What Does MSME Stand For?
MSME stands for Micro, Small, and Medium Enterprises. The absolute base of the Indian economy’s pyramid is micro small scale industries. They are the primary employers and job creators, and they contribute significantly to the country’s growth and development. Let’s take a closer look at MSMEs.
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MSME Definition in India:
MSMEs, or Micro, Small, and Medium Enterprises play a significant role in the Indian economy, accounting for more than 37% of the country’s GDP (GDP). There are more than 60 million micro, small, and medium-sized businesses in the country, employing more than 100 million people. MSMEs not only create a significant number of jobs at a lower cost of capital than large businesses, but they also aid in the industrialization of rural and underdeveloped areas.
Most significantly, MSMEs serve the local community. It has the ability to close inequalities at the local level, whether those gaps are related to employment or consumption. As a result, regional imbalances are reduced, and national income and wealth are distributed more evenly.
India’s MSME Sector:
On June 26, the Ministry of Micro, Small, and Medium Enterprises announced revised registration criteria for MSMEs through the Udyam Registration platform. It also introduced additional investment and turnover requirements for MSMEs. It’s also worth noting that the amended requirements apply to businesses in both the service and manufacturing sectors. According to the most recent criteria, trading companies are now exempt from the list.
The Indian government has approved a collateral-free automatic loan of INR 3 lakh crore under the Atmanirbhar Bharat Abhiyan to help MSMs expand and survive. In addition, the World Bank has established a USD 750 million relief fund for 15 million MSMEs around the world.
In India, there is a list of MSME:
- Exports account for 48% of the country’s total.
- Only 90.19 lakh people have signed up.
- Microbusinesses account for 99.4 percent of MSMEs.
- Small businesses account for 0.52 percent of all businesses.
- Medium-sized businesses account for 0.007% of all businesses.
The Advantages of MSME Registration:
Exemption from excise duty, tax benefits, and reservation in the delayed payment act are just a few of the perks that registered MSMEs receive from the federal and state governments. In 2006, Parliament passed the Micro, Small, and Medium Enterprises Development Act (MSMED Act). This Act promised to make it easier for MSMEs to promote, develop, and compete in a healthy way. Many of the advantages of MSME registration are dependent on the category in which it is filed.
- Benefits from Taxation- The corporate tax rate has been lowered by 5%, from 30% to 25%. This guideline applies to companies with annual revenues of less than 50 crores rupees. The Minimum Alternative Tax’s period has been extended by 15 years. For MSMEs with a turnover of less than Rs.2 crores, the presumptive tax has also been reduced by 2%.
- Bank Schemes- Banks give loans to MSME owners at a cheaper interest rate. They are given some leeway if there is a payment delay.
- Exemption from Excise- For MSMEs with a revenue of less than Rs 1.5 crore in the first financial year, the government has waived excise duty. This benefit, however, is only available to MSMEs that produce goods under the company’s brand name. For MSME certificate holders, for example, readymade clothing gets a lower excise duty of 10%.
Government Benefits for Small Businesses:
In the Special Category Status, the aforesaid ceiling has been reduced to Rs 20 lakhs with the implementation of GST.
- Intellectual Property Concessions: The government would refund up to 80% of the patent application fee to MSME certificate holders or start-ups. A grant of Rs 2 lakhs is also available for filing an international patent application. If an individual or firm has an MSME certificate, they can get a 50% discount on trademark applications. One-time support of Rs 25,000 is offered for the national patent application.
- State government benefits include: The majority of states offer various programs to assist small enterprises. Sales tax exemptions, credit facilities, the availability of developed lands for warehouse development, fiscal assistance in the hire/purchase of machinery, and power bill reductions are only a few examples.
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