The MSMEs, or the Micro, Small, and Medium Enterprises play a vital role in the economic growth of the developing nations. In the last five decades, MSMEs have helped India reduce economic disparity, rural-urban divide, and regional imbalances. The Indian MSME sector produces over 6,000 different products, which account for 45% of all industrial jobs, 50% of all exports, and 95% of the country’s industrial units.  

To further strengthen the growth and development of the MSMEs, the Ministry of Micro, Small & Medium Enterprises offers a slew of benefits, schemes, programmes and reward-based competitions that offer a global-level exposure to registered MSMEs.  

Before we discuss more about these incentives, let’s first take a detailed look at what the MSME registration actually is, and how can you register your enterprise using the Udyam portal. 

The MSME Registration and the Udyam Portal  

The Government of India has set up a comprehensive system to expedite and streamline the registration process of enterprises – known as the Udyam Registration. The Udyam Registration is a fully online, paperless process and is based on self-declaration. To motivate the MSMEs to register themselves, Udyam Registration is 100% free of cost.  

It is important to remember that the Udyam Portal is the only portal to do MSME Registration or undertake any of the activity related with the process. No other private online or offline system, service, agency or person is entitled to register any MSME. 

How to register your MSME on Udyam: Step-by-step guide  

As of the latest data available in December 2022, more than 1.25 businesses have been registered under Udyam. The Udyam MSME registration is a fairly easy process, comprising of five simple steps. But before one begins the registration, it is advised to keep the following information handy   

1. Adhaar Number 
2. Permanent Account Number (PAN)
3. Goods and Services Tax Identification Number (GSTIN) 
4. Bank Current Account 

The PAN and GST linked details on investment and turnover of enterprise is taken automatically from the government database. 

MSME Udyam Registration process: 

The online MSME registration process is made incredibly simple and user-friendly by Udyogadharcertificate.in. For any business person, the MSME online registration process is straightforward and is as follows:  

1. Go to the MSME Registration website (udyamregistration.gov.in) and click on ‘Register here’ on the homepage.
2. On the next page, enter your Aadhar details and click on ‘generate OTP.’ An OTP will be sent to the mobile number linked to your Aadhar.
3. Once the OTP is verified, you will be redirected to the form.
4. Fill the form with the required details and click ‘submit’ once you are done. Your MSME Registration application will be processed online once you click ‘submit’.
5.  Once the registration is complete, you will receive an ‘MSME Registration e-certificate’ on the email address you entered in the form. This usually takes 1-2 hours.  

What are the benefits of MSME Registration?

Once you have registered your enterprise on Udyam, you can take advantage of tax benefits, subsidies, MSME loans, and much more. Here are a few advantages of MSME Udyam registration in India: 

• Attractive interest rates on MSME loans- Bank loans for registered MSMEs are available at an attractive interest rate. There are certain small business and MSME lending programmes that don’t demand collateral to avail a MSME loan. IndusInd Bank offers a wide range of financial assistance to MSMEs with customized offers.  
• 50% Off Patent Registration Fees- For the patent registration of their business idea and process, registered MSMEs are eligible for up to a 50% incentive. To use this government programme, a certificate of registered MSME registration is required. 
• Waiver of Overdraft Interest Fee for MSME- A registered MSMEs can receive up to 1% discount on the interest they pay at any bank or financial institution. 
• Eligibility for Industrial Promotion Subsidy- Under numerous government programmes, registered MSMEs can receive industrial promotion subsidies for spreading awareness of their firm around the world. This may involve receiving compensation for attending trade shows, marketing campaigns, and other events. 
• Action against Postponed Payments- When a registered MSME provides goods or services to another company and the payment isn’t made within 45 days, the government gives the MSMEs the authority to levy compound interest on the unpaid balance each month. And the interest that must be paid is three times the rate that the RBI has authorized.  
• Electricity Bill Subsidies- Particularly in the case of manufacturing facilities, registered MSMEs are also qualified for rebates on power bills in certain circumstances.  
• No cost ISO Certification- The Indian government commits to cover all ISO registration fees in the event that a registered MSME obtains ISO certification. MSMEs which are not registered are not eligible for this refund. 
• Long-Term Tax Benefits- Only registered MSMEs are eligible for the maximum 15-year extension of the minimum alternate tax (MAT) credit, as opposed to the standard 10-year extension for all other companies. 
• Obtaining Government Tenders- Since the Udyam Registration Portal is directly connected to a number of government e-marketplaces and State Government’s portals for issuing tenders, registered MSMEs can receive additional assistance and a boost in acquiring government contracts. 

