Understanding MSME (Udyam) Registration Benefits in 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.According to the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006, MSMEs are defined as-

The registration process takes place online. To get certified, you will need your Aadhaar number. It becomes easier for businesses with MSME certificate to obtain licenses, registrations, and approvals from authorities in different fields.Read on to know the various MSME registration benefits pertaining to small businesses:

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. This is by far the best MSME registration benefits for small business owners.

Business enterprises registered under the MSME Act are given a hefty subsidy of 50 per cent for patent registration. 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.

Businesses or enterprises registered as MSME/SSI under the MSME Act are eligible to avail a benefit of 1% on the overdraft as part of the Credit Guarantee Trust Fund Scheme. Although this can vary from bank to bank.

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.

Understanding the ambiguity lying with business revenues, the Government has extended a helping hand by providing a layer of protection against payments. As of now, the Ministry of Micro, Small and Medium Enterprise has given business owners and enterprises to collect interest on payments delayed by the buyer.Under the MSME registration benefits, a buyer is expected to make a payment for the goods/services within 15 days of the purchase. If the buyer delays, the payment for more than 45 days, the enterprise is eligible to charge compound interest which is 3 times the rate notified by RBI.

A registered small or medium enterprise can claim the expenses for reimbursement that were spent on ISO certification.

Enterprises that are registered under MSME can also receive a subsidy for Industrial Promotion, as suggested by the Indian government.

Businesses can avail MSME loans that offer attractive interest rates. Thus, enterprises can spend a minimum amount of money on loan repayment and use the rest for business purposes.

The MSME industry is growing significantly due to the constant support from the Indian Government. This has further inspired everyone, especially the youth, to explore their entrepreneurial side and start their own venture. However, in such cases, knowledge regarding MSME and MSME registration benefits are important.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.