How MSME Registration helps in Business Growth
MSME is a Micro, Small and Medium Enterprises which contributes huge into the growth of the economy. The MSMEs are the backbone of the economy as it is accountable for 45% of India’s total industrial employment and half of the country’s total exports. It provides many opportunities for employment as well. MSME registration helps in business growth. It provides many advantages to the business that they can avail upon the registration without imposing any limitation. This includes non – monetary as well as monetary advantages in relation to trade and the development of the entrepreneurs.
This article will provide you with the insights of the advantages upon the MSME registration and how it helps in the growth of the business.
Need of MSMEs in India
The MSME registration proves quite beneficial for the Micro, Small and Medium Enterprises. The MSMEs are more likely to experience economic turbulence, unlike the bigger firms. Therefore, when the MSMEs are registered, it provides many benefits to them and allows them to flourish smoothly by providing them with access to various growth-centric schemes and financial aid as well.
The purpose of MSMEs in India is: –
- To improve fiscal advancement.
- To create a regular earning source.
- To ensure the growth of the business.
- To overcome obstructions and ensure self-sufficiency.
- To improve the production and growth by replacing the outdated technology with the new ones
- To provide fiscal aid to those industrial sectors who are struggling to safeguard and protect their existence due to the extreme competition in the market or by any other reason.
- To attract industries towards the growth-centric schemes.
- To adopt advanced technology by implementing new technology.
- Providing easy credit facility to MSMEs with a lower rate of interests and repayment policy.
In What Ways does MSME Registration help in the Growth of the Business?
Many schemes, subsidies and incentives are provided under the MSME Act which helps the micro, small and medium enterprises to grow and contribute towards the development of the economy. MSMEs have to confine their investment to a lower limit in order to avail MSME benefits. Such investment has been explained below: –
The enterprises involved in the production, manufacturing, processing and preservation of the goods can be defined as MSME as: –
- Micro Enterprises: A business whose investment in plant and machinery is not more than Rs. 25 lakh.
- Small Enterprises: A business whose investment in plant and machinery exceeds 25 lakh but is less than Rs 5 crores.
- Medium Enterprise: A business whose investment in plant and machinery exceeds Rs. 5 crores but is less than Rs. 10 crores.
Those enterprises that are involved in the service sector can be defined as MSME as: –
- Micro Enterprises: A business whose investment in equipment is not more than Rs. 10 lakh.
- Small Enterprises: A business whose investment in equipment exceeds 10 lakh but is less than Rs 2 crores.
- Medium Enterprise: A business whose investment in equipment exceeds Rs. 2 crores but is less than Rs. 5 crores.
Though it is not necessary to register an MSME, the registration offers many benefits to the small and medium-sized industries and ensures their growth. MSME registration helps in business growth in various ways. All the entities such as proprietorship company, LLP, partnership firm, Public limited and private limited companies can avail benefits under the MSMED Act. With the dynamic growth and agility, MSMEs have become quite innovative and has adapted itself to survive the economic challenges.
What is the procedure for MSME Registration?
To Register a MSME, the following procedure has to be followed: –
- The applicant is required to fill an application form with the details containing company name, registration number, GST number and other necessary details.
- Further, personal details such as PAN number, name, address, photograph, bank details are required to be mentioned in the form by the applicant.
- An official executive shall review the form once it is submitted by the applicant. The executive will intimate to correct any discrepancies if occurred in the application.
- A digital MSME Registration Certificate shall be issued to the applicant upon the approval of the application.
Validity of the MSME Certificate
Once the MSME is registered, the certificate is valid for a lifetime. The Validity remains into existence as long as the company remains and carry out its operations. No provision for renewals applies to the MSME Certificate.
Benefits of MSME registration in Business Growth
MSME registration helps in business growth by providing many benefits to the MSMEs. Such benefits are as follows:
· Easy credit from banks
The MSME registration helps the MSMEs to avail the bank loans at a cheaper rate of interests. The present rate of Interest for registered MSMEs is 1% to 1.5%.
· Credit for Minimum Alternate Tax (MAT)
The MSME registration helps the MSMEs to avail credit for minimum alternate tax, which can be continued for up to 15 years.
· Eligible to access Government Tenders
The registered MSMEs are eligible to access the e-tenders, with the integration of the Udyam registration portal with government e-marketplace.
· Avail concessions and rebates
Upon the registration of the MSMEs, rebates and concessions can be availed, which allows to spend less cost in filing a patent application for new technology.
· One time settlement fee
The registered MSMEs can opt for one time settlement fee in the case of repayment defaults against the loans.
· Exemption on Income Tax
Registered MSMEs are benefited from an exemption on income tax.
MSME registration helps in business growth in several ways. Its purpose is to uplift the micro, small and medium enterprises (MSME) and help it to develop and grow financially as well. India’s growth is because of the contribution made by MSMEs in various ways that has been discussed above. The innovations and improvisation in the technology, manufacturing and services at the end of the MSMEs are boosting the economic growth and investment.