MSME/SSI REGISTRATION

MSME/SSI REGISTRATION

The Ministry of Micro, Small and Medium Enterprises, broadly known as MSME, or Small Scale Industries (SSI), is the premier Government body that deals with the formulations and management of rules, guidelines, and laws pertaining to small scale industries in India. The MSME came into effect on October 02, 2006. It aims to incentivize, facilitate, and boost the competitiveness of MSMEs working pan India.

Micro, Small and Medium Enterprises (MSMEs) are the backbone of the economy in a developing country like India. These industries, also known as small-scale industries or SSIs, play a crucial role in economic growth and employment generation.

Even if the company is in the manufacturing line or the service line, registrations for both these areas can be obtained through the MSME act. This registration is not yet made mandatory by the Government but it is beneficial to get one’s business registered under this because it provides a lot of benefits in terms of taxation, setting up the business, credit facilities, loans etc.

The Micro, Small and Medium Enterprises are considered a very significant piece of India’s legacy economic model and a part of the critical supply chain for products and services. This sector is the job creator as well as plays a crucial role in providing large-scale employment and industrialization of rural and backward areas. According to the National Sample Survey (NSS) 73rd round in 2015-2016, there were around 633.8 lakh unincorporated non-agriculture enterprises in the country dealing in various economic activities, providing employment to 11.10 crore workers.

Types of MSMEs/SSIs

There are 3 types of MSMEs or SSIs:

• Micro Enterprises
• Small Enterprises
• Medium Enterprises

Classification of MSMEs/SSIs

1. Earlier scenario (till 13th May 2020): Classification of MSMEs was based on investments in plant and machinery. MSMEs were classified into two categories:
   • a. Manufacturing enterprise
   • b. Service enterprise
2. Current Scenario (from 14th May 2020): Classification of MSMEs is based on investments in plant and machinery and turnover, eliminating the distinction between manufacturing and service enterprises.

What is MSME or SSI?

In India, MSME was introduced in the year 2006. The scope of the sector was expanded in recent times to include more service sectors under the definition of Micro, Small, and Medium-sized Enterprises, making a historic change to this Act. The government has simplified the MSME Registration online with paperless work.

Benefits/Advantages of MSME/SSI Registration

• Cheaper bank loans with interest rates as low as ~1 to 1.5%.
• Credit for minimum alternate tax (MAT) can be carried forward for up to 15 years instead of 10 years.
• Reduction in costs for patents, industry setup due to rebates and concessions.
• Easy access to government tenders through integration with Udyam Registration Portal and Government e-Marketplace.
• Benefits of government schemes such as Credit Guarantee Scheme, Credit Linked Capital Subsidy Scheme, Public Procurement Policy, Protection against delayed payments, etc.
• Eligibility for priority sector lending from banks.
• Government security deposit waiver for participation in e-tenders.
• Support in international trade fairs.

Drawbacks/Disadvantages of MSME/SSI Registration

• Difficulty in finding funding due to lack of financial strength compared to large companies.
• Challenges in reaching customers and building trust.
• Higher costs due to lack of economy of scale in certain types of business.
• Financial vulnerability during prolonged economic crises.
• Low bargaining power with suppliers and customers.
• Limited access to skilled personnel.

Documents Required for MSME/SSI Registration

• PAN Card details of proprietor/directors/partners.
• Aadhar Card details of proprietor/directors/partners.
• Proof of ownership or rental agreement for registered office.
• Purchase bills of raw materials.
• Sale bills for end products.
• Partnership deed (for partnership firms).
• Memorandum of Association (MOA), Articles of Association (AOA), Certificate of Incorporation (COI) (for private limited companies).
• Industrial License under the Industrial Development and Regulation Act, 1951.
• Affidavit on Rs. 10/- Non-Judicial Stamp Paper.
• Bills for purchasing and installing plant and machinery.
• Bank account statement.

Procedure For MSME/SSI Registration

1. Fill the MSME Form online or offline.
2. Prepare all required documents according to the MSME Registration application.
3. Upload documents and submit the application to the MSME Registrar.
4. Verification and approval process by regulatory authorities.
5. Issue of Certificate of Incorporation.

Frequently Asked Questions

• Q. What is the meaning of the word “MSME”?
  Ans. MSME stands for Micro, Small, and Medium Enterprises. It is defined under the MSMED Act, 2006 based on investments in plant and machinery and equipment.
• Q. What was the reason behind the Modification of MSME definition?
  Ans. The definition of MSME was modified to eliminate the distinction between manufacturing and service sectors, revise investment limits, and introduce turnover criteria.
• Q. Why is there a need for an individual to apply for MSME Registration before commencing his/her business operations?
  Ans. MSME Registration helps in obtaining clearances from various governmental bodies.
• Q. What is the validity of the MSME registration certificate?
  Ans. There is no expiry of the Udyam Registration Certificate as long as the entity is ethical and financially healthy.