August 10, 2021
MSME Certification in India: The Process and Benefits

MSME stands for Micro, Small, and Medium Enterprises. The MSMED Act of 2006 [Micro, Small & Medium Enterprises Development Act of 2006] governs these businesses. Let’s start with the MSMED Act’s definitions of Micro, Small, and Medium Enterprises.

Previously, the MSMED Act divided these businesses into two categories: manufacturing and service, and defined them based on their investment limits. However, according to a recent announcement, the distinction between the manufacturing and service sectors has been erased, and additional turnover criteria have been imposed in addition to the investment limit criterion.

Also, Read- udyam registration

The following is the procedure for obtaining MSME certification in India via the internet: 

1. Fill out the online form on the MSME website with all of the requested information.

Personal details: Aadhar number & Name of Owner– The name of the owner/applicant must match the name on the Aadhar card issued by UIDAI in order to be validated. The applicant would be unable to continue filling out the form if his or her name does not match that on the Aadhar card. For validation, an OTP (One Time Password) is given to the cellphone number registered with UIDAI.

PAN: Cooperatives, private limited corporations, public limited companies, and limited liability partnerships all require a certificate. It is optional in the case of other organisations.

Bank details: Account number and IFSC code of the bank account used to run the business.

Enterprise details:

  • Name of business, kind of organisation, location of plant, address of business, and date of business start-up.
  • Manufacturing or service is a major activity.
  • DIC- District Industries Center 
  • National Industry Classification Code (NIC Code) 
  • Investment in Plant & Machinery/Equipment
  1. Submit the completed application form.

After clicking the SUBMIT button, an OTP is created and delivered to the applicant’s registered Email address and cellphone number (Adhara connected). Enter the OTP that was sent to you.

  1. Before hitting the Final Submit button, complete the CAPTCHA.

Note: If the applicant does not have an Adhara number but has applied for one, he or she may provide the following documents as an alternative: 

  •  Adhara Enrollment ID slip or a copy of the request for Adhara enrollment; OR 
  • Bank photo passbook/ Voter ID card/ Passport/ Driving License/ PAN card/ employee photo identity card issued by the bank.

The benefits of MSME certification in India:

  1. When supplying goods or services to clients who do not pay on time, MSMEs profit in particular. The maximum time is 45 days if the buyer’s agreement does not include a specific payment date. If the buyer does to pay within this time frame, he or she will be charged compound interest with monthly rests at 3 times the RBI’s rate.
  2. Bank loans that are subsidised and have low interest rates.
  3. Benefits in the form of refunds and discounts are provided to these businesses under the Income Tax and the Goods and Services Tax (GST).
  4. Credit is readily available. In this case, your credit score is equally crucial.
  5. These businesses have the exclusive right to manufacture the items.
  6. MSME owners are also eligible for trademark and patent registration reductions and concessions.
  7. In various ways, the federal and state governments have aided us.

Let’s look at some of the benefits that the government provides to Micro, Small, and Medium Enterprises:

  1. Collateral-Free Borrowing: The Loans Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) was established to provide credit without the requirement for collateral or third-party guarantees. In addition, in the event that MSE units default, the Guarantee Trust absorbs the loss up to 85 percent of the defaulted amount. Enterprises that use this guarantee insurance are charged a guarantee as well as an annual service fee. The table below provides further information about the maximum guarantee that the Trust can provide.
  2. Support for Technology Upgrades: The Credit Linked Capital Subsidy Scheme (CLCSS) offers qualifying MSE units with a 15 percent capital subsidy up to a maximum of 15 lakhs for technology upgrades.
  3. The Technologies Up-gradation Support to Micro, Small Enterprises (TEQUP) initiative helps manufacturing MSMEs enhance their competitiveness by using energy-efficient technology. TEQUP provides a capital subsidy of up to ten lakhs, or 25% of the project cost. The government will pay for 25% of the project, with the other money coming from banks and financial institutions.
  4. Improved Product Quality Support: The TEQUP also provides subsidies to manufacturing MSME units to assist them in obtaining national/international licences, allowing them to compete more successfully. It covers up to 75% of the real cost of obtaining Product Quality Certification licences from national and international standards bodies. The government provides 1.5 lakhs per MSME for product licencing to National Standards, and 2 lakhs per MSME for product licencing to International Standards.
  5. Establishment of Business Incubators: The Support for Entrepreneurial and Managerial Development of SMEs through Incubators programme aims to support new business ideas by providing financial assistance ranging from 75% to 85% of the project cost up to a maximum of Rs.8 lakhs per idea or unit, with a total of Rs.62.5 lakhs for ten ideas. Any MSE with a new company concept may contact these Business Incubators. They can get up to 2.50 lakhs, 1.28 lakhs, and 0.22 lakhs for infrastructure, training, and administrative expenditures for ten ideas, respectively.)
  6. ISO certification support: Under this program, each unit gets paid for 75 percent of the certification costs up to a maximum of 75,000 in order to obtain ISO certification.

Power Costs Discount: Under this plan, MSME-registered businesses can get a discount on their electricity bills by submitting an application to the Electricity Board together with their udyam Registration Certificate.

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