What are Micro, Small and Medium enterprises?

What are Micro, Small and Medium enterprises?

In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:
  (a) Manufacturing Enterprises

  (b) Service Enterprises

The following slabs have been prescribed under the MSMED Act to determine the status of the Enterprise:

S. No.	Type of Enterprise	Manufacturing Enterprises (Investment in Plant and Machinery)	Service Industry (Investment in equipment)
1.	Micro	Does not exceed Rs. 25 Lakh	Does not exceed Rs. 10 Lakh
2.	Small	Exceeds Rs. 25 Lakh but does not  exceed Rs. 5 Crore	Exceeds Rs. 10 Lakh but  does not exceed Rs. 2 Crore
3.	Medium	Exceeds Rs. 5 Crore but does not  exceed Rs. 10 Crore	Exceeds Rs. 2 Crore but does  not exceed Rs. 5 Crore

Which are the classes of enterprises that may qualify for Registration?

All classes of enterprises, whether Proprietorship, Hindu undivided family, Association of persons, Co-operative society, Partnership firm, Company or Undertaking, by whatever name called can apply for the registration and get qualified for the benefits provided under the Act.

Whether the Registration is mandatory/compulsory?

A Medium enterprise engaged in the manufacture or production of goods has to compulsorily register under the MSME Act. For other Enterprises the registration is discretionary or optional.
Taking into consideration the benefits available under the Act, it is recommended that every enterprise shall opt for the registration.

MSME registration procedure:                                    

There are two stages of registration-provincial and permanent (final). An enterprise is granted provincial registration when it is at a pre-investment stage by filing EM Part- I. After getting provincially registered, an enterprise can apply for permanent registration just before launching its production facilities by filing EM Part- II. However, an enterprise that is already functioning need not have to apply for provincial registration as it is eligible to apply for permanent registration.

Note: EM Part-II to be filed within 2 year or else the EM Part-I filed by a person become invalid.

Benefit of MSME registration:

1. Easy finance availability from Banks, without collateral requirement

2.      Protection against delay in payment from Buyers and right of interest on delayed payment

3. Preference in procuring Government tenders,

4. Concession in electricity bills

5. Reservation policies to manufacturing / production sector enterprises

6. Time-bound resolution of disputes with Buyers through conciliation and   arbitration

7.      Credit prescription (Priority sector lending), differential rates of interest etc.

8.      Excise Duty Exemption Scheme

9.      Exemption under Direct Tax Laws.

10.   Stamp duty and Octroi benefits,

11.  Statutory support such as reservation and the Interest on Delayed Payments Act.

12.  Subsidy on ISO Certifications

13.  Subsidy on NSIC Performance and Credit ratings

14.  Participation in Govt Purchase registrations

15.  Counter Guarantee from Govt of India through CGSTI

16.  Waiver in Earnest Money (Security Deposit ) in Govt tenders

17.  Reduction in rate of Interest from banks (Subject to ratings)

18.  Free of Cost Govt tenders

Various Government Schemes for MSME:

1. Credit guarantee fund scheme for MSME
2. Credit linked capital subsidy scheme
3. Scheme for registration for bar coding
4. Lean manufacturing competitiveness scheme
5. Scheme for technology and quality up-gradation
6. Design clinic scheme
7. Scheme for up-gradation of information technology and communication
8. Scheme for technology up-gradation and marketing
9. Scheme of international co operation
10.  Scheme for capacity building