In today’s vigorous Economy, where small and medium enterprises play an important role in steering innovation and growth, we shall not underestimate the importance of MSME (Micro, Small and Medium Enterprises) registration. This sector forms the backbone of the economy which significantly contributes to the GDP which generates employment and boost exports. For increasing the growth of all these enterprises, the government introduces MSME registration which is a process offering a multitude of benefits, this ranges from giving access to the financial assistance and provide credit facilities in granting the access for government schemes and subsidies.
This is a formal process by which the businesses in Micro, Small and Medium sectors acquire a registration certificate. Now, this certificate acts as a statement to the business as an MSME and grants access to the numerous benefits given by the government and financial institutions. The Udyam Registration Portal, earlier known as Udyog Aadhar, which facilitates the registration process. Businesses need to provide essential information such as the Aadhar number, Business address proof and investment details.
Classification of MSME:-
Micro, Small, and Medium Enterprises (MSMEs) which are involved in production, manufacturing, processing or providing services of goods and commodities. It includes both traditional manufacturing industries and service sectors.
This concept of Micro, Small and Medium Enterprises (MSMEs) was introduced by government of India by Micro, Small & Medium Enterprises Development (MSMED) Act, 2006. It aims for promoting, supporting and increasing the competitiveness of the enterprises in India.
According to the Act, enterprises are based on the investment in plant and machinery or the equipment for the manufacturing and production activities. The classification criteria has been revised reflecting the changing economic scenario and business environment.
According to the latest classification of MSME:-
- Micro Enterprises: Rupees 1 crore investment in plant and machinery and/or up to Rupees 5 crore of turnover.
- Small Enterprises: Rupees 10 crore of investment in plant and machinery and/or up to Rupees 50 crores of turnover.
- Medium Enterprises: Rupees 50 crore Investment in plant and machinery and/or up to Rupees 250 crore of turnover.
Key Features of MSME:-
The MSME sector plays an important role in Indian economy and has significantly contributed to development. Importance of MSMEs in India is:-
Employment Generation:-
MSMEs are significant source of employment which provide opportunities to millions of people, which include those in the backwards and rural areas. It creates jobs to help reduce unemployment and alleviate poverty.
Development of Backward and Rural Areas:-
MSMEs contribute to development of rural and backward regions by establishing manufacturing and service facilities. This decentralizes economic activities helping in balanced growth.
Export Promotion:-
MSMEs do have a great potential of Promoting Indian products in International Market. Its ability to adapt quickly, produce specialised goods and offering the competitive price which contributes for the growth of India’s exports, increasing the foreign exchange earnings and strengthening the country’s economy.
Funding and Subsidies:-
The government gives financial assistance, subsidies and incentives to support MSMEs. It includes access to finance, collateral free loans, interest rate concessions and tax benefits which makes it easier for entrepreneurs for setting up and expanding the businesses.
Government Support:-
The government promotes and support the growth of MSMEs from policies and initiatives such as MSME registration which came as the make in India campaign, Digital India, Skill India and others. All these initiatives aim to create an environment for the sector to thrive.
Growth in the Domestic Market:-
MSMEs cater for the growing demand in domestic market, which contributes to overall economic growth of country. It offers different products and services which meets the needs of different consumer segments and foster the economic development.
Lower Capital Requirements:-
While comparing to the large scale industries, MSMEs require less capital investment making it feasible for the aspiring entrepreneurs for entering manufacturing sector. This encourages innovation, competition and entrepreneurship.
Manpower Training:-
MSMEs provide on the job training to employees which enhance their employability and skills. It improves the overall quality of workforce and contributes to development.
Raw Material and Machinery Procurement:-
MSMEs benefit from the government plans which promote access to the raw materials and machinery at reasonable rates. It helps reducing the production costs and increased competitiveness.
With this contribution to the GDP, employment, exports and manufacturing. MSMEs are of paramount significance of overall economic development in the country. The government’s continued focus on supporting and promoting this reflects its recognition of it important role in the economy.
