC codes for your manufacturing or service divisions. Read this post to know more how to select NIC code for MSME registration process.  

Now, let’s get into step-by-step process.
  • Here you will get two options to select. First for those who have already registered for EM-2 or Udyam registration and second who are new enterprises and never registered before.  
  • For those who have already registered with Em-2 or Udyam registration, here is a step-by-step tutorial video to complete the registration process.  
  • For new entrepreneurs, here are steps that need to follow to complete the registration process.  
  • Here, selects the option of “New entrepreneurs who are not registered as a MSME yet”. 
  • Second follow the steps for “Aadhar verification with OTP”. Fill the Aadhar number and name of enterprise in the form. After filling those details, click on button validate and generate OTP number. you get an OTP number on your phone. Fill that OPT number and validate the information that you have filled in the form.  
Fill the Aadhar number and name of entrepreneur
Fill the Aadhar number and name of entrepreneur
  • Next step will be for “Pan verification”. Here, you need to fill the details about your type of organization and pan number of organization. And click on “Validate pan number” button.  
  • After completing this step, a form gets opened. This form contains some basic information such as your phone number, email ID, official address of enterprise, status of enterprise, bank details, major activity unit (service or manufacturing) and number of persons employed etc. After filling all details, click on the button “Submit and get final OTP”.  
Registration form
Registration form
  • Fill the final OTP number and verification code and click on “Final submit” button.  after final submission, you get a “Thank you” message with your registration number. The registration certificate issued after few days, when verification process gets complete from their side.  
final submission
Final submission
  • You can print or save your registration number for future reference.  
Udyog Aadhar certification
Udyog Aadhar certification

Benefits of MSME registration 

Here are some amazing benefits of MSME registration for MSMEs.  

Bank loan become cheaper for those who have registered for MSME registration. (As they have to pay a lower interest rate compare to regular ones). Collateral free loan is another impressive benefit for MSME members.  

  • Easier and cheaper licenses facility is available for MSME registered members.  
  • 1 % less interest on OD loans.  
  • 50 % Subsidy on patent registration and trade mark registration.  
  • Concession on electricity bills. 
  • Protection on delayed payments.  
  • Special reservation policy for manufacturer and production sector of MSME 
  • Credit linked capital subsidy scheme (15 % subsidy for micro and small MSMEs) 
  • Get off in security deposit amount 
  • Waive or less stamp duty and registration fee 
  • 100 % reimbursement of ISO certification fee 
  • Reimbursement t for credit rating process 
  • Tax benefits (specially for MSMEs) 
  • Subsidy on export (less tax)  
  • Subsidy on new machines  

So, these are some amazing benefits of MSME registration.  

Along with this, joining support community is also help in finding needed support for business owners.  

Growth Matters Forum is a community for business owners to explore ideas, streamline growth and create an impact. Join the community here


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