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MSMEs have been the backbone of the Indian economy and the base for it to grow and reach the heights of a developed nation. MSME provides for almost half of the Indian exports and employment and the majority of the industries in the country. The Government realizing the importance of the MSME sector has come up with many schemes for aiding and financing such units. These schemes ensure that the MSME units have easy and prompt finance, technological assistance in a preferential manner to boost their growth and development.

What is the MSME Sector?

Micro, Small and Medium enterprises have been defined under the Micro, Small and Medium enterprises Development Act (MSMED), 2006. According to the Act, MSME units have been broadly classified under two categories or classes. This classification is based on the activities that the business is engaged in i.e., manufacturing activities and service activities. Further, the basis of classification into the micro, small and medium units depends on the amount of investment made by the unit in the manufacturing and service sector. These limits are stated hereunder.


Investment in plant and machinery/ equipment

Manufacturing Sector

Service Sector

Micro Enterprises

Up to Rs. 25,00,000

Up to Rs. 10,00,000

Small Enterprises

More than Rs. 25,00,000 up to Rs. 5,00,00 ,000

More than Rs. 10,00,000 up to Rs. 2,00,00 ,000

Medium Enterprises

More than Rs. 5,00,00,000 up to Rs. 10,00,00 ,000

More than Rs. 2,00,00,000 up to Rs. 5,00,00 ,000

The Finance Ministry has recently revised the above limits that essentially change the definition of the MSME sector. The revised limits are specified hereunder.


Micro Enterprises

Up to Rs. 1,00,00,000

Less than Rs. 5,00,00,000

Small Enterprises

Up to Rs. 10,00,00,000

Less than Rs. 50,00,00,000

Medium Enterprises

Up to Rs. 20,00,00,000

Less than Rs. 100,00,00,000

The above limits are the same for manufacturing as well as the service sector which means that there is no further classification based on activities as was the case earlier.

MSME Registration

Our Government has provided many benefits for the MSME sector under the MSMED Act, 2006. In order to avail these benefits, the entity has to be registered under the Act. Such registration is known as MSME registration. Any organization that qualifies to be an MSME unit as per the above definition of the Act (investment limits), can register as per the laid down rules and procedure under the Act. MSME registration of the organization will provide many benefits as well as preferential business and loans to the MSME units among many other benefits. Registration for MSMEs is not made mandatory by the Government yet, however, registration is advisable and beneficial to the MSME units as without it they will not have access to such benefits, remedies and preferential business set for them as per the Act.

Documents required for MSME Registration

The documents required for MSME registration are mentioned below.

Business address Proof

  • Possession letter/
  • Property tax receipt/
  • Lease deed/
  • Allotment letter/
  • Municipal license/
  • Utility bills/
  • Rent receipts and
  • No Objection Certificate from the landlord

Copies of purchase and sales bills

  • The entity has to produce the purchase bill for each raw material acquired during the production.
  • The entity will also have to submit the sale bills for every product or service supplied by them.

Legal corporation

  • Partnership deed
  • Memorandum of Association
  • Articles of Association
  • Copy of the Board resolution authorizing the registration of the entity as an MSME unit.

Ancillary Documents

  • Documents relating to the purchase and installation of plant and machinery equipment.
  • Industrial licenses may also be required in many cases.

The information required for online MSME registration is given below.

  • Aadhaar Number
  • Owner’s Name
  • Name of Enterprise
  • Type of Organization
  • PAN Card Number
  • Official Address
  • Date of Commencement of the business
  • Bank Details
  • Personal Details (Identity proof, Address Proof, etc.)

Registration Process for MSME

The national portal for MSME registration is Udyog Aadhaar. Registration can be done on this portal by filling the application form available online.

The applicant will be required to provide the Aadhaar Number as well as the Name of the Entrepreneur to start with the application.

Applicants will be provided with an OTP at their mobile number registered with the Aadhaar Card which will have to be submitted to proceed with the registration process.

