Since the beginning of this millennium the inclination of Indian Youth towards start-ups have surged many folds. Approximately $ 39 billions were invested in Indian Start-ups (sourced from TOI & verified through Tracxn). We deeply believe in gaining and building together so here are the details uncovered for what MSME is and how it can help our enthusiastic entrepreneurs to start their own ventures, and what are the value additions they could gain from having this Unique Identification Number for Enterprise.
What is MSME?
MSME is an acronym for Micro, Small and Medium Enterprises. The MSME classification is based on the investment cap for that enterprise and the machinery or equipment in use by it. For a Manufacturing and Service enterprise, the investment criteria for each of these is as follows:
| For Manufacturing | For Service Provider | |
| Enterprise | Investment in Plant & Machinery | Investment in Service Industry |
| Micro | Upto Rs 1 Crore | Upto Rs 5 Crore |
| Small | Above Rs 1 Crore and upto Rs 10 crore | Above Rs 5 Crore and upto Rs 50 crore |
| Medium | Above Rs 10 Crore and upto Rs 20 crore | Above Rs 50 Crore and upto Rs 100 crore |
How does it Add Value to your Start-up
Though MSME certification/registration is not mandatory, but if a startup is fulfilling/falling above-mentioned criteria, it is as always advisable to obtain “UDYAM” earlier called as “UDYOG AADHAR” a 19 digit permanent unique identification number issued by Ministry of Micro Small and Medium Enterprises for an enterprise just like “Aadhar Card” for Individual Unique Identification.
Obtaining MSME/Udyam will make start ups eligible for several benefits from Indian Government including entitlement of interest on delayed payment in market due to unavoidable circumstances.
On a broader aspect, not all start-ups survive long. Some of them lack planning the right structure of business while other fall prey to irregular fund sources. Despite several schemes and initiatives by the government, in the last 2 years, about 40% start-ups were shut while about 75% of them didn’t ever try again, bad-debts are one of the major reasons for untimely shut-downs of ventures in early growth phase.
Therefore, to support and promote the most employing sector of the Indian Economy, another sector came up for the inclusion of start-ups Micro, Small and Medium Enterprises (MSME)
As MSME, the start-ups can now avail the benefit of credit facilities, subsidies, and tax exemption schemes offered by the government for MSMEs and the most important and best advantages cum privilege given to all MSME holders is one step procedure for recovery of money from “MSME Forum” known as Statutory Arbitration.
Few Benefits of registering as an MSME
- Registered MSMEs have lower interest rates on bank loans by a huge margin. MSMEs can avail loans at as low as 1% with friendlier EMIs.
- Registered MSMEs with an MSME Certificate can avail tax exemption.
- Minimum Alternate Tax or MAT for registered MSMEs can be extended to 15 years. Whereas the regular MAT is 10 years.
- MSMEs registered under the Ministry of MSMEs get priority on applications of licenses and certificates issued by the Government of India.
- A registered MSME gets various rebates and concessions on patents and the costs of setting up industry.
- Owners of registered MSMEs can easily access credit for their businesses.
- MSMEs are given preference for government tenders on the Udyam Registration Portal as it is integrated with Government e-Marketplace and other portals that give ease of access to MSMEs on marketplaces and e-tenders.
- MSMEs can avail a One Time Settlement Fee for delayed or non-paid amounts of MSME
Further, the government of India offers so many schemes like the Prime Minister Employment Generation Programme (PMEGP), Revamped Scheme Of Fund for Regeneration Of Traditional Industries (SFURTI), Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE), Skill Upgradation & Mahila Coir Yojana (MCY) etc.