Boosting Business: Advantages of MSME Registration for Indian Enterprises

Heard of Oilmax Systems Pvt Ltd, Minimac Systems Pvt Ltd, Assam Carbon Products Ltd or Emkay Taps and Cutting Tools Ltd? All of these have one thing in common: they are all MSMEs. The Micro, Small and Medium Enterprises (MSME) sector is a booming industry with monetary improvement and innovation being the primary goals. With the rise in government initiatives, evolving customer possibilities, and increased access to technology and resources, registering as an MSME is exponentially beneficial. On World MSME Day, we are discussing the MSME industry in India, its impact on the economy, the benefits of registering your venture as an MSME, and the projected future.

Key Statistics we All should Know

The Government of India introduced the term Micro, Small, and Medium Enterprises (MSME) in accordance with the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006. 

• With over 63 million substantial, MSMEs contribute around 30% to the GDP, constitute 48% of the exports, and provide livelihoods to more than 120 million people.
• The number of MSMEs in the country is expected to grow from 6.3 crore to ~ 7.5 crore in the coming times. The growth is projected at a CAGR (Compound Annual Growth Rate) of 2.5%. 
• As of March 2024, the number of MSMEs registered on the Udyam portal and the Udyam Assist Platform (UAP) has hit 4,00,42,875.
• In October 2023, the gross bank credit deployed to MSMEs under priority sector lending amounted to US$279.18 billion. This marked a 22.8% increase from the previous year and an 11.8% rise from September 2023, according to the latest RBI data on sectoral deployment.

MSME and Small Business Jobs Generation

The easiest way to classify enterprises is via the number of people employed. In the Indian economy, small businesses are the second-largest employment providers. Less than 250 individuals are working in small and medium-sized enterprises. Less than 10 employees work for micro-enterprises, small businesses have a range of 10 to 49 employees and medium-sized businesses have a range of 50 to 249 employees. Large enterprises employ 250-plus people. 

• Small companies also offer various opportunities in the rural and urban areas of the country. The Indian economy generally experiences unemployment, and small firms have helped increase employment opportunities for people. 
• MSMEs created 120 million jobs across all industries in India.
• As of 02.08.2023, as per the Udyam Registration Portal, the total number of persons employed in MSMEs that were registered from 01.07.2020 to 01.08.2023 in India was 12,36,15,681.
• 96% of the industrial units belong to small companies in the Indian economy. The small companies account for 40% of the nation’s overall industrial production and 42% of all Indian exports. 
• In India, 7.56 lakh employment was created, home to 75,000 recognised start-ups, 12% cater to Information Technology services, 9% to healthcare and life sciences, 7% to education, 5% to commercial and professional services and 5% to agriculture. 
• Over the last six years, there has been a 110% yearly increase in the creation of jobs.

Impact on the Indian Economy

Medium-sized businesses, small companies, and corporations are the backbone of the Indian economy.

• MSMEs provide almost 45% of industrial output and 40% of exports.
• According to the Ministry of Commerce and Industry, the recent start-ups of around 10,000 were approved in 156 days, compared to the initial 10,000, which took 808 days to get approved. 
• Also, the Tier-2 and Tier-3 cities are said to account for 49% of the start-ups.
• The GDP is significantly raised by overall manufacturing output, which contributes to 33.4% and manufacturing itself sums to 6.11%. 
• The share of MSME Gross Value Added (GVA) in All India Gross Domestic Product (GDP) is around 30%.
• The share of MSME manufacturing output in All India manufacturing output is around 36%. 
• The share of MSME-related product exports in All India exports is around 45%.

Government Policies and Schemes for MSMEs

The MSME term, initiated and run by the Ministry of MSME, refers to bodies engaged in the manufacturing, production, processing, and preservation of goods and commodities.

MSME Ministry heads five statutory bodies: KVIC, Coir Board, NSIC, NI-MSME and the MGIRI.