The applicant will then have to fill in various details like Name of the organization, type of the organization, number of employees, PAN Number, location of the plant, bank details, etc.

Alternatively, applications can also be made without Aadhaar Number by providing DIC or the MSME-DE for the entity or business. The supporting documents to be provided in this case are,

  • Aadhaar Enrollment copy
  • Aadhaar Enrollment request copy
  • Voter’s ID/ Passport/ Driving License/ PAN Card/ Employee ID
  • Bank Pass book

Benefits of MSME Registration

The registration to Udyog Aadhaar for MSME units is not yet made mandatory by the Government of India. However, registration of the MSME unit or enterprise is beneficial to the business organization and hence is encouraged. Government has come out with many benefits and preferential business opportunities for the MSME organizations that are registered with Udyog Aadhaar. Some of these benefits are stated below,

  • Excise Exemption Scheme form Direct tax
  • Benefits from various Government departments like concession in electricity bill, water bill, etc.
  • Lower or concessional interest rate on bank loans
  • Tax rebates for MSMEs from Minimum Alternate tax, credit can be carried forward for a longer tenure as compared to other businesses
  • Reimbursement of ISO Certification
  • Credit Guarantee Schemes of the Government
  • Barcode Registration Subsidy
  • Preference in various Government Tenders, schemes, etc.
  • Support of the State and Central Government.

Different types of MSME Schemes

There are many types of schemes that are beneficial to the MSME sector and are targeted specifically for them. These schemes aim to provide not only financial assistance but also improved quality of products and services and assistance in exports, credit linked subsidies preference to women entrepreneurs. These schemes are discussed hereunder

Udyog Aadhaar

It is the registration portal for MSME enterprises. Entrepreneurs are provided the registration number based on or linked to their Aadhaar Card. Applicants are given a unique registration number along with the registration certificate that make it easy for these units to get finances at lower cost, preference in tenders from the government, etc.

Quality Management Standards and Quality Technology Tools

This scheme enables the enterprises to have a competitive or an equal chance alongside their national as well as international peers on the technological front. This scheme enables the MSME organizations to have an access and understanding of new innovations in their line of business or business standards in general and thus have an equal opportunity for growth and progress.

Zero Defect Zero Effect

This is an export oriented scheme where the export based MSME units have to adhere to specific standards that ensure that there is zero or minimum returns of the products that are exported. This scheme was devised with the aim to uplift or upgrade the standards of the quality control in MSME units. Enterprises are eligible for concessions or refunds in this scheme.


This scheme is essentially in line with the needs of the startups or new businesses that are based on innovation or new technologies that may require heavy capital investment or financial backing. Under this scheme, the enterprises can get up to 75% to 80% of the financial backup or assistance from the Government.

Women Entrepreneurship

This scheme is targeted specifically for the women entrepreneurs. They can get assistance with various aspects like capital, direction, conveyance systems and more. Women entrepreneurs are provided even emotional support or any other assistance required by them under such schemes.

Credit linked Capital Subsidy Scheme

Under this scheme, MSME enterprises are provided financial assistance for new innovations in their line of business to replace them with older ways or technologies of business. Entrepreneurs can get assistance for capital investment to upgrade the units to be at par with their international peers or as per international standards.

FAQs – MSME Registration

1. Is the MSME registration mandatory?

No. MSME registration is not made mandatory by the Government yet but registration is beneficial to avail the advantages set by the government.

2. Can MSME units be registered without an Aadhaar Card?

Yes. Although an Aadhaar Card is a prerequisite for MSME registration, units can register provisionally without the Aadhaar card as well.

3. What are the fees for MSME registration?

MSME registration at Udyog Aadhaar is free of cost.

4. What are some of the major benefits of MSME registration?

Some of the major benefits of MSME registration are,

  • Easy access to loans at lower cost
  • Preference in government tenders
  • 50% concession in trademarks and patents
  • Access to MUDRA Loans
  • Tax benefits

5. Can a MSME registration be cancelled once initiated?

No. Once initiated, MSME registration cannot be cancelled.

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