MSME- an abbreviation of Micro, Small & Medium enterprises- is the pillar of

economic growth in many developed, and developing countries in the world.

Often rightly termed as “the engine of growth” for India, MSME has played a
prominent role in the development of the country in terms of creating
employment opportunities-MSME has employed more than 50 million people,
scaling manufacturing capabilities, curtailing regional disparities, balancing the
distribution of wealth, and contributing to the GDP-MSME sector forms 8% of
GDP. Though India is still facing infrastructural problems, lack of proper market

linkages, and challenges in terms of flow of institutional credit, it has seen a

tremendous growth in this sector.

The advantage of this sector is it requires less investment, thus creating

employment on a large scale, and reducing the employment and
underemployment problems. Moreover, this sector has survived almost all
threats emerging out of still completion from both domestic and international
market.

Importance of MSME ACT 2006:

With the introduction of the MSME Act in the year 2006, the service sector
that was not yet included in this sector was included in the definition of the
Micro, Small & Medium sized Enterprises making a historic change to this Act,
thus leveraging the scope of the sector even now government simplified
the MSME Registration Online with the paperless work.

Share of MSME in Manufacturing, Exports and Employment sectors in India:

Sector Percentage(%) share

1 Manufacturing 45
2 Exports 40
3 Employment 69
The contribution of MSME to other sectors has been immensely instrumental.
It is the biggest employer after agriculture sector, despite the fact that
agriculture sector’s contribution to GDP is less than MSME. While it
contributes about 45% to manufacturing sector, and perhaps 40% to Exports,
it forms the highest share of Employment sector in India, contributing around
69% to it.

Let us take a look at some of the key importance of this sector in the
development of India both in terms of economic, and social development:

1. Creates large scale employment:

Since the enterprises falling in this sector require low capital to start the
business, it creates huge employment opportunities for many unemployed
youth. India produces about 1.2 million graduates per year, of the total
number about 0.8 million are engineers. And, there is no economy in the world
that can provide jobs to so many fresh graduates in one year. MSME is the
boon for many of these fresh manpower.

2. Economic stability in terms of Growth and leverage Exports:

MSME is a significant growth driver in India, with it contributing to the tune of

8% to GDP. As mentioned in the table, Exports sector in India constitutes
about 40% of contribution from MSME alone. Looking at the kind of
contribution of MSME to manufacturing, exports and employment, other
sectors are also benefitting from MSME. MNCs today are buying semi-
finished, and auxiliary products from small enterprises, for example, buying of
clutches, and brakes by automobile companies. It helps create a linkage
between MSME and big companies.even after the implementation of the GST
40% msme sector also applied GST Registration which increase the
government revenue by 11%.

3. Encourages Inclusive Growth:

About 50% of wealth in India in owned by just 100 people which is due to
unequal distribution of wealth. Inclusive growth is on top of the agenda of
Ministry for Medium, and Small, and Medium sized enterprises for several
years. While poverty and deprivation are a deterrent to the development of
India, including marginalized sections of society is a key challenge lying
before the Ministry of MSME.

4. Cheap Labor and minimum overhead:

In large scale organizations, one of the key challenges is to retain the human
resource through an effective human resource management professional
manager. But in case of an MSME, the requirement of labor is less, and it
does not need a highly skilled laborer. Hence, the indirect expenses incurred
by the owner is also low.

5. Simple Management Structure for Enterprises:

MSMEs do not require a huge capital to start. With limited resources available
within the control of the owner, decision-making becomes easy and efficient.
As in case of a large corporation wherein a specialist is required for every
departmental functioning because of complex organizational structure, a small
enterprise does not need to hire an external specialist for its management.
The owner himself/herself can manage it. Therefore, it can be run single-
handedly.

6. Plays an important role in making “Make in India” possible:

Post the inception of ‘Make in India’, a signature initiative by the prime

minister of India, the process of incorporating a new business has been made
easy. Since the MSME is the backbone in making this dream a possibility, the
government has directed the financial institution to lend more credit to
enterprises in MSME sector.

