Since Independence in India, the Khadi and Village industry (KVI) has flourished. The MSME sector in India is developing at a rapid pace. This industry helps in promoting employment opportunities in rural and backward areas.
In India the Khadi and Village Industries (KVI) is common which provides wealth of employment opportunities in the agriculture sector. The basic needs of processed goods are provided through this sector. Apart from this, employment opportunities are developed at a fast pace.
The Coir industry is an agro-based sector which originated in Kerala. Since its origination, this sector has spread its prominence throughout India. Apart from this, many organisations and MSMEs utilise these opportunities to carry out exports from India. Hence these sectors have been developed and through the incorporation of the MSME entity, such areas have been promoted further.
The MSMED Act, 2006 (Micro, Small and Medium Enterprises Development Act) came into existence to address different issues pertaining to policy development and improvement of this sector. There is a particular ministry authorising all the activities of MSME. This ministry is known as the Ministry of Micro, Small and Medium Enterprises (M/o MSME)
What are the functions of the ministry (MSME REGISTRATION)?
Apart from looking after the formation of MSMEs, the ministry also takes prudence in handling all the below activities:
- Credit Flow
The ministry of MSME ensures that proper credit flow is present in this sector.
- Technology Development
The ministry ensures that digitisation and technology are utilised properly in this sector to contribute to different form of activities.
- Upgrading Infrastructure
Apart from the above the ministry also ensures that infrastructural capability is present in these sectors.
- Provide Certification
The ministry also provides quality assurance and certification related to procedures and processes which are utilised in this sector.
- Develop Technology Process
Along with technology development, the ministry will ensure that technology processes throughout the systems in this sector is developed.
- Skill up Gradation
Promoting development, skills and entrepreneurship is one of the main motives of this ministry. Through various programs, promotion of development of industries can be achieved.
- Development and Product Design
For MSME registration, the government will also assist by providing programs for development of designs and other processes.
What is the meaning of Micro Small and Medium Enterprise?
Under the MSME registration process, there are different forms of small scale industries. Under MSME registration process, there is Micro, Small and Medium Enterprises. All small scale industries present under this are considered as MSME.
There are different eligibility criteria for qualifying for as Micro, Small and a Medium enterprise. The turnover would determine the type of registration required for a particular entity under the MSME registration process. The Finance ministry has amended this turnover criteria several times. On 01 June 2020, the Finance ministry revised the criteria for turnover to be eligible under MSME registration.
Turnover Criteria for MSME Registration
The following revised turnover ratios indicate the criteria for a particular type of MSME:
Any enterprise or entity would be classified as a Micro-enterprise, if the investment in plant and machinery is not more than Rs. 1 Crore and the turnover is not more than Rs. 5 Crore.
- Small Enterprise
Any enterprise or entity would be classified as a small enterprise, if the investment in plant and machinery is not more than Rs. 10 Crore and the turnover is not more than Rs. 50 Crore.
- Medium Enterprise
Any enterprise or entity would be classified as a Medium enterprise, if the investment in plant and machinery is not more than Rs. 50 Crore and the turnover is not more than Rs. 250 Crore.
As per the government, this notification has come into effect on 01 July 2020. Hence all enterprises should satisfy the above turnover criteria to be classified under the definition of Micro, Small and Medium Enterprises.
Regulatory Body/ Authority for MSME Registration
The primary regulatory body for MSME registration process is the Ministry of MSME. Apart from this institution, the office of development commissioner of the MSME is authorised by the Additional Secretary and Development Commissioner (MSME).
Apart from this above, there are additional bodies which look after the developments of their respective sector. Such bodies will include the following:
- Khadi and Village Industries Commission
This looks into the activities related to Khadi and Village Industries on a national basis.
- Coir Board
The Coir board looks into the activities of the Coir industry. Apart from this regulation is also governed under this sector.
- National Small Industries Corporation Limited (NSIC)
This organisation was established mainly to promote the activities related to developments of Micro, Small and Medium Enterprises in India.
MSME Benefits- How is MSME Registration beneficial?
- Bank Loans
MSMEs can easily secure loans. This would become seamless, once an MSME is registered with the relevant authorities.
- Tax Exemptions
MSMEs can claim different form of tax exemptions and rebates which are provided by the government.
- Minimum Alternative Tax (MAT)
Registered MSMEs have the benefits to carry forward minimum alternative tax for 15 years. Usually this benefit is only for 10 years.
