Why MSME Registration Matters for Business Growth?

For a growing economy like India, small and medium businesses are quite important. They not only generate employment, encourage innovation and boost exports but also contribute significantly to the country’s GDP.  Thus, they are rightly called the backbone of the economy.
 
To support and encourage these industries and enterprises, the Government of India brings them under the umbrella of Micro, Small and Medium Enterprises (MSME). In the year 2006, the government began the registration, also called the MSME Udyam registration. While a business isn’t mandated to get itself registered, having the MSME certificate can offer it several benefits.
 

Understanding MSME Udyam Registration

If you are an entrepreneur, getting the MSME certificate can be easily done. The MSME registration is an online process. You need to visit www.udyamregistration.gov.in and follow the registration process as per the category you fall in. Take a look at the MSME classification:
 
Criteria
Investment & Tenure
Micro
Between ₹1 crore and ₹5 crore
Small
Between ₹10 crores and ₹50 crores
Medium
Between ₹50 crores and ₹250 crores
 
All kinds of manufacturers, wholesale, retail and service industries that fulfill the classification can apply for the MSME certificate. There is no fee that you need to pay. The only documents required for obtaining the MSME certificate are PAN card and Aadhaar Card.
 
 
Why MSME Registration Matters for Business Growth?
Let us explore the various benefits that make MSME Udyam registration crucial for business growth.
MSME loans
One of the biggest benefits of MSME registration is the availability of collateral-free loans. When an SME is registered under MSME, they get easy access to capital through the MSME business loans. Various banks and NBFCs today offer MSME business loans in a very simple and hassle-free manner.

Did you know, the MSME loan interest rates are almost 1-1.5% cheaper than regular business loans?


Interest Subvention
Your business can be eligible for interest subvention. Simply put, you can enjoy lower rates of interest on an overdraft MSME loan. This subsidy on your loans makes cash flow possible, reducing your financial liabilities, especially when you are going through a financial crunch.


Subsidised Patent Registration
Patents play a crucial role in protecting your intellectual property and prevent other from copying your iddeas. If your MSME needs to invest in the research and development of the patent, its registration becomes all the more valuable. Your MSME certificate allows you subsidy on the expense towards your patent registration.

Did you know, you can get a subsidy of up to 75% of the actual expenditure that goes towards the licensing of the product?


Industrial Promotion
MSME Udyam registration streamline subsidies for purchasing machinery. This can be helpful in a technological upgrade and lead to overall improvement infrastructure. The cash you save can be utilised to improve the operations and increase efficiency.


Reserved Production
Many small scale industries face challenges due to the increasing competition in the market. Keeping this in mind, the government has mandated that certain products can only be manufactured by MSMEs alone. This makes it easier for such industries to survive the ever-evolving market.


Tax Emeptions
Both state and central government allow several tax benefits to MSMEs. Some industries are exempted from excise duty and some get deductions on certain direct taxes, especially in the first few years of their business. A few examples include:
Section 80J: 6% deduction on capital from profits of new industries, ships, and hotels.
Section 80IB: Deductions for oil, food, and hospital businesses.
Section 54GB: Exemption for investing house sale proceeds in startup equity.


ISO Certification
For every business, big or small an ISO certification can be an added advantage. It builds a stronger and more credible brand name in the industry. However, getting the ISO certification can be heavy on the pocket.

But did you know, as a registered MSME, you can get your ISO certification for free? This can be a great way to enhance your business standard and keep up with the evolving industry.
 

In Conclusion

As mentioned above, for a business to operate MSME Udyam registration is not mandatory. However, for the upkeep and growth of your business having the MSME certificate can be very useful. It is not just the ease of cah flow through an MSME business loan, but the many other benefits that the MSME label brings with it. If you have still not completed the MSME registration process yet, make sure you do it right away!