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What is MSME ??

MSME stands for Micro, Small and Medium Enterprises. In a developing countries like India, MSME are the considered as backbone of the economy. Micro, Small and Medium Enterprises are generally considered as the part of unorganized industry. The process of registration of MSME helps the MSME Sector to organize. It also help Government to announce the schemes for the MSME as they get the proper data of production and turnover of the MSME. It also help in increase of Total GDP of the country.

What is role of MSME ??

In the country like India, the MSME sector contributes to approx 45% of India’s total industrial employment. Moreover 50% of India’s total exports and 95% of all industrial units of the country and more than 6000 types of products are manufactured in these industries (As per Strengthening the MSME industries helps the economy of the country to grow as a whole and flourishes.

How differentiate MSME for registration

The existing MSME classification was based on the criteria of investment in plant and machinery or equipment:

Sector Criteria Micro Small Medium
Manufacturing Investment < Rs.25 lakh < Rs.5 Crore < Rs.10 Crore
Service Investment < Rs.10 lakh < Rs.2 Crore < Rs.5 Crore

Now, under the Aatmanirbhar Bharat Abhiyan (ABA), the government revised the MSME classification* by inserting composite criteria of both investment and annual turnover. Also, the distinction between the manufacturing and the services sectors under the MSME definition has been removed. This removal will create parity between the sectors. The following is the revised MSME classification*, where the investment and annual turnover, both are to be considered for deciding an MSME.

Sector Criteria Micro Small Medium
Manufacturing Investment &
Annual Turnover
< Rs.1 Crore
< Rs.5 Crore
< Rs.10 Crore
< Rs.50 Crore
< Rs.50 Crore
< Rs.250 Crore

Benefits of MSME Registration

• Loans without collaterals

The Government has introduced various schemes for MSME/SSI that help them to avail credit without any collateral security. One of the benefits of MSME registration is that, the initiative to provide collateral-free loan is undertaken by GOI (Government of India), SIDBI (Small Industries Development Bank of India) and the Ministry of Micro, Small and Medium Enterprise under the name The Credit Guarantee Trust Fund Scheme an other Various schemes.

• Subsidy on Patent Registration & Industrial Promotion

Government provides many schemes for the MSME. One of the benefits of registration of MSME is that MSME got Subsidy on Patent Registration which help them to grow. Various other schemes are launched by the GOI where MSME got Industrial Promotion and support for Export of goods.

• Overdraft facility along with Interest Rate Exemption

Businesses or enterprises registered as MSME under the MSME Act are eligible to avail a extra benefit of 1% on the overdraft limits from Banks under Credit Guarantee Trust Fund Scheme. This can vary from bank to bank.

• Reimbursement of ISO Certification Charges

A registered small or medium enterprise can claim the expenses for reimbursement that were spent on ISO certification.

Documents Required

The entity has to submit business address proof, copies of purchase and sale bill, and licenses from regulatory bodies.

Business Address Proof

If the premise is selfowned, Allotment letter, possession letter, lease deed or property tax receipt is required. If the MSME is having a municipal license in the business name or in the name of the proprietor, partner or director of the business, no other possession document is required to be submitted.
If the premise is rented then MSME have to submit Rent receipt and a no objection certificate from the landlord is required. Also, any utility bill or document evidencing the landlord’s ownership is to be submitted with other documents.

Copies of Sale Bill and Purchase Bill

MSME is required to submit the copy of sale bill related to each end product that it will plan to supply. Also, for each raw material that it will purchase, a purchase bill has to be submitted.

Partnership Deed/ MoA and AoA

If the MSME is a partnership firm, then they have to submit their partnership deed. If the partnership firm is registered, then they have to submit registration certificate also.
In case MSME is a company, then they have to submit the copy of Memorandum of Association and Articles of Association, and certificate of incorporation has to be submitted. They also have to submit copy of the resolution passed in general meeting, and a copy of board resolution authorizing a director to sign the MSME application .

Copy of Licenses and Bills of Machinery Purchased

In few cases, the applicant has to submit a copy of industrial license which is to be obtained by giving an application to Govt. of India. The license is required if the MSME is producing any such goods in which license is required like Liquor. Further, all bills and receipts related to purchase and installation of plant and machinery have to be kept safe and required to be submitted on demand beacuse the Criteria for registration of MSME is the investment in plant and machinery.


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