Revised definition of MSME, registration process, credit/finance schemes and procurement policy
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Revised definition of MSME, registration process, credit/finance schemes and procurement policy

A step towards Self-Reliant India, global tenders will be disallowed up to Rs.200 crores. Business enterprises registered under the MSME Act are given a hefty subsidy of 50 per cent for patent registration.

  • By ICN Group | August 24, 2020

In a webinar presented recently on the MSME sector and its classification, registration process,  credit/finance schemes of the Ministry of MSME for services sector and public procurement policy amongst others, Devendra Kumar Singh, Additional Secretary and Development Commissioner, Ministry of Micro, small and medium Enterprises (MSME) and Anand Sherkhane, Additional Development Commissioner, MSME highlighted on the information and guidance to the stakeholders on benefits from the various elements and schemes of MSME.

After 14 years since the MSME Development Act came into existence in 2006, a revision in MSME definition was announced in the Atmanirbhar Bharat package on 13th May 2020.  As per this announcement, the definition of Micro manufacturing and services units was increased to Rs. 1 crore of investment and Rs. 5 crore of turnover. The limit of small unit was increased to Rs. 10 crore of investment and Rs 50 crore of turnover. Similarly, the limit of medium unit was increased to Rs. 20 crore of investment and Rs. 100 crore of turnover. The Government of India on June 1, 2020 decided for further upward revision of the MSME Definition. For medium Enterprises, now it will be Rs. 50 crore of investment and Rs. 250 crore of turnover.

After the package was announced on 13th May, 2020, there were several representations saying that the announced revision is still not in line with market and price conditions and hence it should be further revised upwardly. Keeping in mind these representations, Prime Minister decided to further increase the limit for medium Units. This has been done in order to be realistic with time and to establish an objective system of classification and to provide ease of doing business.

The Ministry of MSME has reiterated that it has put in place a very strong handholding mechanism for MSMEs and new entrepreneurs in the name of Champions (www.champions.gov.in) which was recently launched by the Prime Minister. Interested Enterprises/People can take benefit of this mechanism and can also put their queries or complaints. The same will be attended to with utmost promptness.

 The Presenters also shared the procedures for registration in MSME.

· Udyam registration is compulsory https://udyamregistration.gov.in

· Free registration- no fees

· Only Adhar number is required

· Permanent registration number

· Registration certification issued online.  If registered once, no need for renewal

· Champions centers (DICs) will provide support.

· Registration process is totally free

· No cost or fees are to be paid to anyone.

A step towards Self-Reliant India, global tenders will be disallowed up to Rs.200 crores.  This will be a step towards Atmanirbhar India and support Make in India. The presenters also shared the subsidy benefits of the programme wherein general category beneficiaries can avail of margin money subsidy of 25 % of the project cost in rural areas and 15% in urban areas. For beneficiaries belonging to special categories such as scheduled caste/scheduled tribe /women the margin money subsidy is 35% in rural areas and 25% in urban areas.

The presenters also highlighted the MSME registration benefits pertaining to small businesses:

1.Loans without collaterals:

The Government has introduced various initiatives for MSME/SSI that allow them to avail credit without collateral. One of the best MSME registration benefits, the initiative to provide collateral-free loan is undertaken by GOI (Government of India), SIDBI (Small Industries Development Bank of India) and the Ministry of Micro, Small and Medium Enterprise under the name The Credit Guarantee Trust Fund Scheme. This is by far the best MSME registration benefits for small business owners.

2. Subsidy on Patent Registration & Industrial Promotion:

Business enterprises registered under the MSME Act are given a hefty subsidy of 50 per cent for patent registration. This can be availed by sending an application to the respective ministry. In addition to this, one of the great MSME registration benefits is to get subsidy for industrial promotion suggested by the Government.

The presenters also highlighted Pradhan Mantri Mudra Yojana:3 offerings ‘Shishu’, ‘Kishore’ and ‘Tarun’.  The primary product of Pradhan Mantri MUDRA Yojana will be providing refinance for lending to micro businesses/units (medium and small entrepreneurs). The initial products and schemes under this umbrella have already been created and the interventions have been named ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur as also provide a reference point for the next phase of graduation/ growth for the entrepreneur to aspire for:

1. Shishu: covering loans up to Rs 50,000

2. Kishor: covering loans above Rs 50,000 and up to Rs. 5 lakh

3. Tarun: covering loans above Rs 5 lakh and up to Rs. 10 lakh

Now, there will be no difference between manufacturing and service sectors. The new definition will pave way for strengthening and growth of the MSMEs. Particularly, the provision of excluding the exports from counting of turnover will encourage the MSMEs to export more and more without fearing to lose the benefits of a MSME unit. This is expected to exponentially add to exports from the country leading to more growth and economic activity and creation of jobs.

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