#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):
Image source: Taxguru.in
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:
Image source: Taxwayglobal.com
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: Udyamregistration.gov.in)
Here is an infographic to summarized the important guidelines for MSME registration.
Image source: Udyamregistration.gov.in
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.
- First visit the website Udyogaadhar.gov.in
- 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.
- 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”.
- 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.
- You can print or save your registration number for future reference.
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.
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I am reading a lot about MSME schemes lately. Small scale businesses play a significant role in Indian economy and India is rich in many handicraft. Such scheme can give the artisans the much needed support.
yes agree completely.
This is thoroughly informative surbhi, looks a perfect guide to someone wanting toregister as MSME. I loved your research and initiative to help the needy.
A small and budding business always plays a pivatol role in changing the face of the economy and we all know now that MSME contributes so well to the GDP and exports.
This is a one stop guide that shares information about the MSME. Being a strong support and a backbone of a developing country’s economy MSME are one of the most important fields. This post could be of much help to people who already have or willing to venture
Thanks dear, I am glad you liked it.
Thanks dear, I am glad you liked it.
Wonderful post Surbhi. So much information. I didnt know how to register for MSME. You have shared minute details. Thank you for this chest of knowledge on MSME
Thanks dear, I am glad you liked it.
This is such an informative post. I have been planning to set up something, and your post has made this simpler. The step-by-step guide has become a bible and I will just follow these steps for registeration. Great way to learn.
Thanks dear, I am glad you liked it.
This is a very useful article for all those looking for ways to start a MSME or get registered as one.Some very good answers to questions that comes to our minds are included in great detail.
Thanks dear, I am glad you liked it.
MSME’s plays a huge role in not only economic development but can also bring improvement in social indicators. You’re doing a great job by providing every detail in this post. This is really helpful.
MSME sector is backbone of economy of every country. They keep the wheel rolling. Your post is so deep, I am sure its going to help many.
Thanks dear, I am glad you liked it.
Thanks dear, I am glad you liked it.
Wow this is such a detailed write up on MSME. I mean I just got to know about this recently but you have given a lovely article for those who want to start and we’re not sure how to. Awesome.
Thanks dear, I am glad you liked it.
I am reading a lot about MSME schemes and you have briefly explained all points. Must read for those who want to start small scale businesses. No doubt that small scale businesses are important because it helps in increasing the employment and economic development of India. I will share it with friends, it is of great help.
Thanks dear, I am glad you liked it.
Thank you so much for this informative post. Got to know many things about MSME which were not known to me. I need to think seriously on this now.
MSME’s important for economic development and also bring improvement in social indicators. Great thoughts.
This is such an detailed post and can be very useful for people who have no idea about MSME and want to start a business. Very well researched article. Thanks for asking this Surbhi.
Thanks dear, I am glad you liked it.
Thanks dear, I am glad you liked it.
So much of information in one post. This would be a perfect stop on post for someone who is looking to invest in a msme
Thanks dear, I am glad you liked it.
I really feel and trust that small businesses are really helpful in growth of people and our country and you have explained everything so perfectly!
Agree with you completly
The paradigm shift our economy had in the past one decade is commendable, to boost it further it is important that our MSMEs grow and mature into large scale industries.
yes absolutely
I didn’t know anything about the MSME sector and I think if and when I start my entrepreneur journey, I will go through this post in detail again to expand my knowledge and learning.
Thank you for the detailed post Surbhi. This is very informative as I had no clue about MSME sector. Thank you for sharing.
Thanks dear, I am glad you liked it.
Wonderful information for those with entrepreneur hearts! This article surely would not only open their eyes to great information they needed and maybe give them more motivation to start knowing there’s also a lot of people who aspire to go to this road of opening a business. It maybe tough work, but the outcome is really fulfilling!
Thanks dear, I am glad you liked it.
This is a helpful post and informative. it is easy to get lost on the internet when one is trying to find authentic information. thanks for putting such a detailed note together on this.
Thanks dear, I am glad you liked it.
MSMEs contributes a lot to the Indian economy and through various means like digitisation, government schemes, Enterprises can emerge stronger.
yes agree completely.
Many people who are not aware of the MSME are surely missing a lot in their growth. Your post has detailed process that can help many non-tech savvy people also to register in MSME.
Thanks dear, I am glad you liked it.
Great informational post. Thanks. Keep posting such great articles.
thanks. I am glad you like it.