The MSME sector in India is filled with immense potential. To strengthen their capacity and resilience, the Government of India has launched several programmes providing support to existing enterprises and encouraging the creation of new enterprises. The MSMEs are, and will continue to act as engines of sustained economic growth, equitable creation of opportunities and elimination of rural-urban divide. 

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision.  IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.   

The MSME, or the micro, small and medium enterprises are considered the backbone of the Indian economy. The contribution of MSMEs in accelerating the economic growth of the nation has increased manifold in the last 5 years. In 2019-2020, the contribution of Indian MSMEs in the India’s GDP stood at a whopping 30 per cent. The MSME ministry expects this share to grow further. 

For developing nations like India, MSMEs play a vital role in eliminating the rural – urban disparity, providing employment opportunities, and supporting equitable growth. As per the data available on the MSME registration portal Udyam, India has registered 1.24 crore MSMEs till December 2022, which jointly employ 9.12 crore people. Over 23 per cent of these are women employees.  

In cognizance of the crucial role of MSMEs, the government of India has put a very strong handholding mechanism for MSMEs and new entrepreneurs. Ministry of MSME has a number of schemes and programmes to support and elevate small businesses. 

How does the government categorize MSMEs? 

On the basis of Investment, any enterprise whose investment in the plant, machinery or equipment is less than Rs. 1 crore will fall in the micro enterprise category. If the investment in the plant, machinery or equipment is between Rs. 1 to 5 crore, it will be considered a small enterprise. To qualify as a macro enterprise, the investment in the same has to be between Rs. 5 to 10 crore. 

Enterprises can be categorized into the micro, small and medium category on the basis on annual turnover as well. If the yearly turnover of the business is below Rs. 5 crore, it will be a small enterprise. If the turnover is over Rs. 50 crores, it will fall under the small enterprise category. For businesses with more than Rs. 250 crore turnover, the medium enterprise category is applicable. The criterion is based on the MSMED Act, 2006. 

What kind of businesses fall under MSME? 

The government of India states that ‘all business activities – services and manufacturing are covered in MSME sector’ as long as they meet the investment and turnover criterion mentioned above. However, there are certain exceptions to this as well, which we have listed out for you later in the article. (Source) 

Manufacturing business activities – Manufacturing business activities (producing finished goods from raw products) in the MSME segment contribute to 45 per cent of the total manufacturing output and 40 per cent of total exports. Combined with the collective attempt to popularize the ‘Made in India’ campaign within the country and globally, this share will only go upwards. 

Service sector business activities – An analysis of the Udyam MSME registration portal shows that MSMEs in service sector comprise a larger proportion of as compared to those MSMEs in manufacturing sector. Indian entrepreneurs have registered over 5.37 lakh enterprises under the manufacturing category and 8.65 lakh enterprises under the service sector. 

Here is a broad list of services and businesses shared on multiple financial portals that qualify as MSMEs:

Businesses that do not fall under MSME 

The MSME Ministry has stated via a notification that the following activities are not covered under MSMED Act, 2006: 

• Gambling and betting activities
• Forestry and logging 
• Fishing and aquaculture 
• Trade/repair of motorcycles (wholesale and retail) 
• Retail trade except of vehicles and motor cycles 
• Activities of households for domestic personnel 
• Goods and services produced via private households for personal use 
• Activities of extraterritorial organization and bodies 

Most popular industries amongst MSME businesses in India 

At present the share of service sector is 61% higher than manufacturing sector when it comes to MSME registration.  

The top 5 industrial sectors that are most popular amongst the MSMEs are:- 

1. Food products 
2. Textile 
3. Apparel 
4. Fabricated metal products 
5. Machinery & equipment  

The MSMEs have been continuously contributing to the expansion of entrepreneurship and business innovations. The Government of India has been acting dedicatedly to boost the expansion of MSMEs via various subsidies, exemptions, financial schemes, and trade fairs. We at IndusInd Bank are equally devoted to helping you grow your business and offer financial assistance that is tailored to your needs.  

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision.  IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.