MSME registration

According to Act Small enterprise is categorised in three groups which are as under.

1) In the case of the enterprises engaged in the Manufacture or Production of goods pertaining to any  industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951, as –

• A micro enterprise, where the investment in plant and machinery does not exceed 25 lacs rupees;
• A small enterprise, where the investment in plant and machinery is more than 25 lacs rupees but does not exceed 5 crore rupees; or
• A medium enterprise, where the investment in plant and machinery is more than 5 crore rupees but does not exceed 10 crore rupees

2) In the case of the enterprises engaged in providing or rendering of SERVICES, as –

• A micro enterprise, where the investment in equipment does not exceed 10 lacs rupees;
• A small enterprise, where the investment in equipment is more than 10 lacs rupees but does not exceed 2 crore rupees; or
• A medium enterprise, where the investment in equipment is more than 2 crore rupees but does not exceed 5 crore rupees

Benefits of MSME registration 

• Protection against delayed payments by buyers of goods / services (Chapter V of the Act) and right to interest for delayed payments and time-bound settlement of payment-related disputes through conciliation and arbitration.
• Central Government’s measures for promotion and development [Sec 9 of the act].The regime of incentives offered by the central government   generally contains   the following:-

• • Credit prescription (Priority sector lending), Differential rates of interest.
  • Excise exemption scheme – exemption under Direct tax laws.
  • Statutory support such as reservation and interest on delayed payments act (It is to be noted that the banking laws, Excise law and direct taxes law have incorporated the word MSME in their exemption notifications, though in many cases they may define it differently, however generally the registration certificate issue by the registering authority is seen as a proof of being MSME. State / Union territory have their own package of facilities and inventive for small scale, they relate to development of Industrial estates, Tax subsidies, Power tariff subsidies, Capital investment subsidies and other support, both the Centre and the State , whether under law or otherwise , target their incentives and support packages generally to units registered with them.

• RBI’s progressive credit policies for ensuring timely and smooth flow of credit [Sec 10 of the act]

• Reservation of items for manufacture and production u/s 29B of the 1951 Act
  • Preference policies (preference to micro enterprises in respect of goods and services Procured by Government Departments/ aided institutions/ PSEs) notified by Central/ state government [Sec 11 of the act].

• Simplified exit scheme (winding up the business) u/s 25 of the act – This scheme shall not apply to companies.

• Advantage/ benefit of registering a micro or small enterprise with the state government
  • Apart from getting other benefits, if a micro or small enterprise has filed a memorandum with DIC of its area, then it stands to gain as to timely payment in respect of supply of goods or rendering of services to any buyer.