BENEFITS OF MSME RREGISTRATION FOR STARTUPS

INTRODUCTION

MSMEs, or Micro, Small, and Medium Enterprises, have emerged as a major pillar of the Indian
economys foundation. These businesses are categorized as follows:

MSMEs empower citizens to go out on their own and, in turn, give back to society by creating
new jobs and diversifying an area's gross domestic product (GDP). They have also gradually and
steadily revived the artisan class in India's far reaches by providing employment, loans, and other
services to the said class.

Furthermore, they consistently support technological advancement, infrastructure development, and the modernization of the country and our society as a whole. In terms of numbers, micro, small, and medium enterprises contribute a staggering 30% of the countrys GDP, as well as approximately 45 percent of manufacturing output and approximately 48 percent of exports.
Its because of this that they're so important to our economic development, and why theyve been in the news nonstop since the pandemic began in early 2020. However, as the pandemic subsides
and the economy gradually recovers, there will be more opportunities for business owners to
complete their MSME registrations and reap a variety of benefits.

To assist MSMEs, the Indian government introduced the MSME (Amendment) Bill of 2018 and
re-emphasized the MSME Act of 2006. There would be no need for frequent inspections under
these laws to ensure that the necessary investments in plant and machinery were made.
Furthermore, MSMEs operations would be permitted to continue in a transparent, non-
discriminatory, and objective manner.

Some of the additional benefits of registering your MSME under the provisions of these laws are
summarized in the section below.

1.Bank Loans (Collateral Free)

All small and micro-business sectors in India now have access to collateral-free credit, thanks to
the Government of India. This initiative provides funds to micro and small businesses. Benefits
are available to both old and new businesses under this scheme. The Government of India,
SIDBI (Small Industries Development Bank of India), and the Ministry of Micro, Small, and
Medium Enterprises established the Credit Guarantee Trust Fund Scheme to ensure that the
Credit Guarantee Scheme is implemented for all Micro and Small Enterprises.

2. Subsidy on Patent Registration

Under current legislation, MSMEs registered with the MSME ministry are eligible for a 50%
subsidy on patent registration fees. This motivates small businesses and firms to continue
innovating and developing new projects and technologies. Subsidies can be obtained by
submitting an application to the relevant ministries.

3. Overdraft Interest Rate Exemption

Businesses and enterprises registered as MSMEs can benefit from a 1% discount on their
overdraft in a scheme that varies by bank. This contributes to the security of small businesses
during unfavorable market conditions.

4. Industrial Promotion Subsidy Eligibility

Businesses that have been registered as MSMEs are eligible for government subsidies for
industrial promotion.

5. Protection against Payments (Delayed Payments)

MSMEs are constantly exposed to the risk of late payments, which disrupts their entire
operation. To protect registered businesses, the Supreme Court mandated that any buyer of goods
or services from registered MSMEs make payment on or before the agreed-upon date of payment
or within 15 days of accepting the goods or services. If the buyer delays payment for more than
45 days after accepting the products or services, the buyer must pay interest on the agreed-upon
amount. The interest rate is three times higher than the rate announced by the Reserve Bank of
India.

6. Fewer Electricity Bills

All businesses with an MSME Registration Certificate are eligible for electric bill discounts. This
allows businesses to increase production and take on more orders without having to worry about
capital expenditures on costs such as electricity and maintenance. Micro, small, and medium-
sized businesses can apply for the concession by submitting an application to the department of
electricity along with their registration certificate.

7. ISO Certification Charges Reimbursement

Any registered micro, small, or medium-sized business can claim reimbursement for expenses
incurred in obtaining ISO certification. This encourages entrepreneurs to obtain ISO certification
for their respective businesses, which allows them to do business abroad in terms of high-quality
exports.