What is an MSME in India?

Definition of MSME:

The classification of Micro, Small, and Medium Enterprises is defined under the MSMED Act 2006 amendment dated 1st June 2020.

MSMEs are categorized as manufacturing and service-providing enterprises based on investment in Plant, Machinery, or Equipment values (excluding land and building) and annual turnover, as mentioned in the table below:

Role of MSMEs in the Indian Economy:

MSMEs are the backbone of industrial development in any country.

Micro, Small & Medium Enterprises (MSMEs) significantly contribute to expanding entrepreneurial endeavours through business innovations.

MSMEs are expanding their presence across various sectors of the economy, producing a diverse range of products and services to meet the demands of both domestic and global markets.

In India, MSMEs play a crucial role by providing ample employment opportunities.

They contribute to the industrialization of rural and backward areas, reducing regional imbalances and ensuring a more equitable distribution of national income and wealth.

The signature initiative by the Prime Minister of India, “Make in India,” has been facilitated by MSMEs.

Process for MSME Registration in India:

The Indian government offers MSME registration to Micro, Small, and Medium Enterprises (MSMEs) to assist them in accessing benefits that support business establishment and growth.

The MSME registration process is entirely online and can be completed through the Udyam registration portal.

Step 1:

Visit the official website of Udyam registration at –https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm

Step 2:

Enter the Aadhaar Number and Name and click on ‘Validate & Generate OTP.’ Enter the OTP received on the registered mobile number.

Step 3:

Enter the “Type of Organisation” and the PAN Number, and click on the “Validate PAN” button. The portal retrieves PAN details from government databases and validates the PAN number of the entrepreneur.

Step 4:

After PAN verification, the Udyam Registration form will appear, and entrepreneurs need to fill in their personal details and details of their enterprise, along with the National Industrial Classification (NIC) code.

Step 5:

Enter the investment and turnover details, select the declaration, and click on the “Submit and Get Final OTP” button. An OTP is sent, and after entering it and submitting the form, the Udyam Registration Certificate will be sent via email. Entrepreneurs can also check the MSME registration status on the Udyam Registration portal.

Frequently Asked Questions:

1. Is it Mandatory to register MSME? It is not mandatory for MSMEs to obtain this registration, but it is beneficial to register one’s business under it because it provides numerous benefits in terms of taxation, setting up the business, credit facilities, loans, etc.
2. Is it mandatory to have an Aadhar card for obtaining Udyam registration? Yes, for obtaining Udyam registration, an Aadhaar card is compulsory. In case the applicant is other than the proprietor, the Aadhaar card of the partner and the director will be required.
3. What is the validity of the MSME Registration Certificate/Udyam Registration certificate? There is no expiry of the Udyam/MSME Registration Certificate. As long as the entity is ethical and financially healthy, the certificate remains valid.
4. Is the MSME registration online free? Yes, there is no cost for MSME registration on the Udyam Registration Portal, and it is free of charge.