MSMEs – REGISTER | BENEFITS | SCHEMES

Jun 22, 2020 | Posted by : Binny Nahar | Category : Article

In the backdrop of the announcements made by the Finance Minister, please ensure that your Business (Manufacturing| Services) is registered as an Micro Small and Medium Enterprises (MSME) and obtain an Udhyog Aadhar for your business.

BACKGROUND

Micro, small and Medium Enterprises (MSMEs) popularly called as MSMEs are the backbone of Indian economy. Silently operating in different areas across the country, more than 6 crore MSMEs have a crucial role to play in building a stronger and atma nirbhar India. These small economic engines have a huge impact on the country’s GDP-making a contribution of 29 percent. They contribute to almost half of exports from the country. Additionally, more than 11 crore people are employed in the MSME sector.


Does your organization qualify as an MSME?

 The earlier categorization of MSMEs was based on the Investment in Plant and Machinery or Equipment’s as defined in the MSME Act 2006 and the notifications there off:

Old Limits to Classify as an MSME : –

                                                                                                                  All amounts are in Rs.

Enterprise Type

Manufacturing Sector

Service Sector

Investment in Plant & Machinery

Investment in Equipments

Micro Enterprises

Upto 25 Lakhs

Upto 10 Lakhs

Small Enterprises

More than 25 lakhs upto 5 Crores

More than 10 Lakhs upto 2 Crores

Medium Enterprises

More than 5 Crores upto 10 Crores

More than 2 Crores upto 5 Crores

 

The new limits are based on investment in Plant and Machinery / Equipments and Turnover with effect from 1st July 2020 vide notification dated 1st June 2020.

New Limits to Classify as an MSME : – 

Enterprise Type

Manufacturing & Service Sector

Investment Limits

Turnover Limits**

Micro Enterprises

Upto 1 Crores

Upto 5 crores

Small Enterprises

More than 1 Crores upto to 10 Crores

More than 5 Crores upto 50 Crores

Medium Enterprises

More than 10 Crores upto 50 Crores

More than 50 Crores upto 250 Crores

 

*The investment in Plant and Machinery will be the Original Investment and additions and deductions as defined in Notification 4(1) / 2006 dated 5th October 2006 and as per Section 7(1) (a) of the MSME Act 2006.

**Turnover with respect to exports will not be counted in the limits of turnover for any category.


Would an organization benefit from being registered as an MSME?

Governed by the Micro, Small and Medium Enterprises Act of 2006 and monitored by the MINISTRY OF MICRO, SMALL & MEDIUM ENTERPRISES, GOI, the MSMEs have various schemes and benefits.

The Schemes are classified under the following headings (details on https://msme.gov.in/all-schemes)
  • Prime Minister Employment Generation Programme and Other Credit Support Schemes
  • Development of Khadi, Village and Coir Industries
  • Technology Upgradation and Quality Certification
  • Marketing Promotion Schemes
  • Entrepreneurship and skill Development Programme
  • Infrastructure Development Programme
  • Scheme of Surveys, Studies and Policy Research
  • National SC-ST-HUB
  • Scheme of Information, Education and Communication
Some of the salient benefits for registered MSMEs are

For all MSME

  • Priority Sector Status: Borrowings from Scheduled Banks accorded the priority status for lending, getting preferred rate of interest and definite allocation.
  • Interest Subvention Scheme: Interest relief @2% on outstanding balance from time to time on the incremental or fresh amount of working capital/term loan sanctioned (Notification for extending scheme beyond April 1, 2020 awaited)
  • TReDs: An electronic platform for facilitating the financing / discounting of trade receivables of MSMEs (on non-recourse basis) through multiple financiers wherein the receivables can be due from corporates and other buyers, including Government Departments/PSUs.
  • Timely Payments Any buyer procuring goods / services from MSME needs to make payment within 45 days
Only for Micro and Small Enterprises
  • Procurement Policy: Every Central Ministry /Department / PSU shall procure minimum 25% of the annual value of goods or services and certain reserved items from Micro and Small Enterprises.
  • Collateral free loan through Credit Guarantee Trust fund:  Collateral free loan up to a limit of ₹ 2 Crore available to MSE. 85% of the loan amount to the bank is guaranteed by the Trust Fund.
  • Credit Linked Capital Subsidy for Technology Upgradation (CLCSS) : 15% up front capital subsidy to MSEs, including tiny, khadi, village and coir industrial units, on institutional finance, availed by them for induction of well established and improved technologies in specified sub sectors/products approved under the scheme.

Benefits in tenders: No fees for procuring tender document or furnishing earnest money; and, in certain cases, price adjustment also permissible for MSEs to the extent of 15% to match lowest bid in tender.
Amendement to the Global Tender Enquiry Rules by Ministry of Finance – Department of Expenditure dated 15th May 2020 – No GTE for tenders upto Rs. 200 Crores (i.e. these tenders are to be met by Indian Enterprises).


Other reliefs provided to MSMEs under the Atma Nirbhar Bharat Abhiyan

  • To provide 3 crore collateral-free loans to restart the business, to meet the operational liabilities, purchase of raw materials. Repayment to be done in 4 years with moratorium period of 12 months on the principal.
  • Providing equity support by the way of subordinate debt.
To manage all these reliefs and revised criteria the Ministry of MSME has launched a system called CHAMPIONS (www.champions.gov.in). This portal not only helping the MSME in present COVID-19 pandemic situation but also provides guidelines in grabbing the new opportunities and in the long run become national and international competitors.
The respective State governments to offer other reliefs to the MSMEs in their respective states.

How can MITRAA assist you and your organization?

  • Over six decades of rendering services in the field of Accounting, Management, Tax and Legal Advisory in India (Headquartered in Chennai) and offices across India and in UAE & Singapore.
  • A Team of Experts having  years of experience across various verticals including  Accounting & Assurance | Supply Chain and Logistics | Business    Process Re-engineering | ERP & IT Systems |  Direct Taxes | Indirect Taxes | Legal Advisory.
  • Senior Professionals having decades of experience in appearing before various Judicial and Quasi-judicial authorities across countries.

Our Services to the MSMEs

  • Assistance in obtaining necessary registrations
  • Identification of Packages and Schemes which may be applicable to your organization
  • Undertaking a feasibility to study to understand the implications of the schemes and packages
  • Identifying the various schemes and packages provided by the State and Central Government.

Incase your good self would require any assistance please feel free to contact us. We shall be happy to assist.

Contact us : Binny Nahar : sec@mitraa.in or Anuradha R : admin@mitraa.in | +914446225100

Note: This document is only a summarized form for informational purposes. Please contact a advisor to advise you for the relevant details. We do not assume any responsibility for the loss or damages to any person acting purely based on this material without reading through the necessary amendments schemes and obtaining professional advice.