MSME Registration and Its Importance
Posted: Oct 29, 2018
Registering a start up company as a micro, small or medium scale enterprise under MSMED Act in India automatically conveys a plethora of benefits on the enterprise. The MSME registration is a totally optional process for all relevant enterprises but companies prefer the certification because of the following reasons:-
- Under Credit Guarantee Fund Scheme, micro and small enterprises get bank loan without collaterals;
- Registered businesses are entitled to charge compound interest on delayed payments from buyers
- Banks charge comparatively lower rate of interest from MSME registered companies.
There are many more such advantages that registered companies enjoy. Hence it is sensible to register your business with the Ministry of MSME at the onset itself.
What are the Criteria for MSME registration?
The Ministry clearly specifies the outline defining segregation of enterprises into micro, small and medium scale business entities:-
- Micro industries are ones where the investment in the business is not more than Rs. 25 lakh in the manufacturing sector and not exceeding Rs. 10 lakh for industries in service sector.
- Small industries are the ones whose investment does not go beyond Rs. 5 crore in the manufacturing segment and Rs. 2 crore for companies involved in services.
- Medium scale enterprises are one whose investment does not go beyond Rs. 10 crore for manufacturing companies and Rs. 5 crore for ones involved in service sector.
What is MSME Registration Process?
MSME registration can be done online as well as offline. The offline process involves filing the relevant form and submitting it along with self-attested documents like Personal Aadhar number, Industry name, and bank account details, address proof of the registered office, certificate of incorporation, Partnership Deed, bill copies of machines purchased, sales and purchase bills.
MSME Registration online
Online MSME registration can be done from the government website. The registration form requires the applicants to fill in details like Aadhar Number, name of entrepreneur, social category, gender, physically handicapped, name of enterprise, type of organisation, PAN, address of the factory/plant, registered office address, mobile number, email id, date of business commencement, bank account number, IFSC code, main business activity of enterprise, NIC 2 Digit code, additional details of the business, number of employees, investment amount in plant and machinery in lakh. The scanned copies of Aadhar card is required to be uploaded here.
Udyog Aadhar Registration
Udyog Aadhar is a unique 12-digit number that is an official government identification number. The Udyog Aadhar is granted by the Ministry of Micro, Small and Medium scale enterprises. Once the MSME registration is done, the ministry provides the relevant certification and the Udyog Aadhar number. While this number can be applied for online as well as offline – with the Udyog Aadhar number the unit gets special government subsidies, 15% subsidy for upgradation of technology and 50% subsidy for getting patent registration; financial support to participate in industry specific exhibitions in foreign countries etc.
The Udyog Aadhar Memorandum, also called UAM is a document meant for self-certification of certain mandatory particulars of the MSME like its bank details, owner’s Aadhar details etc.
Is SSI Registration the same thing?
Yes, it is one and the same thing. SSI registration is for small scale business units and their ancillary units. The SSI unit needs to be registered with the Director of Industries at the state government level. With such registration, the enterprise gets special provisions like priority sector lending, excise exemption scheme, also exemption under direct tax laws, and interest on delayed payment etc.
SSI Registration online
The SSI registration online can be from the website of the Ministry of MSME. In fact, the application form for SSI registration and MSME registration is exactly the same including the details that need to be furnished. The Provisional Registration certificate is granted in the pre-operation stage. The provisional certificate is applicable for a period of five years. Once operations commences, the unit needs to apply for the Permanent registration. However if the business does not start its production in the initial five years, it can re-apply for the provisional certificate.
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