Micro, Small and Medium Enterprises is also known as MSMEs are the backbone of Indian economy. MSME operating in various areas across the country silently, more than six crore MSMEs have an important role to play in building a stronger and self-reliant India. These small economic engines have a big impact on the country’s GDP-making a contribution of 29%. In addition, more than 11 crore people have got job in the MSME sector. In the year of 2006, the concept of Micro, Small and Medium Enterprises (MSME) was first introduced in India. The MSME Sector has seen huge growth in past five decades.
The MSMEs are vital part of the economy and plays a crucial role in the supply chain. MSME Sector generates employment and nourish the entrepreneurship thereby, contributes to the development of economy. The domain of MSMEs is getting wider as they are meeting the demand of their products and services in domestic as well as global markets. MSME contributes a major portion in the GDP of India. Government of India is putting various initiatives to develop and grow the MSME sector. MSME is classified into 3 categories i.e. micro, small and medium enterprises based on their investment in machinery & plant or equipment and turnover limit.
New Definition of Micro, Small & Medium Enterprises which are effective from 1st July, 2020. MSMED Act, 2006 had set up the criteria of defining MSME enterprises and it differs for manufacturing and services units. It was also very low in financial limits (i.e. Investment amount).
A new classification for manufacturing and service units has been made in the new MSME rule. Now, there is no difference between manufacturing sectors and service sectors. The new classification is based on Investment Amount and Turnover of the enterprise.
Investment limit and turnover limit Criteria for Classification as Micro, Small & Medium Enterprise
| Classification | Investment | Turnover |
| Micro | Up to 1 Crore Rupees | Up to 5 Crore Rupees |
| Small | Up to 10 Crore Rupees | Up to 50 Crore Rupees |
| Medium | Up to 50 Crore Rupees | Up to 250 Crore Rupees |
MSME Registration
Any company who qualifies the above criteria can apply for MSME Registration. The registration can be obtained on the UDYAM Portal through online application. The MSME Registration is also known as UDYAM Registration. It is not essential for an entity to obtain UDYAM Registration; however, it is advisable to get the registration done. The registration process is easy and simple & there is zero fee for registration.
What are the Benefits of MSME Registration?
- Lower Interest Rate on Loans: An entity who have done their UDYAM Registration can get the bank loan at a lower interest rate.
- Access to Credit is Easy: An entity who have done their UDYAM Registration can avail the benefits of various credit schemes launched by the Government of India for the promotion of MSMEs.
- Fast approvals from Central Government/State Government: Entities who have done their UDYAM Registration are treated on priority for approval of any license or certification.
- Tax Concessions: Various tax rebates and concessions are provided by the Government of India to the MSMEs.
- Access to Government Tenders: There are many government tenders for which only MSMEs can make a bid, so if you have done your registration it will be beneficial for you.
What is the Contribution of MSME in the Economy of India?
Micro, Small and Medium Enterprises (MSME) have a significant role in our economy due to its effort to broaden entrepreneurship through business innovations. It is expanding its range day by day, by producing different products and services to meet the demands of domestic as well as global markets. According to the statistics of CSO (Central Statistics Office), Ministry of Statistics and Programme Implementation, the contribution of MSME sector in GDP of the country for the year 2018-19 was 30.27%.