MSME-1

ALL ABOUT MSMEs

                              (part-1)

MSME sector has always remained an area of key focus for the Indian Economy. Growth of this sector plays major role in overall growth of the economy. As per data, this sector contributes around 29.7% of GDP and around 49.66% of Indian exports.

Through this article following key points will be discussed:-

1. What are MSMEs and recent change in definition of MSMEs?
2. Registration of MSMEs and Relevance of Udyog Aadhaar
3. Process of applying Udyog Aadhaar

1. What are MSMEs?

MSMEs are governed by Micro Small and Medium Enterprises act,2006. Before the announcement by Finance minister on 13.05.2020 as part of measures for AATMA NIRBHAR BHARAT, the MSMEs were usually divided into Manufacturing and service industries. As can be visible from below provided table, the limits for Investment were different in Manufacturing and service industries.

However, post the announcement of 13.05.2020, key observations are:-

• there is no distinction between manufacturing and service industry  
• a new parameter of turnover has been added
• parameters of turnover and investment will be seen combined as the word AND is used instead of OR
• investment limit for each category has been increased manifold i.e. from 25/10 lacs to 1 cr in Micro, from 5/2cr to 10 cr in Small and from 10/5 cr to 20 cr in Medium enterprises

2. Relevance of Udyog Aadhaar.

As discussed above there are criteria with respect to turnover and investment to be met for a business to be categorized as MSME.

But simply meeting the above criteria does not make your business covered under MSME. To enjoy the benefits available to MSME, one has to first register his business under Udyog Aadhaar.

It is nothing but like an Aadhaar card for your business. It comes with a registration certificate and a unique number in order to certify your business as MSME. Simply saying it is MSME certificate.

Under this the owner, director or proprietor of entity will have to provide his/her aadhaar number.

All types of entities can obtain Udyog Aadhaar including sole proprietorship, LLP, partnership firm, Companies under companies act, 2013 etc.

3. Process of applying Udyog Aadhaar

Following steps will provide an overview as to how to apply for Udyog Aadhaar and as a result be registered as MSME:-

1. Visit the official website:- udyogaadhaar.gov.in
2. Enter Aadhaar number as discussed above (if not available then Udyog Aadhaar memorandum can be filed)
3. Enter Name of Entrepreneur (as per Aadhaar card)
4. Enter OTP
5. Enter Social category like General, OBC, SC, ST etc.
6. Entity details to be entered( in case of more than 1 entity, details of all to be mentioned)
7. Address of Entity to be filled
8. Enter Incorporation date
9. Enter bank details
10. Classification of enterprise
11. Other details like Turnover and Investment

Post submitting above details, documentary proofs for above details to be attached and then a Unique number along with MSME status is provided to the business.

(In our next article, we will be discussing various benefits and schemes, MSMEs are entitled to, and the special credit arrangements available to them)