The overwhelming growth of Micro, Small and Medium Enterprises (MSME) industries has resulted in the rapid development of the urban and rural sector in India over the years. The MSME scheme currently covers only manufacturing and service industries in India, aiding enterprise development through various subsidies and schemes. 

Registration of MSMEs in India is currently, not legally mandatory. However, entities getting registered as an MSME/SSI can avail various benefits under the MSME Act 2006. With MSMEs finding favour with the Indian Government, and the Government initiating various benefits like excise exemption, credit at low-interest rates etc., registered MSME entities enjoy great benefits.

Additional Reading: Apply for MSME Loan

Key Benefits of MSME registration

The importance of MSME registration is highlighted through the key benefits given below.

Patent/Trademark Registration Subsidy

  • The government of India provides MSME registered entities 50% subsidy towards patent/trademark registration fee.

Collateral-Free Bank Loans

  • Collateral-free credit is available to all registered MSME enterprises, including old and new enterprises.
  • The government of India has established the Credit Guarantee Fund Scheme (CGS) for providing collateral-free loans.
  • Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and Small Industries Development Bank of India (SIDBI) are the entities in charge of implementing CGS.

Exemption on Overdraft Interest

  • Entities registered under MSME get a 1% exemption on overdraft interest provided by banks, though this exemption could vary across different banks. 

Industrial Promotion Subsidy 

  • Registered MSME entities can avail subsidy for industrial promotion under Government of India initiatives.

Concession on Electricity Bill

  • MSME registered enterprises/businesses can forward an application to the electricity department to claim a concession on their electricity bill. 

Priority in Government Tenders

  • The amended General Financial Rules (2017) has helped MSME registered entities in getting preference in government tenders as the notification has disallowed global tenders up to Rs. 200 crores. 

Reimbursement on ISO Application Fee

  • Entities who have registered under MSME get reimbursement on ISO application fee after making an application to the concerned department. 

The key benefits enlisted above showcase the underlying importance of MSME registration for entities.

Points to Remember: 

MSMEs have contributed significantly to the social and economic development in India, through the provision of 45% of India’s total industrial employment, 50% of its total exports and 95% across all industrial units

MSME industries manufacture over 6000 various products aiding exports.