Updated : June 20, 2024How MSME Registration Benefits Your Business in India!
Brief Summary : MSME Registration is a regulation that offers numerous benefits to small and medium scale businesses. This blog sheds light on the key benefits of MSME Registration i.e. availing collateral-free loans, interest subvention and also subsidies on patent registration and industrial promotion.
Also, know about the Samadhan portal and free ISO Certification and how these government initiatives are helpful in contributing towards financial stability of small and medium-sized enterprises. The blog discusses the key aspects of MSME Registration, its registration, significance, and also the process; all in a simplified and easy to understand manner.
Overview : Small and Medium-sized enterprises (SMEs) are important for a country’s GDP, especially in a country like India. In India, these Small & Medium-size enterprises contribute to around 30% of the country’s overall GDP; along with creating & providing employment opportunities to a large chunk of population. That’s the reason, SMEs are the backbone of India’s Economy. In order to support and promote these businesses, the Government of India has come up with the Micro, Small and Medium Enterprises Development (MSMED) Act, which offers various benefits and incentives to SMEs that register under this Act. Some of the major benefits are Easy Access to credits, financial assistance through grants, loans on guarantee, preference to priority sector, subsidies and so on.
Let’s discuss these benefits in detail and understand the importance of registering an MSME in India.
What are the benefits of MSME Registration in India?
MSME Registration provides a number of benefits to MSMEs which support them in their growth and back them in staying ahead in their relevant industry/sector. The MSME Registration benefits are quick & easy access to credit, reduced rates on interest, subsidy on patent registration, industrial promotion subsidy, obtaining timely payments from buyers (distributors, suppliers or final consumers), and also free ISO Certification.
With this section, you will learn about the benefits of MSME Registration in a detailed manner along with how they can help MSMEs improve their operations and financial stability.
Key Advantages of MSME Registration in India include
1. Collateral Free Loans
Obtaining loans is often challenging for Small & Medium-size businesses. However, SMEs that get registered under MSME, banks and other financial institutions easily grant loans to such businesses without asking for any asset as security. This has become possible as the government provides credit guarantee schemes to the banks, due to which giving loans to registered SMEs has become less risky for them. This initiative helps MSMEs to access much-needed funds to grow and expand their business operations.
2. Overdraft Interest Subvention
MSMEs can avail the benefit of interest subvention or low interest rates on their overdraft facilities, up to a certain limit. The government provides interest subvention, which means it provides a facility of reduced interest rate to MSMEs who sincerely & promptly repay their loans. The subsidy on interest makes it easier for MSMEs to manage their cash flow and reduces their financial burden, especially during challenging or tough times.
3. Subsidy on Patent Registration
MSMEs can reap almost 50% subsidy on the total cost of Patent registration, which makes it highly affordable for them to protect their inventions and innovations.
Patent registration is crucial for MSMEs that invest heavily in research and development, as it helps them protect their intellectual property rights and prevent competitors from copying their ideas.
4. Industrial Promotion Subsidy
MSMEs can take benefits of the industrial promotion subsidies given for the purchase of plant and machinery, which is helpful in upgrading their technology, machinery and thus overall infrastructure. The subsidy provides financial assistance to MSMEs in order to help them improve their production processes, increase efficiency, and become more competitive.
5. Timely Payments by Buyers
Micro, Small & Medium-size enterprises mainly face financial issues due to delay in payments from their suppliers, or customers. Due to which, their cash flow is affected which leads to financial stability.
In order to address this issue, the government has introduced the Samadhan portal, which gives a legitimate platform to these businesses to file complaints against the buyers/customers who make delayed payments. This initiative ensures that MSMEs can receive payments on-time for their products/services, which further helps in improving their financial stability.
6. Free ISO Certification
ISO certification is important for Small & Medium-size businesses as it helps build credibility and trust among their potential customers, suppliers or other business associates. However, obtaining ISO certification can be expensive, especially for smaller businesses. After MSME registration, businesses get their ISO certification for free, as this registration also offers financial assistance in obtaining the necessary certification. This benefit helps MSMEs uplift their quality standards to keep pace with the latest industry trend and stay competitive.
What is MSME Registration and Why Is It Required?
MSME registration is a process of acquiring a certificate from the government that is the certification of recognition of a business as an MSME. This certificate is issued by the Ministry of Micro, Small, and Medium Enterprises under the MSMED Act. It is not mandatory for MSMEs to register under the act, but it is highly recommended to register their business to reap benefits & facilities offered by the government.
One of the primary reasons for this recommendation is that post registration MSMEs become eligible to enjoy benefits of various schemes and initiatives rolled out by the Government in their favour. For instance, MSMEs registered under the act have the accessibility to the loans under priority sector lending, can access government schemes and programs, can claim several tax exemptions and subsidies, and much more. Additionally, having an MSME registration certificate adds credibility to a business, making it easier to access loans and attract potential customers or investors.
Applying for MSME registration is so easy these days as you can get it done online through the Udyam Registration Portal which can be accessed by visiting https://udyamregistration.gov.in/. It is a quite simple process as it needs minimal documentation i.e. Aadhaar Card, PAN, Bank Account details, and a few more. Once the application is verified, the MSME registration certificate is issued and your business becomes ready to avail all the benefits of MSME Certificates in India.
Simply acquiring an MSME Registration Certificate can benefit your business unimaginably and we have discussed all such benefits in the next section of this blog.
Conclusion
MSME registration is a crucial step for businesses that want to grow and stay ahead in this highly competitive market. Due to easier access to credit, subsidized interest rates, subsidy on patent registration/industrial promotion subsidy, and also free of cost ISO certification, MSMEs can enhance & upscale their business operations, become more financially stable, and eventually, contribute to the economic growth of the entire MSME sector in India.
The recent changes in the definition of MSMEs and the government’s focus on supporting such businesses further emphasize the importance of MSME registration. Therefore, if you own a small or medium-sized business, it is highly recommended to register your business under the MSME Act to avail of the maximum benefits of MSME Certificates and propel your business towards the path of success.
