MSME

 

What is MSME

The Union Ministry of Micro, Small, and Medium Enterprises (M/o MSMEs) has issued a Gazette notification heralding the implementation of a revised definition and criteria for MSMEs in India. This significant update is slated to come into effect from 1st July 2020. This noteworthy revision in the MSME definition has been announced after a gap of 14 years since the inception of the MSME Development Act in 2006. This update was unveiled as part of the Atmnirbhar Bharat package on 13th May 2020.
According to this announcement, the definition of Micro-manufacturing and services units has been augmented to Rs. 1 Crore of investment and Rs. 5 Crore of turnover. The threshold for small units has been elevated to Rs. 10 Crore of investment and Rs. 50 Crore of turnover. Similarly, the limit for medium units has been raised to Rs. 20 Crore of investment and Rs. 100 Crore of turnover. Further advancing this progression, the Government of India on 01.06.2020 decided to enhance the MSME Definition even more, setting the investment limit for medium enterprises at Rs. 50 Crore and the turnover at Rs. 250 Crore. Detailed Classification in pursuance of the changed definition is as under:

The earlier definition criteria for Micro, Small, and Medium Enterprises (MSMEs) were based on the MSMED Act, 2006. Previously, these criteria differed for manufacturing and service units and were characterized by low financial limits. However, with significant changes in the economy over time, the need for revision became apparent This adjustment aims to align the classification system with current realities, ensuring it remains objective and supportive of a conducive business environment.

In addition to revising the limits, a new composite formula for classification, applicable to both manufacturing and service sectors, has been introduced. This move eliminates the distinction between these sectors and incorporates a new criterion based on turnover.

These changes are intended to bolster the growth and development of MSMEs. The provision to exclude exports from the turnover calculation is of special significance. It shall incentivize MSMEs to engage more in exports without losing the benefits associated with being classified as an MSME. This, in turn, is anticipated to significantly boost the country's exports, leading to increased economic activity, growth, and job creation.

MSME Registration Process

The redefined MSME registration process unfolds a strategic path, embodying a series of pivotal steps. These meticulously crafted stages are tailored to empower businesses, enabling them to meet the criteria for a plethora of benefits earmarked by the government for Micro, Small, and Medium Enterprises (MSMEs). By traversing through these stages with precision, businesses can establish their MSME status, paving the way for a spectrum of advantages, including financial aid, priority in government tenders, and a host of other privileges.

Step 1: Initiation

Embarking on the journey of MSME registration is akin to stepping into a realm of opportunity and recognition. The first step in this direction involves navigating the dedicated Udyam Registration Portal. It is a digital sanctum where businesses converge to seek validation under the new and evolved MSME definition.

Step 2: Self-Declaration

Once on the portal, businesses qualifying for MSME status, especially those not previously registered or those holding previous registrations (EM II or UAM), must complete a self-declaration form. This form stands as a paramount declaration, affirming one's eligibility under the revised MSME classification.

In the self-declaration form, enterprises need to furnish details, including the Aadhar number of the proprietor (for proprietorships), managing partner (for partnerships), or authorized signatory (for companies or LLPs). Additionally, the authorized signatory must supply PAN card details and the GSTN allotted to the company or LLP.

Step 3: Verification

Ensuring the accuracy and legitimacy of provided information, the PAN and Aadhar details undergo verification. This crucial step adds an extra layer of authentication to the registration process, maintaining the integrity of the MSME database.

Step 4: More Details

Businesses must furnish a comprehensive array of details about their enterprise, encompassing official addresses, social category, gender, and personal contact details of the signatory. Additionally, they are required to provide bank details, primary business activity, registration status, total and net investments, turnovers, and industrial classification where applicable.

Step 5: Certificate

On successful completion of the Udyam Registration process, a Certificate of Registration and a unique registration number are issued. This certificate, signifying official MSME recognition, and the registration number boast a lifetime validity, eliminating the need for periodic renewals.

Registration Fees if any:

The MSME registration is undertaken on the Udyam Registration Portal free of charge. Unlike various certifications and registrations that often involve substantial fees, the government has strategically eliminated the financial barrier for businesses seeking MSME recognition.

