Benefits Under MSME Registration (Udyog Aadhaar)

MSME enterprises are the backbone of any economy and are an engine of economic growth, promoting equitable development for all. Therefore, to support and promote MSMEs, the Government of India through various subsidies, schemes, and incentives promote MSMEs through the MSMED Act. To avail of the benefits under the MSMED Act from the Central or State Government and the Banking Sector, MSME Registration is required. This blog will help you entrepreneurs in understanding the Benefits under MSME Registration that Startups should not miss on.

Benefits are –

1. Collateral Free loans from banks
2. Subsidy on Patent Registration
3. Overdraft Interest Rate Exemption
4. Industrial Promotion Subsidy Eligibility
5. Protection against Payments (Delayed Payments)
6. Fewer Electricity Bills
7. ISO Certification Charges Reimbursement
8. Special consideration on international trade fairs
9. Waiver of Stamp Duty and Registration Fees
10. Exemption under Direct Tax Laws
11. Bar Code registration subsidy
12. Subsidy on NSIC Performance and Credit ratings
13. Eligible for IPS subsidy
14. Access to Tenders
15. The Reservation Policy has two objectives
16. W1% exemption on the interest rate on OD
17. 15% CLCSS subsidy to purchase fully
18. Reservation policies to manufacturing / production sector

1. Collateral Free loans from banks

The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) was launched by the Government of India to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme. The Ministry of Micro, Small and Medium Enterprises, Government of India, and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises.

2. Subsidy on Patent Registration

A hefty 50% subsidy is given to the Enterprise that has the certificate of registration granted by MSME. This subsidy can be availed for patent registration by giving application to respective ministry.

3. Overdraft Interest Rate Exemption

Businesses or enterprises registered under MSME can avail a benefit of 1% on the Over Draft as mentioned in a scheme that differs from bank to bank.

4. Industrial Promotion Subsidy Eligibility

Enterprises registered under MSME are also eligible for a subsidy for Industrial Promotion as suggested by the Government.

5. Protection against Payments (Delayed Payments)

At times, the buyers of services or products from the MSME’s or SSIs tend to delay the payment. The Ministry of Micro, Small and Medium Enterprise lend a helping hand to such enterprises by giving them the right to collect interest on the payments that are delayed from the buyer’s side. The settlement of such disputes must be done in minimum time through conciliation and arbitration.

In case, if any MSME registered enterprise supplies any goods or services to a buyer then the buyer is required to make the payment on or before the agreed date of payment or within 15 days from the day they had accepted the goods and services from MSME or SCI registered business( if there is no mention of the date of payment).

If the buyer delays the payment for more than 45 days after accepting the products or services then the buyer has to pay the compound interest along with interests (monthly) on the amount that was agreed to be paid. The interest rate is three times the rate that is notified by the Reserve Bank of India.

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6. Fewer Electricity Bills

This concession is available to all the Enterprises that have the MSME Registration Certificate by providing an application to the department of the electricity along with the certificate of registration by MSME.

7. ISO Certification Charges Reimbursement

The registered MSME enterprises can claim the reimbursement of the expenses that were spent for the ISO certification.

8. Special consideration on international trade fairs

Under the International Cooperation Scheme, financial assistance is provided on a reimbursement basis to the State/Central Government organizations, industries/enterprises Associations and registered societies/trusts and organizations associated with MSME for deputation of MSME business delegation to other countries for exploring new areas of MSMEs, participation by Indian MSMEs in international exhibitions, trade fairs, buyer-seller meet and for holding international conference and seminars which are in the interest of MSME sectors.

9. Waiver of Stamp Duty and Registration Fees

At present, IT units in public IT Parks are exempted from Stamp Duty and Registration fees up to 31st March 2006. Now all new industrial units having MSME Registration and expansions will be exempted from payment of Stamp Duty and Registration fees.

10. Exemption under Direct Tax Laws

Enterprises that have MSME Registration can enjoy Direct Tax Exemption in the initial year of business, as mention in the scheme by Government and depending on business activity.

11. Bar Code registration subsidy

Enterprises that have MSME Registration can avail Bar Code Registration subsidy as mentioned in the scheme.

12. Subsidy on NSIC Performance and Credit ratings

Enterprises that have MSME Registration can avail Subsidy on NSIC Performance and Credit ratings as mentioned in the scheme.

13. Eligible for IPS subsidy

Enterprises that have MSME Registration are eligible for Industrial Promotion Subsidy (IPS) as mentioned in the scheme.

14. Access to Tenders

There are multiple government tenders that are open only to MSMEs to promote small business participation in India.

15. The Reservation Policy has two objectives

Ensure increased production of consumer goods in the small scale sector, Expand employment opportunities through setting up small scale industries.

16. W1% exemption on the interest rate on OD

Enterprises that have MSME Registration can avail the benefit of a 1% exemption on the interest rate on OD as mentioned in the scheme.

17. 15% CLCSS subsidy to purchase fully

The Ministry of Micro, Small, and Medium Enterprises is operating a scheme namely “Credit Linked CGSTI Subsidy Scheme (CLCSS) for technology up-gradation of Micro and Small Enterprises. The scheme was launched in October-2000 and revised from 29.9.2005. The revised scheme aims at facilitating technology up-gradation of Micro and Small Enterprises (MSEs) by providing a 15% capital subsidy (limited to maximum Rs.15 lakhs) for the purchase of Plant & Machinery. The maximum limit of eligible loans for calculation of subsidy under the scheme is Rs.100 lakhs. Presently, more than 1500 well established/improved technologies under 51 sub-sectors have been approved under the Scheme.

18. Reservation policies to manufacturing/production sector

Reservation of items for exclusive manufacture in SSI sector statutorily provided for in the Industries (Development and Regulation) Act, 1951, has been one of the important policy measures for promoting this text-center sector.