- Secure Tenders
Registered MSMEs would have access to government contracts and tenders. It is easier to secure a tender for a registered MSME, as they would have authenticity. Apart from this, registered MSMEs would be notified by the relevant authority regarding a tender.
- Ease of Credit
It is easier to secure a different form of credit facilities from financial entities. Hence MSME which are registered have this benefit. Hence MSME registration is required for securing faster credit.
- Higher benefits from Government
Registered MSMEs have more benefits when it comes to government facilities. Not only the government but even the general public would have more confidence and faith in a registered MSME when compared to an unregistered MSME.
- Opportunities for Growth
MSME registration provides more opportunities in terms of diversification. An individual, who considers MSME registration, would get more recognition. Apart from this, registered MSMEs would be recognised when it comes to international commercial conventions and export oriented fairs.
- Collateral Loans
Registered MSMEs would also secure the benefits of collateral free loans. Usually loans provided to MSMEs would be of a minimum value of less than Rs 10 lakhs. Banks would not require any form of collateral for any loan value below the above amount.
- ISO Certified
Through MSME registration, an individual can secure the benefits of ISO certification process. Apart from this, all MSMEs which are registered as per the requirement would get any form of reimbursement for ISO certification.
Hence if an individual wants the above benefits, then MSME registration process is required.
Which Entity can apply for MSME Registration Process?
The following entities can apply for the MSME registration process:
- Sole Proprietor
Any business which has an individual carrying out and managing the affairs can apply for the MSME registration.
A partnership is a formed of business entity where two or more individuals have an agreement to share the profits of the business. The business of a partnership can apply for the MSME registration process.
- Limited Liability Partnership
A limited liability partnership is governed by the provisions of the limited liability partnership act, 2008 (LLP Act 2008). The statuses of the partners are limited to the amount of contribution made by the partnership. LLPs can apply for MSME registration process.
- Producer Company
Any company which is engaged in activities related to producing agriculture produce is known as a producer company. Such companies are present under section 465(1) of the provisions of the Companies Act, 2013. As agricultural activities are one of the main activities of MSMEs, hence this form can go for the above registration.
- Private Limited Company
Any company which is registered under the Companies Act, 2013 or previous company law 1956 can engage in activities of an MSME.
- Hindu Undivided Family
An HUF would have a karta as the manager of the HUF. Apart from the Karta, there are other members of the HUF. A HUF can do MSME registration.
- One Person Company
An entity which is registered as a one person company can go for the process of MSME registration.
- Co-operative Society
Any entity which is registered under the Co-operative societies act can go for MSME registration.
Eligibility Criteria for MSME Registration Online
- Turnover Criteria
The entity wanting to register as an MSME must meet the turnover criteria as specified above.
- Compliance under MSMED Act
Apart from the above, the investor or the owner is required to invest more than Rs. 20 Crore and the turnover must be lesser than 100 Crore. This requirement of turnover lesser than 100 Crore is as per the amendment in May 2020. This turnover has to be in the plant and machinery either for the manufacturing sector or the service sector.
How to Apply for MSME Registration/ Udyam Registration?
- Fill the Application Form
The process of MSME registration can either be carried out offline or online. The applicant would have to fill in the application form with all details. After filing the application form the requisite documentation have to be prepared.
- Prepare Documentation
In the next step, the applicant is required to submit all the requisite documentation for the MSME application. All information asked for should be submitted as per the requirements for MSME registration. It takes about three working days for the documentation to be processed.
- Submit the Application
After providing the documents; the applicant is required to submit the same. Usually this would take about two to three working days for submitting the documentation. When the documents are submitted, the authority will verify the same along with the application.
- Issuance of Certificate
In the final step, the authority will verify the documentation. If all the documents meet the requirement of verification, the same will be accepted. The certificate of registration will be issued to the applicant.
- In an RBI update released in August 2020 all enterprises are required to obtain the udyog registration certificate. Lenders would require to take the udyog registration certificate from all entrepreneurs
- Udyog Memorandum and Udyog Aadhaar Memorandum of the MSMEs obtained till June 30, 2020 shall remain valid till March 31, 2021. All enterprises under the MSME which are registered till June 30, 2020 would require filing the new registration (Udyam Registration) in the portal before March 31, 2020.
- The Value of Plant and Machinery must be according to the Written down Value as per the requirements.
Documents Required for MSME Registration Process
- PAN Card Details/ Information of the members of the organisation or the entity.
- Aadhar Card Details of all the members of the organisation.
- Proof of ownership – Either through some form of agreement, utility bills, leased document or property documents of the premises.
