MSME Registration in India
MSME stands for Micro, Small and Medium Enterprise. MSME's are the foundation of any economy and have been accepted as the heart for economic growth and for promoting equitable development in all over the world. The labour intensity of the MSME sector is much higher than that of others in an economy as the MSMEs constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports. In India, MSME has been introduced in year 2005 under The Small and Medium Enterprises Development Bill 2005 which was enacted in June 2006 and renamed as "Micro, Small & Medium Enterprises Development Act,2006. the MSME's contribution is highly remarkable in the overall industrial economy of the country. MSMEs account for 45% of India's manufacturing output and about 40% of India's total exports. As per the provisions of MSMED ACT 2006, MSME definition is based on the 2 basic conditions that needs to be fulfilled in order to get registered and receive the benefits of being a MSME :-
(i) Investment in plant and machinery for those who are engaged in manufacturing or production, processing or preservation of goods.
(ii) On the investment in equipment for enterprises engaged in providing or rendering services.
MSME in both the manufacturing and service sector can obtain MSME Registration under the MSMED Act. Although getting MSME registration is not mandatory but it is always suggested to small and medium enterprises to get it done In order to gain variety of benefits provided by different parties to business. All classes of enterprise whether Proprietorship, Hindu Undivided Family, Association of Persons, Co-operative Society, Partnership Firm, Company or Undertaking can apply for the registration. Types of Registration for MSME:-
1) Provisional Registration
Provisional registration is granted to a unit at its pre- investment period to enable it to take necessary steps to apply for financial credit, land or an industrial set, water, power or telephone connections, etc.
A provisionally registered industrial unit when it is about to go into production is to apply for grant of Permanent / Final Registration. An existing and functioning industrial unit is eligible to apply for Permanent / Final Registration without going into provisional registration processes.
De-Registration of MSME:- A MSME need to be de-registered in following cases-
1) where investment limit increases the limit specified under MSMED ACT 2006.
2) when an registered enterprises starts manufacturing any new item or items that require an industrial license or any other kind of statutory license.
Advantages of Registering MSME under MSMED Act,2006:-
Benefits from Banks:Preferential treatment in case of loan having lower bank interest rates.
Tax Benefits:MSME may enjoy an excise exemption scheme as well as exemption from certain direct taxes in the initial years of your business.
Benefits from State Governments
Most states offers sales tax exemption and purchase preference on goods produced.
Benefits from Central Government
Under Credit Guarantee Scheme (CGTMSE) Central Government provides credit to various MSME's.