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Micro, Small and Medium Enterprise (MSMEs) in India

Updated: Oct 5, 2023

The Indian MSME sector is the backbone of the country’s economy and has unremittingly acted as the bulwark, providing it resilience to ward off global economic shocks and adversities.

In terms of numbers, micro, small and medium enterprises (MSME) contribute a staggering 30% to the country’s GDP, and around 45% of the manufacturing output, and approximately 48% of the country’s exports and that is why MSMEs are very crucial to the economic development of India.

Most micro, small, and medium enterprises (MSMEs) require financial assistance to grow. By getting MSME registration, a business can get various benefits. To get the registration, a business needs to register itself as MSME/SSI under MSME Act.

What is required to get registered as MSME?

MSME online registration is to be done at the government portal of The registration of MSMEs can be done under the following two categories in the portal:

1. For New Entrepreneurs who are not Registered yet as MSME or those with EM-II and

2. For those having registration as UAM and for those already having registration as UAM through Assisted filing.

Benefits of MSME registration in India:

Micro, Small and Medium Enterprise (MSMEs) in India

Loan 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.

Subsidy on Patent Registration: Registered MSMEs can avail a 50 percent subsidy on their patent registration fees. This encourages small businesses and firms to keep innovating and working on new projects and technologies, and registering patents. 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.

Overdraft Interest Rate Rebate: To help the small businesses (MSMEs) to secure loans at lower cost and enhance their profitability, registered MSMEs are provided with the benefit of 1 percent on the overdraft facility that differs from bank to bank.

Concession on Electricity: One of the simplest MSME registration benefits, businesses registered under the MSME Act can avail a concession on electricity bills. All they have to do is submit the bills along with an application and a copy of the registered certificate by MSME.

Protection against delayed payments: Micro, Small and Medium Enterprise Development (MSMED) Act, 2006 contains provisions to deal with cases of delayed payment to micro and small enterprises. As per the provisions of the Act, the buyer is liable to pay compound interest with monthly rests to the MSME supplier on the amount at three times the bank rate notified by Reserve Bank in case they do not make payment to the supplier for the supplies of goods or services within 45 days of the day of acceptance of the goods/service or the deemed day of acceptance.

ISO certification charges reimbursement: A registered small or medium enterprise can claim the expenses for reimbursement that were spent on ISO certification. This motivates entrepreneurs to get their respective businesses ISO certified which helps them to do business abroad in terms of high-quality exports.

Public Procurement Policy - SAMBANDH: The Ministry of MSME came with the Public Procurement Policy for Micro and Small Enterprises (MSE) with an order in 2012, later amended in 2018, which has mandated that every central ministry/department / Public Sector Units (PSU) shall set an annual goal for procurement from the MSME sector of minimum 25 percent of the total annual purchases from the products or services produced or rendered by MSMEs.

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