For Small Business, Government brings with MSME Registration to provide benefits and give incentives to promote Entrepreneurship. Also by taking MSME (Micro, Small and Medium Enterprises) Registration under the Act, the small business can get loans at a cheaper rate of Interest. MSME Registration also is known as Udyog Aadhaar Registration.
The government of India to promote, protect the Interest of the MSMEs and to incentivise MSMEs introduced Micro, Small and Medium Enterprises Development Act, 2006.
What are MSME Enterprises?
MSME enterprises of manufacturing sectors can be categorized on the basis of the amount of investment in plant and machinery –
1.Micro enterprises– Entities which invest less than ₹ 25 lakhs in plant and machinery known as Micro Enterprises.
2. Small enterprises– Entities which invest more than equal to ₹ 25 lakhs but less than ₹ 5 crores in plant and machinery are known as small enterprises.
3. Medium enterprises– Entities which invest more than/equal to ₹ 5 crores but less than ₹ 10 crores in plant and machinery are known as medium enterprises.
MSME enterprises in the service sector can be categorized on the basis of amount of investment in equipment-
1. Micro enterprises– Entities which invest less than ₹ 10 lakhs in the equipment
2. Small enterprises– Entities which invest more than ₹ 10 lakhs but less than ₹ 2 crores
3. Medium enterprises– Entities which invest₹ 2 crores but less than ₹ 5 crores.
Following are the benefits to the MSME Registration in India:-
1. Easy access of Bank Funds
2. Eligible to get Collateral Free Loan
3. Low rate of Interest
4. Electricity at Concessional rate / Power Tariff Subsidy
5. Exemption of Earnest Money Deposit (EMD)
6. Access of Bid document free of cost
7. Various Tax benefits like Income Tax, Octroi
8. Capital Investment Subsidies like CLCSS / TUFS
9. Interest in Delayed Payment
10. Eligible for various Government subsidies
Easy access of Bank Funds
Enterprises can avail various government schemes which are specially designed for MSME Enterprises.
Collateral Free Loan
Some Government schemes are designed where MSME can avail collateral free loan. This is done to promote the business of MSME.
Low Rate of Interest
Generally, Banks offer funds to MSME at low rate of Interest to promote and handhold the MSME.