The waiver of this fee is in harmony with the government's aim to motivate more enterprises to formalize their MSME status, and nurturing the growth and development of small and medium-sized enterprises across various sectors. By eliminating registration fees, businesses, particularly those with constrained financial resources, can avail themselves of the benefits and support services linked with MSME status without bearing an additional financial burden.

Enterprises should be careful about any potential services or agencies who offer paid registration assistance. The official Udyam Registration Portal provides a user-friendly platform for enterprises to independently complete the registration process without the need for intermediary services. :

SCHEMES & PROGRAMMES of MSME

In India's diverse economic landscape, Micro, Small, and Medium Enterprises (MSMEs) stand out like vibrant hues, infusing the canvas with vitality, resilience, and progress. These initiatives by the Government of India include Schemes and Programmes meticulously crafted, to create an enabling environment for MSMEs to thrive, proliferate, and contribute to the fabric of our nation's prosperity. These schemes, designed with precision and foresight, seek to enhance the competitiveness of MSMEs, facilitate their integration into the global value chain, and foster a culture of innovation and entrepreneurship. They aim to provide financial assistance, facilitate access to credit, promote technology adoption, and enable market expansion for MSMEs, thereby empowering them to scale greater heights of success. As a testament to their impact, recent data reveals that these schemes have benefitted millions of MSMEs across the country, catalyzing growth, creating employment opportunities, and bolstering economic development at the grassroots level. As we delve into the rich tapestry of government schemes, we unravel a story of resilience, innovation, and growth, where every stitch represents a step towards a more prosperous and inclusive India. The Government of India, cognizant of the pivotal role played by MSMEs, has unfurled an array of schemes and programs which are as under:

• Prime Minister's Employment Generation Programme (PMEGP): This scheme aims to generate self-employment opportunities through the establishment of micro-enterprises in the non-farm sector. The Scheme is implemented by Khadi and Village Industries Commission (KVIC), as the nodal agency at the National level. At the State level, the Scheme is implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs) and District Industries Centres (DICs) and banks. The maximum cost of the project/unit admissible under manufacturing sector is Rs.25 lakh and under business/service sector is Rs.10 lakh.
• Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE): CGTMSE provides credit guarantee cover for collateral-free loans to micro and small enterprises. This scheme encourages banks and financial institutions to provide credit to MSMEs without the need for collateral security.
• Micro Units Development and Refinance Agency (MUDRA) Yojana: MUDRA Yojana aims to provide funding to the non-corporate, non-farm small/micro enterprises. It offers loans under three categories: Shishu (up to ?50,000), Kishore (?50,000 to ?5 lakh), and Tarun (?5 lakh to ?10 lakh).
• Credit Linked Capital Subsidy Scheme (CLCSS): CLCSS provides upfront capital subsidy to MSMEs to upgrade technology and enhance productivity. The subsidy is available for eligible enterprises for the purchase of machinery.
• MARKETING PROMOTION SCHEMES: It comprises of International Cooperation, Marketing Assistance Scheme, Marketing Assistance &Technology Upgradation (MATU) and MSME Market Development Assistance (MDA)
• Market Development Assistance (MDA) Scheme: This scheme aims to encourage MSMEs to participate in international trade fairs and exhibitions to showcase their products and services.
• Micro & Small Enterprises Cluster Development Programme (MSE-CDP) Scheme: Objective: To support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills etc.,To create /upgrade infrastructural facilities in the new/existing Industrial Areas/Clusters of MSEs., To set up Common Facility Centres (for testing, training,raw material depot, effluent treatment, complementing production processes, etc)..
• Procurement and Marketing Support (PMS) Scheme: The scheme aims to promote new market access initiatives like organizing / participation in National / International Trade Fairs /Exhibitions / MSME Expo, etc. held across the country and to create awareness and educate the MSMEs about the importance / methods/ process of packaging in marketing, latest packaging technology, import-export policy and procedure, GeM portal, MSME Conclave, latest developments in international / national trade and other subjects / topics relevant for market access developments etc.
• MSME Champions Scheme: There are 3 components under the new MSME Champions scheme, 1) - MSME-Sustainable (ZED), 2) -MSME-Innovative(for Incubation, IPR, Design), 3) - MSME-Competitive (Lean) 3) - Digital MSME.
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These are just a few examples of the schemes and programs initiated by the government of India to support the MSME sector. These initiatives play a crucial role in promoting entrepreneurship, job creation, and economic development in the country.