Before discussing the MSME registration, let’s see what MSME is. “MSME” stands for Micro, Small, and Medium Enterprises. They are also known as SSI or small-scale industries. In a developing country like India, MSMEs act as an engine that helps in the growth of the economy and promotes development in the economy.
According to the survey, the MSME sector contributes to 45% of Total Industrial Employment. Also, it has 50% of Total Exports and 95% of all industrial units in the country. More than six thousand types of product manufacture in these industrial units. That’s why these industries are considered as the backbone of the Indian economy.
Definition According to the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006
According to the MSMED Act 2006, the Micro, Small and Medium Enterprises is broadly divided into two Category:
- Manufacturing Enterprises- This enterprise is explained in terms of investments in plant and machinery. The enterprises are engaged in manufacturing goods.
- Service Enterprises:- They are defined in terms of investment in equipment. Service enterprises deals in providing or offering services.
The classification is given below-
1. The Manufacturing Sector (In terms of investment in Plant and Machinery)
- Micro Enterprises – Does not exceed twenty-five lakh rupees
- Small Enterprises – More than twenty-five lakh rupees but does not exceed five crore rupees
- Medium Enterprises – More than five crore rupees but does not exceed ten crore rupees
2. The Service Sector (In terms of Investment in equipment)
- Micro Enterprises – Does not exceed 10 lakh rupees
- Small Enterprises – More than ten lakh rupees but does not exceed two crore rupees
- Medium Enterprises – More than two crore rupees but does not exceed five crore rupees
The MSME Authority provides two types of certificates:-
- A provisional MSME registration certificate is given to the companies which are valid for only five years.
- Permanent Registration Certificate to that company. there is no time limit in the permanent registration certificate.
Let’s discuss some more about each of the certificates.
Provisional Small Scale Industry (SSI) Registration
To obtain MSME registration, first of all, you have to apply for a provisional SSI registration certificate. This certificate is for the pre-operation period i.e. when you have not started your operations but have a business plan. It also helps the MSME unit obtain term loans and working capital. It is valid for up to five years.
One can apply for it through online as well as offline with the necessary documents.
- Three passport size photographs of proprietors or partners or directors.
- In case of a partnership, it requires the photocopy of the partnership deed. The partnership doesn’t have to be registered under the Partnership Act.
- In the case of a private company, it requires a copy of the MOA and AOA along with the certificate of incorporation. Also, a copy of the resolution of the company authorizing one of the Directors of the company to sign the application form and also appear for the interview.
- Copy of NOC from the landlord with proof of legal possession (rent receipt), Proof of Ownership, Proof of legal possession (rent receipt), and the Power Load Authorized by the connection holder to the applicant.
- Consent obtained for the establishment of the unit from the Delhi Pollution Control Committee. It is important for provisional registration.
Some of the documents may differ because each state has different requirements for documents. The above-given documents are minimum requirements which are to be submitted.
Start the Business
Now, the owner can start the production in the factory with the MSME certificate. After the commencement of production, they can apply for the permanent license.
Permanent SSI registration
When you start your business or production, you should apply for permanent SSI registration. This can also be done by applying online through the state website. For offline, you can apply through the Zonal office or District Office of the Department.
Requirements for applying Permanent Registration Certificate
- In case the unit is listed in Schedule-III of the Industrial Licensing Exemption Notification then the person can apply for a Permanent Registration Certificate without an industrial license. Other units must have an industrial license.
- However, The industrial unit should get approval from the pollution control board, the drug control board, etc.
- The industrial unit should not violate any locational restriction.
- The original value of plants including machinery should be within prescribed limits for which you are applying.
- The unit should not be a subsidiary, owned or controlled by another industrial undertaking.
- To do the registration under the MSME act, the owner has to fill a form. They can do it online as well as offline. The form is available on the website.
- They can do individual registration if a person wants to do registration for more than one industry
- Aadhar number, industry name, address, bank account details, and some common information are required for the registration of a permanent certificate.
- In this, they can provide self-certified certificates for registration.
- There are no registration fees is required for this process.
- Once the detail-filled and upload you will get a registration number.
Benefits of MSME Registration:
- It has a benefit that bank loans become cheaper as the interest rate is very low i.e. around 1 to 1.5% which is much lower than interest on the regular loans.
- Under MSME, various tax rebates are offered to the owners.
- Credit for minimum alternate tax (MAT) is also allowed. It can be carried forward for up to 15 years instead of 10 years
- For MSME industries, many government tenders are especially open for them.
- They can get credit easily.
- Many rebates and concessions are available for them which reduces the cost of getting a patent or setting up of the industry once they are registered.
- Business registered under MSME is given a higher preference for government license and certification.
- There is a One Time Settlement Fee for non-paid amounts of MSME.
If you want to apply for Company incorporation, you can go with Company Registration Online
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