- If in case the place being used is a rented premises then the proof of the payment of utility bills must be provided. Apart from this, a No Objection Certificate is required to be submitted to the authority.
- Copy of Purchase Bill of every capital goods and raw materials purchased.
- Copies of Sale Bills of all the products that are sold.
- Copy of the Partnership Deed in case the firm is a partnership entity or a limited liability partnership.
- Memorandum of Association of the company.
- Articles of Association of the company.
- Copy of the resolutions undertaken in shareholders and board meeting.
- Copies of any permits or industrial licenses required under the respective acts.
- An affidavit on Rs. 10/-Non-Judicial Stamp Paper. This must be attested and notarised by a judicial officer.
- Purchase Bill of the Machinery Installed.
- Bills relating to Purchasing and Installation of plant and machinery.
- Information of Accounting and Bank Account Statement.
How to reach Enterslice for MSME Registration/ Udyog Registration?
Frequently Asked Questions
What is the main authority for issuing certificates for MSME registration?
There are different departments detailing with MSME registration process in each and every state. Hence, the whole process can be carried out online for MSME registration. When it comes to issuing certificates, then the District Industries Centre (DIS) provides certificates for MSME.
Which details have to be submitted for MSME registration?
The following details have to be submitted for MSME registration:
• Identification Details- Name, Address, Pan card Information, Aadhaar
• Social Category- Belonging to which group
• Gender Category
• Address of the Plant or the Premises
• Location of the Plant or Premises
• Physical Status of the Applicant
• Incorporation Details of the Entity
• NIC Code
• Information Pertaining the Bank
• Any investment information with the plant and machinery
• Equipment Related Information.
Is MSME registration the same as Udyam Registration?
Yes the meaning of Udyam is the same as MSME. Hence an applicant wanting to start an MSME would have to utilise the process related to Udyam registration. This facility is completely online.
Can existing entities apply for this form of registration?
Yes both existing entities and new entities can apply for this form of registration. As long as the turnover and eligibility criteria have been met, the above can apply.
Is there any form of expiry period for this certificate?
No, there is no expiry period for this certificate. As long as the business carried out is in compliance with the requirements of the MSMED Act 2006, the business would be viable and perpetual.
Are trading companies allowed to carry out MSME?
No only manufacturing and service entities are allowed to carrying out MSME registration. Companies that carry out trading activities are not covered under the scheme provided by MSME. Government schemes and benefits are only provided to companies that are budding and engaged in start-up services.
If I have different branches of MSMEs do I need multiple registrations?
No there is a single unified registration process for MSME. Hence there is no requirement to secure multiple registrations for different MSMEs. Only one registration is required to be secured.
What is the meaning of Udyog Aadhaar?
This Udyog Aadhaar is a 12 digit identification number issued by the MSME department. This is issued as a proof of identity for a particular MSME.
How many products are preserved for MSME?
Till date there are about 20 products which are preserved for MSME.
How are half yearly returns filed?
Half yearly returns (tax) can be filed by an MSME by utilising MSME Form-1.
Is credit rating required for an MSME?
Credit rating is a process to access the borrower’s ability to repay a particular loan. MSME registered under this scheme would be required to be rated. Though the above step is not mandatory, it is beneficial to get rated as all financial institutions would use this system to access the capability of the MSME to return back the borrowed money.
Will the applicant for MSME registration be provided with a hard copy by the registration authorities?
No, the government of India has made the registration process online. With a view of facilitating paperless environment, the certificate of registration would be provided online. However, as per the request of the applicant, physical copies can be availed or asked.
What is the Udyog Aadhar Registration?
Udyog Aadhar registration is considered as the system related to MSME registration in India. All micro, small and medium enterprises have to secure this form of registration through this process. Such process can be carried out offline as well as online.
Would I require to provide the Aadhaar Card for MSME registration?
Aadhaar card is one of the mandatory documents required for MSME registration. However, if the applicant is another person other than the proprietor, then the aadhaar card of the directors or partners would be required.
Which cities do we provide MSME registration?
Enterslice provides registration in the following cities: Bangalore, Mumbai, Delhi, Kolkatta and Noida.
Which activities are not allowed to be carried out by MSME’s in India?
The following activities cannot be carried out by MSME’s in India:
• Forest and Logging activities;
• Activities related to Fishing and aquaculture;
• Activities related to retail trade, Wholesale, and repair of motor vehicles and motorcycles;
• Activities related to Wholesale trade except for motorcycles and motor vehicles;
• Activities related to Retail Trade Except of motor cycles and Motor Vehicles.