In our great country of more than 135 crore Indians, there are nearly 6.5 crore micro, small and medium enterprises (MSMEs) which are providing employment to 11 crore citizens ~ equivalent to one third of domestic workforce. Historically, MSMEs have grown at faster pace than Indian economy at 10% p.a. besides contributing in excess of 30% of GDP. MSMEs also contribute for 40% of total exports and 45% of total manufactured output in India. Despite being such a vibrant sector, majority of MSMEs have often struggled to grow due to lack of timely financing and the situation is even worse after Covid-19 pandemic.
Historically, India had adopted very conservative norms for MSMEs by keeping lower investment limit for both – manufacturing and services sector. However, despite doing good business, many enterprises were not trying to grow in order to enjoy benefits offered by government. Hence, an urgency was felt to introduce new norms with common structure across both the categories. In order to bring more enterprises under MSMEs category, new rationalised pattern has been adopted with dual criteria of turnover as well as investments made.
Benefits for Registration with Udyam Portal:
Government of India has offered a free one-time registration facility to MSMEs through its Udyam portal and various incentives are available to registered entities. Traders are not allowed to do MSME registration and only manufacturing or service sector units can register with Udyam. Despite having 6.5 crores MSMEs, hardly 25% of them have been registered due to lack of awareness about following key benefits among the businessmen:
1. Priority sector lending under Credit Guarantee Trust Fund (CGTMSE) for
a. Overdraft interest rate concession of 1%
b. Collateral free loans to micro and small enterprises
2. Benefits of sourcing capital goods to start business
a. Credit Linked Capital Subsidy Scheme (CLCSS) for purchasing machinery & technologies
b. Export Promotion of Capital Goods (EPCG) to allow import of capital goods at zero duty
3. 50% subsidy on patent registration & eligibility for industrial promotion scheme
4. Concessional rate of electricity tariff from few state electricity boards
5. Reimbursement of ISO certification charges
6. Better financing terms @ TReDS ~ RXIL, M1xchange, Invoicemart, etc
7. Protection against delayed payment and allowed to seek interest after 45 days
8. Newly introduced ‘Samadhaan - Sambandh – Sampark’ scheme for empowerment
9. More than 30 schemes are available online at www.champions.gov.in
There is an urgent need to create awareness about above schemes offered for the benefits of business enterprises so that maximum entities can avail desired benefits. As per MSME definition, even practising CMA firms can avail above benefits for themselves after registering on Udyam portal.
Start-ups – Niche but Powerful Segment of MSMEs
As per Department of Promotion of Industry & Internal Trade (DPIIT), any firm or company having innovative approach as well as scalable business model with a high potential to create wealth and employment can register as start-up provided it is less than 10 years old and annual turnover is less than Rs 100 crores since inception. Following is category-wise data with DPIIT as on July 2020:
Total Registrations: 61,300
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