Benefits of MSMEs
Some Key Benefits that MSMEs have:
Employment Generation and Local Development:-
MSMEs are engines for employment, which provide opportunities in urban and rural areas. Creating jobs at grassroot level, all these enterprise contribute in alleviating poverty and developing local community.
Encouraging Entrepreneurship and Innovation:-
It provides a better ground for budding entrepreneurs in unleashing their creativity and innovation. This often introduce novel products, services and processes which disrupt market and lead to technological advancement.
Flexibility and Adaptability:-
The size of MSMEs helps in swiftly adapting to change market conditions and preferences. It allows flexibility which lets it seize opportunities and adjust the strategies.
Promoting Balanced Regional Development:-
MSMEs are much important in having an equitable growth by increasing economic activities to different regions. It helps in reducing regional differences and provide a much balanced distribution of economic benefits.
Contribution to Exports:-
MSMEs engage in the export activities, which boosts the foreign exchange earnings and enhances its global trade relations. This acts as an essential cogs in wheel of international trade.
Nurturing Innovation:-
MSME act as the incubators for experimentation and innovations. Their small scale allows quicker decision making which enables it to adopt innovative practices and technologies.
Fostering Indigenous Industries:-
MSME help in the development of indigenous industries by producing unique, culturally significant and traditional products. This preservation increases the richness of the nation’s economy.
Supporting Sustainable Practices:-
Being in smaller scale, MSMEs could adopt for eco-friendly practices much easily. It has the potential for being leader in sustainable manufacturing and contributing to the environmental preservation.
Enhancing Rural Economy:-
MSMEs provide opportunities for rural populations engaging in productive economic activities without migrating to urban centers. It helps in decreasing the strain on urban infrastructure and resources.
Access to Government Schemes and Incentives:-
Government design schemes and incentives according to the growth of MSMEs. It includes access to credit, subsidies, tax exemptions and multiple financial assistance programs.
Job-specific Skill Development:-
MSMEs provide opportunities to skill development in certain trades and crafts. It helps in preserving traditional skills and pass them to future generations.
Increased Competition and Consumer Choice:-
MSME sector fosters a healthy competition in the market. It leads to better quality products, competitive pricing and a wide choice for the consumers.
Strengthening the Industrial Base:-
MSMEs build a big industrial foundation, giving a diverse range of products and services which collectively better up the economy.
Contribution to GDP Growth:-
The combined impact of MSMEs on GDP is quite substantial. These enterprises collectively make a significant contribution to the country’s economic output.
MSME registration provides the following benefits:
Access to Government Schemes and Incentives:-
Governments offer different schemes, incentives and subsidiary exclusively for the MSMEs. It includes financial support, tax benefits, lower interest rate on loans and assistance with technology upgrades.
Easier Access to Credit:-
MSME registration increases the credibility for the financial institutions, which makes ir easy for securing loans and credit. It is important for small businesses which struggle to access sufficient funds.
Priority Sector Lending:-
Institutions shall often allocate a certain percentage of lending to the priority sector. It results in much favourable loan terms and conditions for registering MSMEs.
Collateral-Free Loans:-
Some governments have introduced policies that allow MSMEs to access collateral-free loans up to a certain limit. This reduces the burden of providing assets as collateral and makes credit more accessible.
Market Opportunities:-
MSME registration provides increased visibility and recognition for your business. This opens up new market opportunities as larger corporations or government agencies often prefer to work with registered MSMEs.
Subsidized Infrastructure Facilities:-
In some cases MSMEs receive subsidised access to industrial infrastructure such as technology park, incubation center and testing facilities.
Intellectual Property Support:-
MSME might provide assistance with registration of Patent, trademark and design registration. It protects the intellectual property assets.
Skill Development and Training:-
Many government run the skill development and training programs specifically for MSMEs. It helps in improving the skills of the workforce and enhancing the overall productivity of the business.
Conclusion
So, while concluding the essentials of MSME registration for businesses these micro and small enterprises have great supportive measures from government it ensures and balances the business. So, by contributing to Micro, Medium and Small enterprises it promotes the large industries as supplementary unit.
These enterprises have to learn about the essentials of MSME registration and strategise the business activity for availing the different benefits under the MSME.
