Every nation’s economic hopes are pinned on its young, small businesses. the Indian government, with this in mind, offers numerous benefits to such organisations so that they may achieve growth with less difficulty. To avail of these benefits, the organisations that qualify must get an MSME or SSI Registration (regulated by the MSMED Act), which is among the easiest of government registrations to be granted.
Importance of MSMEs in India
Micro, small and medium enterprises (MSMEs) power India, accounting for almost 40% of gross industrial value and 45% of total direct and indirect exports. Hence, the government has introduced various schemes and aids to ensure the MSME lead a struggle free existence in the country, and also contribute, to the Indian Economy. Some of these schemes have been initiated by the central government, while others are promoted by the state government. To avail of them, however, you need an Udyog Aadhar registration.
Benefits of an MSME Registration
Benefits from Banks: All banks and other financial institutions recognise MSMEs and have created special schemes for them. This usually includes priority sector lending, which means that the likelihood of your business being sanctioned a loan is high, and lower bank interest rates. There may also be preferential treatment in case of delay in repayment.
Tax Benefits: Depending on your business, you may enjoy an excise exemption scheme as well as exemption from certain direct taxes in the initial years of your business.
Benefits from State Governments: Most states offer those who’ve registered under the MSMED Act subsidies on power, taxes and entry to state-run industrial estates. In particular, there is a sales tax exemption in most states and purchase preference on goods produced.
Benefits from Central Government: The central government, from time to time, announces schemes to benefit MSMEs, such as the credit guarantee scheme:
Credit Guarantee Scheme (CGTMSE)
One of the major struggles that the small scale industries face is credit and input of income from various sources to support them.
The Credit Guarantee scheme, introduced to support MSME, comes with modifications to make it more beneficial for small traders:
The salient features of the scheme include:
1. Enhancing the optimal eligibility loan from Rs. 25 lakh to Rs. 50 lakh.
2. Reducing the one-time guarantee for loans availed of by the MSME in North-Eastern region of India from 1.5% to 0.75%.
3. Increasing the extent of guarantee cover from 75% to 80% for:
4. Women operated Medium and small scale enterprises
5. Micro enterprises, for loans upto 5 lakhs
6. Loans obtained in North Eastern region of the country
7. Reducing the one-time guarantee fee for all loans availed in North Eastern India from 1.5% to 0.75%.
Apart from these benefits, the government also continues, in a phased manner, to enhance the ‘List of products reserved for purchase from MSME’. A detailed list is available in the authorized website.
Accordingly, the MSME is aided by the government to make use of these product lists, and manufacture and supply these products to large scale industries, and make profit in the process.
Support services provided by State governments:
Extended credit facilities
Industrial extension support and services
Availability of developed sites for warehouse construction
Provision of training facilities
Hire-purchase of machineries for use in MSME
Assistance in marketing, both within the country and outside (exports)
Assistance for construction of industries in underdeveloped areas
Technical consultancy, assistance in capital, and so on, for enhancement of technology in MSME
MSME, hence, has several support systems in the state as well as the center, in terms of both starting a new project as well as its continued existence. The government also aims to supply trained professional, input resources and the flow of capital through assistance from venture capitalists, and through private equity funds.