MSME classification

What Does MSME Stand For?

Micro, Small, and Medium Enterprises (MSME) are governed by the Micro, Small, and Medium Enterprises Development Act of 2006. MSMEs, according to this act, are businesses that specialise in the processing, production, and storage of goods and commodities.

MSME Characteristics

Let us look at the characteristics of MSMEs:

     MSMEs help businesses gain better access to domestic and international markets.

     MSMEs promote product development, design innovation, intervention, and packaging as business elements.

     MSMEs are working to improve this sector’s technology and infrastructure.

     MSMEs provide employment opportunities as well as loans.

     MSMEs provide credit limits or funding assistance to various banks throughout the country.

MSME Classification Restructure

Any business with an investment of up to Rs 1 crore and an annual revenue of less than Rs 5 crore is classified as “Micro.”

Any enterprise with an investment of up to Rs 10 crore and an annual revenue of up to Rs 50 crore will be classified as “Small.”

Any enterprise with an investment of up to Rs 20 crore and an annual revenue of less than Rs

100 crore will be classified as “Medium.”

MSME Loan Schemes Launched by the Government of India

The following MSME schemes are offered by financial institutions and initiated by the Indian government:

     Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) ●           CLCSS stands for Credit Linked Capital Subsidy Scheme.

     Credit Guarantee Program

     PMMY’s MUDRA Yojana

     Subsidy from the National Small Industries Corporation (NSIC)

     The Prime Minister’s Employment Generation Programme (PMEGP)

     Prime Minister’s Rozgar Yojana (PMRY)

     Loans from PSB in 59 minutes

     India Standup

     India Startup

Characteristics of the Ministry of MSME (MoMSME)

     Works to improve the lives of artisans and workers.

     Banks provide credit limits or funding assistance.

     Promotes entrepreneurship development and skill enhancement through specialised training facilities

     Supports technological advancement, infrastructure development, and modernization.

     Aids in improving access to domestic and export markets.

     Modern testing facilities and quality certification are available.

     Packaging, product development, and design intervention are all supported.

The following are the key entities that work under the MoMSME:

     A Program to Encourage Innovation, Rural Industries, and Entrepreneurship (ASPIRE)

     Village Industries and Khadi Commission (KVIC)

     Mahatma Gandhi Rural Industrialization Institute (MGIRI)

Micro, Small, and Medium Enterprises National Institute (NIMSME)

     National Small Business Administration (NSIC)

     Funding Scheme for Traditional Industry Regeneration (SFURTI)

Required Documents for MSME Registration

The only documents required for MSME registration are an Aadhaar Card and a PAN Card.

MSME registration is entirely online, and no documentation is required. The Udyam Registration Portal will automatically retrieve PAN and GST-linked information on enterprise investment and turnover from government databases. The Income Tax and GSTIN systems are fully integrated with the Udyam Registration Portal.

GST is not required for businesses that do not need to register for GST under the GST law. However, enterprises that are required to obtain GST registration under the GST regime must have GST registration in order to obtain Udyam Registration.

Those who have a UAM registration or any other registration issued by any authority under the Ministry of MSME must re-register in the Udyam Registration Portal by clicking on the “For New Entrepreneurs who are not yet Registered as MSME or those with EM-II” link.

Enterprises with UAM registration must migrate to Udyam Registration by June 30, 2022. If entrepreneurs with UAM registration do not migrate to Udyam Registration by 30/06/2022, their UAM registration will be null and void, and they will no longer be eligible for the benefits provided to MSMEs.

Questions and Answers

1.      Has MSME registration been transferred to Udyam Registration?

Yes, MSME registration, also known as Udyog Aadhaar Registration, has been replaced by Udyam Registration. If any micro, small, or medium-sized enterprises want to start a business, they can apply for MSME/Udyam registration. The MSME/Udyam registration process is entirely online. This registration entitles the company to numerous benefits and subsidies.

2.      Is MSME registration required?

No, enterprises that fall under the MSME category are not required to apply for MSME registration. However, it is preferable to obtain MSME/Udyam registration because the government provides many benefits to enterprises that have MSME registration, such as loan facilities, easy access to credit, low-interest rates, eligibility to many schemes, and so on.

3.      Is an Aadhar card required?

Yes. An Aadhaar card is required to obtain Udyam registration. If the applicant is not the proprietor, the partner’s and director’s Aadhaar cards will be required.

4.      Is it possible for both existing and new businesses to apply?

Yes, both existing and new businesses can apply for MSME/Udyam Registration, as long as the existing unit is operational and meets the registration threshold limits. Enterprises with a UAM Registration must re-register for Udyam registration in order to take advantage of the MSMEs benefits.

5.      How long is the MSME registration certificate valid?

The Udyam Registration Certificate has no expiration date. The certificate will not expire as long as the entity is ethical and financially sound.

6.      Can trading companies apply for MSME status?

Yes. Previously, MSME registration only applied to the manufacturing and service industries.

The scheme does not apply to trading companies. However, the government announced in July 2021 that the wholesale and retail trades will fall under the MSME classification, and that those businesses can apply for MSME registration. For the purposes of priority sector lending, the Ministry of Micro, Small, and Medium Enterprises decided to include retail and wholesale trade as MSMEs.

7.      Do I need to register multiple manufacturing plants in different cities?

No, the MSME/Udyam Registration Certificate is only valid for a single entity, regardless of how many branches or plants it has. However, details about multiple branches or plants must be provided.

8.      Whose Aadhaar number must be entered when completing the MSME registration form?

In the case of a company, the authorised signatory must provide the PAN and Aadhaar number when completing the MSME registration form.

9.      In the case of a partnership firm applying for MSME registration, whose Aadhaar number should be entered?

In the case of a proprietorship firm, the proprietor’s Aadhaar number and PAN number must be entered. In the case of a partnership, the managing partner must supply the PAN and Aadhaar number. In the case of a partnership firm, the enterprise details on the MSME registration form will be the details of the managing partner, and the entrepreneur details will be the details of the entrepreneur.

10.   Can I register a second MSME after registering the first?

When the enterprises are distinct, i.e. founded under different names and registered or incorporated separately, the proprietor of the enterprise may apply for MSME registration. An enterprise, on the other hand, cannot apply for more than one Udyam Registration. All activities, whether manufacturing or service, should be specified or added to a single Udyam Registration. By clicking on the ‘Update Details’ option on the homepage, an entrepreneur can add additional activities to the Udyam Registration.

11.   Who can apply for an MSME registration?

The following entities can obtain MSME registration if they meet the revised MSME classification criteria of annual turnover and investment:

     Individuals, businesses, startups, and entrepreneurs

     Limited liability companies, both private and public,

     Solitary proprietorship

     Partnership corporation

     Partnerships with Limited Liability

     Self-Help Organizations

     Cooperative organisations