The dynamic MSME sector contributes 29 percent to India’s GDP and has created over 11.10 crore employment opportunities. To encourage the growth of the MSME sector, the government offers several benefits to enterprises in this category.
It is not mandatory by law to register your MSME business, but if you do get your MSME business registered, you can enjoy countless benefits provided under the MSME Act of India. The registration certificate acts as proof of your business being an MSME. You can use it to earn interest on delayed payments, exemption on excise duty, export incentives, statutory help such as reservations, and affordable MSME or SME loans at low-interest rates from reputed non-banking financial companies.
Benefits under MSME registration
Ease of getting MSME/SME loans under priority sector lending: MSMEs fall under the priority sector because of their contribution to the economy. Under the norms of the priority sector, banks must offer a share of their funds as loans to MSMEs. The easy sanction of MSME and SME loan mandate boosts the easy availability of credit to small businesses.
Lower interest rates: To set up a new business or expand existing ventures, registered MSMEs can apply for an MSME loan. MSME and SME loan interest rates vary among financial institutions and depend on your business profile. However, these are typically less than what is charged on standard business loan.
Uncomplicated access to credit: Under the Mudra loan scheme by the Government of India, if your business is registered under MSMEs, you can apply for MSME loans of up to Rs. 10 lakh without having to pledge collaterals.
The government launched the Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) under which both new and pre-existing MSMEs can avail collateral-free loans from NBFCs.
Excise exemption scheme: If you have an annual turnover of Rs. 1 crore or less, you do not have to pay excise duty. If you have a yearly turnover of less than Rs. 3 crore, you can get concessions on excise duty.
Interest for delayed payments: Buyers of goods or services from registered MSMEs are expected to make payments within the date agreed by both parties, or within fifteen days of purchasing. If payments are delayed, you can claim interest at compounded rates.
Reservation: MSMEs retain exclusive rights to manufacture specific products under the reservation policy of the central government. The government offers many tenders that are open only to MSME companies.
Lower overheads: Being a registered MSME, you can ask for a concession on electricity bills. You can also claim for reimbursement of expenses incurred for obtaining ISO certification, and apply for patent registrations at a subsidy of 50%.
MSMEs are also eligible for exemptions under direct tax laws. Various state governments offer certain exclusive benefits to MSMEs.
If you are an entrepreneur and want to expand the horizons of your enterprise, register your MSME business. You can then avail various benefits like a business loan at attractive interest rates from various financial institutions and help your business soar.