• Pradhan Mantri Mudra Yojana (PMMY): This scheme was launched by the Prime Minister on April 8, 2015, for providing loans of up to ₹ 10 lakhs to non-corporate, non-farm small or micro-enterprises. These loans are classified as MUDRA loans under PMMY.
• Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE): This trust is established by the Government of India under the Ministry of Micro, Small and Medium Enterprises (MoMSME) and the Small Industries Development Bank of India (SIDBI). Launched in 2000, the CGTMSE scheme offers credit guarantees to financial institutions that provide credit facilities of up to Rs. 2 crores, which has now been increased to Rs. 5 crores.
• Animal Husbandry Infrastructure Development Fund (AHIDF): This fund incentivises investments by individual entrepreneurs, private companies, MSMEs, Farmers' Producers Organisations (FPOs) and Section 8 companies to establish the dairy processing and value addition infrastructure, meat processing and value addition infrastructure and Animal Feed Plant.
• PM Vishwakarma Scheme: Launched on September 17, 2023, by the Prime Minister, it provides end-to-end support to artisans and craftspeople who work with their hands and tools. The Scheme covers artisans and craftspeople engaged in 18 trades, including Carpenters, Boat Makers, Armourers, Blacksmiths, Locksmiths, Goldsmiths, and more.
• Prime Minister’s Employment Generation Programme: Launched in August 2008, this programme is a credit-linked subsidy scheme, administered by the Ministry of Micro, Small and Medium Enterprises (MSME). PMEGP aims to generate employment opportunities through the establishment of micro-enterprises in the non-farm sector, benefiting both rural and urban areas. 
• Scheme for Micro and Small Enterprises Cluster Development Programme (MSE-CDP): The MSME Ministry has adopted the Cluster Development approach as a key strategy for enhancing the productivity, competitiveness, and capacity building of Micro and Small Enterprises (MSEs) and their collectives in the country. A cluster is a group of enterprises located within an identifiable and, as far as practicable, contiguous area or a value chain that goes beyond a geographical area and produces the same or similar products or complementary products or services, which can be linked together by standard physical infrastructure facilities that help address their everyday challenges.
• Vivad se Vishwas I-Relief to MSMEs: This scheme offers relief to MSMEs by refunding performance and bid securities forfeited during the pandemic, revoking debarment, and more.
• Interim Budget 2024-2025 Inclusion: In the Interim Budget 2024-2025, it was announced that a corpus of Rs. 1 lakh crore (approximately US$11.99 billion) would be established, offering 50-year interest-free loans.https://www.localsamosa.com/news/goregaon-mulund-road-project-9438859 This initiative aims to incentivise the private sector, particularly MSMEs, to enhance research and innovation in emerging sunrise domains. 

Benefits of MSME Registration in India

With access to numerous government policies and schemes, the MSME sector is witnessing substantial growth. The Ministry of MSME is also working diligently to encourage MSME enterprises engaged in the manufacturing, production, processing, or preservation of goods to help entrepreneurs realise that starting up no longer costs an arm and a leg.

However, first, let’s understand the definitions of micro, small, and medium enterprises.

To register as an MSME, simply follow the online registration process. It requires your Aadhar number to get it certified. You can obtain the certificate online without needing a physical copy. Additionally, the process has been simplified further for enterprises holding an MSME Certificate to obtain licences, approvals, and registrations in any field for their business from their respective authorities. Such that they can produce the Certificate of MSME Registration while applying. Furthermore, applicants can reimburse the ISO Certificate Expenses by submitting an application to the respective authority, supported by MSME Certificates.

We learnt about the various government schemes and policies for MSMEs. What other benefits are there?

• Your enterprise may avail of the Bar Code Registration subsidy. A 50% subsidy is available for patent registration upon application to the respective authority, as well as for Trademark registration in selected categories.
• There’s a subsidy on the expenditure for obtaining product certification licences from National or International standardisation bodies. Under this, a subsidy of up to 75% of the actual expenditure is granted towards the licensing of the product to National or International Standards. The maximum GOI assistance allowed per MSME is Rs. 1.5 lakh for obtaining product licensing or marking to National Standards and Rs. 2.0 lakh for obtaining product licensing or marking to International Standards.
• As per the RBI Master Circular on lending to the MSME sector dated July 1, 2010, a composite loan limit of Rs . 1 crore can be availed from banks.
• Under the Support for Entrepreneurial and Managerial Development of SMEs scheme, financial assistance ranging from 75% to 85% of the project cost, up to a maximum of Rs. 6.25 Lakh per idea, is provided. This assistance is limited to 10 ideas for Business Incubators (BIs) or the host institute. The BIs are also eligible to avail Rs. 3.78 lakh for infrastructure and training expenses for incubating 10 ideas (Rs. 37,800 per idea).

With the support from the Government and the younger generation’s interest in starting a new business, the MSMEs are proliferating.