Final Conclusion on MSME Sector:

Micro, Small and Medium-sized Enterprises (MSME) are one among the most
important sectors, forming the backbone of the Indian economy. This sector
has been instrumental in the growth of the nation, leveraging exports, creating
huge employment opportunities for the unskilled, fresh graduates, and the
underemployed, also extending the opportunities to banks for giving more
credit to enterprises in this sector. The government should take utmost care of
this sector in terms of providing more and more MSME Registration benefits
through better regulations, Government simply , and enabling financial
institutions to lend more credit at less interest rate for sustainability of this
sector.
MSME registration stands for the micro small and
medium enterprises registration. MSMED Act has
been launched by the government of India to support
the MSME through various schemes, subsidies, and
incentives. With MSME Registration, banks also
provide the loans at lower rate of interests, as these
MSME play an important role in the country’s
economic growth. You can apply for MSME
registration process by visiting the official website
of Udyog Aadhaar Registration.
Why MSME Registration is Important for Small-
Scale Industries?
 MSME registration is essential for the
companies, as it brings clarity and credibility in
the functioning of the organization.
 If you are planning to start MSME anywhere in
the country, then the MSME department
authorized by the government of India will help
you in the promotion of your enterprise.
 To avail the benefits such as incentives,
subsidies and bank loans, MSME registration is
mandatory.
What is the Process of MSME Registration in
India?
 There is an online process for MSME
registration. Taking the help of a professional is
always recommended for the MSME registration
as it requires the knowledge of all the latest
updates in this field.
 Although MSME registration is not must, before
starting your enterprise, but it is always helpful
to take advantage of benefits provided under the
MSME
 In the application form, you need to mention the
few details regarding your company and fill the
following details:-
 Aadhar number of the applicant
 Name, gender, PAN number, email id and
mobile number of the applicant.
 PAN, location, and address of the organization.
 A number of employees and the date, you are
planning to start your business.
 Bank account number and IFSC code
 The basic business activity of the enterprise
 NIC 2 digit code
 Investment in plant and machinery/equipment
Who needs to go for MSME Registration?
Before applying for MSME registration in India, you
need to take a look at the Notification released on
7th February 2018 by the government of India.
One has to adhere to the following MSME
registration conditions:-
 Micro Enterprise- if the annual turnover of the
enterprise does not exceed Rs 5crores
 Small Enterprise- If the annual turnover of the
enterprise is between Rs 5crores to Rs 75crores
 Medium enterprise-If the annual turnover of the
enterprise is between Rs 75crores to Rs
250crores
Note: above is the proposed classification
What is the eligibility Criterion for MSME
Registration?
For MSME registration your enterprise must fulfill
the point(s) mentioned below.
 There has to be only one proprietor of the
company that is you are the sole owner of the
business.
  Be a part of Hindu Undivided family or belong
to it.
 Your enterprise is a one person company.
 You work as or have a partnership firm with
another party in an association.
 You have a limited liability partnership
 You run a private limited company
 You produce material from your production
company
 You are associated with other people regarding
work
 There is a co-operative society under your name
or any other undertaking
What are the few Benefits of MSME
Registration?
 Accessibility of bank loans
Banks easily provide the loans for MSME, that too
collateral-free loans do not have to pledge property
with banks.
 The opening of Bank Account
Once you have gotten your MSME registration
certificate, it will serve as a legal entity proof of the
business; which will help you in the opening of a
bank account.
 Opportunities for growth
MSME departments hold international/national trade
fairs that will provide opportunities to grow
nationally and internationally.
 Tax Rebate
If your company is registered under MSME, then
you are likely to get the benefit of octroi refund
imposed on goods and services.
 Compensation under barcode registration
If you run a manufacturing unit, then barcode
registration is required. Under which you can avail
the benefit of subsidy.
Enterslice is a leading company dealing with MSME
registration.
PROCEDURE FOR REGISTRATION
Eligibility
All Micro & Small Enterprises which are registered
with the Director of Industries (DI)/District
Industries Centre (DIC) as manufacturing/service
enterprises or having Acknowledgement of
Entrepreneurs Memorandum (EM Part-II) are
eligible for registration with NSIC under its Single
Point Registration Scheme (SPRS).
Micro & Small Enterprises who have already
commenced their commercial production but not
completed one year of existence. The Provisional
Registration Certificate can be issued to such Micro
& Small Enterprises under Single Point Registration
scheme with monitorylimit, minimum amount of
money to be invested, of Rs. 5 Lacs which shall be
valid for the period of one year only from the date of
issue after levying the registration fee and obtaining
the requisite documents.
How to apply:
Micro and Small enterprises could be applied
through online application that is provided by the
prescribed state website(State website’s of thou are
applying for registration) respective state in which or
by submitting the application form in duplicate
which is to be submitted the concerned
Zonal/Branch Office of NSIC located nearest to the
unit.
Procedure:
Step 1: Provisional Small Scale Industry (SSI)
Registration
To obtain SSI registration you must apply for
provisional SSI registration certificate. This
certificate is given when the unit is in pre-operative
stage and helps SSI unit obtain term loans and
working capital. This license is given for five years.
One could apply for this certificate online through
the state website or by applying in the concerned
zonal department.
Important Documents for Provisional SSI
registration:
Three passport size photographs of
proprietors/partners/directors, as the case may
be.
Photocopy of the partnership deed in case of a

