Benefits MSME Can Avail Which You Didn't Know About

There are a lot of things that contribute to the country’s economics. With so many things already adding to it India’s economy, the booming MSME sector has also been an active contributor in the same. Before we get into the depth of understanding what this means precisely, let's first establish the basic knowledge and understanding about MSME.

What is MSME?

Not everybody is aware of- what is MSME, and that’s what makes it important for us first to educate you about its basics. MSME is simply an abbreviation that stands for Micro, Small & Medium enterprises. This includes everything from a fresh startup to an organisation having a decent yearly turnover. India has been one of the fastest developing countries and all thanks to the MSME sector. Not just India, but the majority of developing and even developed countries consider their MSME sector to be a pillar of their economy.

According to a survey, in the past few years, the MSME sector of India has contributed to as much as 45% of the total Indian Industrial employment. It accounts for almost 95% of all the industrial units and approximately 50% of the total yearly exports. As per the official MSME website of India, it is seen that there are more than 6000 different products that are produced in the country by the organisations falling in this sector. And when these companies grow, they don’t just make their profit but also help strengthen the country’s economy. A lot of experts also believe that it's the flourishing MSME in many countries that have kept their economy stable. In many countries, these industries are referred to as SSI’s or Small Scale Industries, as they call it.

More insight on MSME

To understand “what is MSME”, we need to explore a few more points that strengthen its ground in a country. There are a few factors & criteria for India that every company has to satiate to get registered under this tag. In India, the existing MSME classification is done based on their investment in machinery, equipment and plant. So here is what the companies have to limit their lower limit too, according to the existing classification of MSME:

Although, the existing MSMEs have demanded some revision in this rule. The government has made a few changes under the “Aatmanirbhar Bharat Abhiyan (ABA), but the rules are yet to be applicable with full force. The changes highlight annual turnover and investment criteria.

Benefits of MSME

We already know that there are different types of MSMEs. Here are some of the important MSME registration benefits, including:

1. Collateral free loans

One of the best amongst the benefits of MSMEs includes collateral-free bank loans. According to the Indian laws of MSME, established by the government, it is stated that people having micro and small scale business can avail collateral-free credits from the banks. This is a very positive and good initiative taken by the government to promote, support, and motivate the country’s MSMEs. Under this scheme, both the new and old organisations can avail themselves of the credit limit and benefits that tag along for their business.

The Indian government also launched a trust fund for MSME owners named as Credit Guarantee Trust Fund Scheme. This scheme was introduced by a collaboration of the Indian government, Ministry of Micro, Small and Medium Enterprise, and Small Industries Development Bank Of India. These three bodies make sure that the scheme is implemented across the country and the advantages are enjoyed by the Micro and Small organisations. This was also considered as one of the best MSME government business loan schemes.

2. Exemption from interest rate

As per the scheme, all the organisations that have done their MSME loan registration become eligible to avail of the 1% benefit on their overdraft. Though the government has given this leverage, still it highly depends from bank to bank as to what they wish to do.

3. Benefits on patent registration

All the enterprises having a certificate of registration given by MSME are eligible to avail of a hefty 50% subsidy. In order to avail of this subsidy, an enterprise has to give an application to their respective ministry.

4. Electricity bill reduction

From so many different benefits, one interesting advantage offered to all the enterprises registered under MSME is the reduction in electricity bill. If you have the MSME registration certificate, all you need to do is provide an application to the electricity department, attaching your certificate along with it.

5. Reimbursement of ISO charges

The government has also given the MSMEs a right to claim a reimbursement of their funds that were spent in getting the ISO certificate.

6. Delayed payment protection

Another benefit that works wonders for MSMEs is that they are protected from any kind of delayed payment. This means when a person or organisation buys their products or services but delays the payments; the particular enterprise has the right to collect interest on the payment. In case of such disputes, the enterprises can do the settlement through arbitration and conciliation.

What is MSME registration?

MSME registration is a process in which all the enterprise registers itself as a micro, small or medium enterprise. During this process, the enterprise has to give its Adhaar number, and the registration process now can be completed with or without the Pan Card. You can get your enterprise registered easily through the official website, and the certificate that’s generated post-registration can help you in availing or enjoying several benefits.

Conclusion

It is no more difficult to understand or assume that the future of MSMEs in India is brighter than ever. This sector is rapidly growing and providing a lot of support to the country. Owing to the fact that they are a help for the country’s economy, the government is also taking steps to help them in every way possible.

Also read:

1. Ten Benefits that MSME Can Avail
2. How to Avail MSME Certificate?
3. All You Need to Know About Interest Rates on MSME Loan
4. Labour laws applicable in MSME
5. OkCredit: All you need to know about OkCredit & how it works.

FAQs

Q. What is the lower limit investment criteria for services in MSME?

Ans. Based on the service criteria, a company is termed as an MSME when a micro organisation’s lower limit becomes < INR 10 lakhs, a small company’s lower limit becomes < INR 2 crores, and the medium company’s lower limit becomes < 5 crores.

Q. What is the full form of MSME?

Ans. The full form of MSME is Micro, Small & Medium enterprises.

Q. Why is it important for any country?

Ans. The number of MSME in almost every country around the globe is increasing with time. They not only control the market but act as a very important sector contributing to the total economy of the country. With its strong presence, a country can make better exports to boost the economy.