partnership unit. It is not necessary that the

partnership should be registered under the
partnership Act.
Copy of the Memorandum and Articles of
Association in case of Private Company along
with certificate of incorporation. Copy of the
resolution of the company authorising one of
the Directors of the company to sign the
application form and also appear for the
interview.
Proof of legal possession i.e. rent receipt, NOC

from the landlord with proof of ownership, the

power load authorised by the connection
holder to the applicant
Provisional Registration would be allowed in

approved Industrial areas only after the Unit

has obtained consent to establish from Delhi
Pollution Control Committee
Some of the documents may differ because each

state has different requirements of documents.

 Above given documents are minimum required
documents which are to be submitted
Benefits of Provisional SSI registration
Material for construction of factory building :
The material which is needed for construction
of the factory or building would be available to
the factory at subsidized rates from
government
Apply for Municipal Corporation License &

power connection. With the provisional

registration the company would be able to get
all the clearances from the concerned
authorities.
Step 2: Start the Business
The next step towards having a permanent license is
to start the business with SSI certificate. The owner
should start the production in the factory so that
permanent license could be given.
Step 3: Apply for Permanent SSI registration
After you have started the business you should apply
for permanent SSI registration. This could be done
by applying online through state website or through
the Zonal office or district office of the department.
Requirements for applying PRC(Permanent
Registration Certificate)
You may apply for the PRC without an
industrial license in case your unit is listed in
Schedule-III of the Industrial Licensing
Exemption Notification. Other units must first
acquire an industrial license.
The unit should have obtained all clearances

from the pollution control board, drug control

board etc.
The unit should not violate any locational
restriction
The original value of plant 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.

Documents which are to be submitted for
applying in
 Proof of ownership of premises i.e. allotment
letter/possession letter/lease Deed/property tax
 receipt. If the unit has a municipal corporation
license in its own name or in the name of its
proprietor or one of the Partner/Directors as the
case may be, then no other proof of legal
possession is required.
In case premises are arranged on rental basis,

unit should submit proof of Legal possession

i.e. a rent receipt and/or NOC from the
landlord supported by the proof of land lord’s
ownership. For this purpose rent receipt/rent
agreement with GPA (General Power of
Attorney) is also accepted provided the GPA is
appointed by the owner/lessee through a Regd.
deed.
One photo copy of sale bill of each end product

applied for.
One photo copy of purchase bill of each raw

material.
Copy of partnership deed in case of partnership

unit (this need not be registered.)

Copy of Memorandum of Articles of
Association with certificate of incorporation in
case of private limited company (in case of any
change of Directors subsequently, copy of
resolution and intimation in form No.32)along
 with copy of resolution authorising one of the
directors to sign the application for grant of
permanent SSI registration.
Copy of the industrial license from Govt. of

India in case the end products require such

license under Industrial Development and
Regulation Act.1951.
An affidavit on Rs.10/- Non judicial Stamp

Paper duly attested by Notary Public affixed

with proper notarial Stamp giving the status of
the unit, machinery installed, power
requirement etc. as per the prescribed format
Purchase bill of machinery installed.

Photo copy of valid consent letter from pollution

control committee of that state.

Benefits for having a permanent SSI registration
Tax Benefits: Depending on your business, you
may enjoyExcise Exemption Scheme as well
as exemption from certain Direct Taxes in the
initial years of your business.
Availability of raw material depending on
existing policy: Raw material for production
would be given by the government in the initial
years at subsidized rates.
 Benefits from Banks: All banks and other
financial institutions recognise MSMEs and
have created special schemes for them. This
usually includes priority sector lending, which
means that the likelihood of your business
being sanctioned a loan is high, and lower bank
interest rates. There may also be preferential
treatment in case of delay in repayment.
Benefits from State Governments: Most states

offer those who’ve registered under the

MSMED Act subsidies on power, taxes and
entry to state-run industrial estates. In
particular, there is a sales tax exemption in
most states and purchase preference on goods p
Time taken for SSI or MSME registration ranges
between 5 to 20 days depending on the state in
which the industry is located in.