Top 10 Benefits of MSME Registration in India

MSMEs drive the Indian economy forward, contributing to the country's socio-economic development and employment generation. After agriculture, the MSME sector employs millions in India and contributes about 30% of the country's GDP. The government also encourages India's MSME sector through various schemes. That is why MSME registration is crucial, as it offers several MSME benefits to the company.

The following sections summarise some significant MSME registration benefits according to the laws concerned.

What is MSME Registration?

Also known as Udyam registration, MSME registration is the process of registering an entity as a Micro, Small, and Medium Enterprise. Companies that fulfil the criteria for MSME classification can register themselves as an MSME using the Udyam portal. The MSME registration process is 100% online. Although it is not mandatory, a company can enjoy several benefits of MSME registration in terms of credit facilities, business setup and expansion, taxation, etc.

When and why is MSME Registration Required?

MSME full form is Micro, Small, or Medium Enterprise. It must apply for MSME registration under the following circumstances:

• To obtain a low-interest Business Loan
• To boost their chances of getting a government tender
• To get registrations, licenses, and approvals easily 
• To avail of subsidies on capital, tax, and tariff
• To get tax exemptions under the Direct Tax Laws
• To enjoy a subsidy on automatic equipment with Business Loans 
• To get compensated for ISO certificate expenditure

Also Read: What is MSME - Benefits and Its Registration Process

List of 10 Major Benefits of MSME Registration

Here is a list of MSME registration benefits:

Access to Credit Facilities

Businesses often need credit during their operational cycles. Easier and faster access to credit facilities is one of the most sought-after benefits of MSME registration. Loan providers approve their loans much more easily and quickly, with lower interest rates and easier terms and conditions.

Priority Sector Lending

Most lending institutions like Hero FinCorp prioritise registered MSMEs and make special loan plans for them. Such MSMEs can obtain Business Loans at lower interest rates than non-registered ones.

Also Read: What is MSME Databank? Know the Registration & Verification

Tax Exemptions and Benefits

Tax benefits help save money that increases business-related expenses. The tax department provides several tax exemptions and benefits to registered MSMEs, relieving them during the audit procedures.

Access to Various Schemes

The central government runs numerous beneficial schemes for registered MSMEs such as credit guarantee schemes, Atma Nirbhar Bharat, women entrepreneurs schemes, zero effect zero defect, etc. State governments also provide subsidies on utilities and taxes to registered MSMEs.

Technology Upgradation Support

Several government schemes reimburse the implementation of clean technology and provide subsidies for products made per international standards. It increases the project’s cost-effectiveness and promotes clean energy initiatives in the manufacturing sector.

Access to International Trade

The Indian government runs an international cooperation program that aims to increase exposure to global industrialisation in the country. Registered MSMEs can obtain funds to attend international exhibitions, trade shows, seminars, conferences, and business meetings that benefit their business.

Also Read: Udyam Registration - How to get a Udyam Certificate Online?

Electricity Bill Concessions

All companies with an MSME certificate are eligible for discounted electricity bills. As a result, they can accept more orders and increase their output without worrying about heavy electricity bills. 

Government Assistance for Marketing and Promotion 

Registered MSMEs can participate in several trade-related fairs, events, exchange programs and exhibitions organised by the Indian government. Moreover, they also qualify for tax breaks, subsidies, and technical support for exports.

Subsidy on Patent Registration

Registered MSMEs get a 50% discount on patent registration expenses. The subsidy encourages start-ups to develop novel technologies and ideas when running their business.

Collateral-Free Loans

The Indian government provides collateral-free Business Loans to registered MSMEs under the credit guarantee scheme. It enables them to borrow loans without collateral, guarantor, or security.

Also Read: Top 6 Ways To Boost Your MSME Loan Eligibility

Eligibility for MSME Registration

Any company in the manufacturing, wholesale, retail, or service sector that fulfils the MSME classification criteria can register its entity as an MSME through the Udyam portal. These include the following:

• Micro enterprises' investment in machinery, equipment or plants should not exceed Rs 1 Crore, and turnover should not exceed Rs 5 Crore. 
• Small enterprises' investment in machinery, equipment or plants should not exceed Rs 10 Crore, and turnover should not exceed Rs 50 Crore. 
• For medium enterprises, the investment in machinery, equipment or plant should not exceed Rs 50 Crore, and turnover should not exceed Rs 250 Crore.

Also Read: Solutions To 5 Challenges Faced By The MSME Sector While Availing Loans

How Does MSME Registration Help You to Avail Business Loan?

Registering a business entity as an MSME makes business finance much more accessible. Here is how it helps:

• Since most lending institutions only prioritise lending to registered MSMEs, such business entities have easier access to the required funding.
• Registered MSMEs have lower default chances, making lenders feel confident about making their lending decisions.
• Lending institutions like Hero FinCorp offer collateral-free loans of up to Rs 40 lakh to registered business owners, enabling them to keep their assets safe when borrowing a Business Loan. 
• Registered MSMEs get Business Loans at interest rates as low as 14%, reducing their loan cost and total interest outgo.
• A registered MSME owner can choose a repayment term, usually up to 60 months, according to their budget and convenience, keeping EMIs easily manageable.

Also Read: For MSMEs, Working Capital Loans Are The Road To Recovery

Conclusion

MSME registration offers several benefits in the form of incentives, rewards, and facilities, both financial and non-financial. These MSME registration benefits significantly support a company's entrepreneurial, economic, and commercial growth. Business owners wishing to enjoy the MSME benefits must register through the Udyam portal online and build a separate identity. Those looking for a collateral-free Business Loan can apply on the Hero FinCorp website.

Frequently Asked Questions

1. How much loan does MSME provide?

At Hero FinCorp, a registered business entity can obtain a Business Loan of up to Rs 40 Lakh to cover various expenses. 

2. Is GST compulsory for MSME registration?

GST is not compulsory for MSME registration.

3. Does MSME require a license?

MSME needs registration through the Udyam portal to operate as a registered MSME.

4. What is the difference between MSME and Udyam registration?

MSME and Udyam registration are the same. A micro, small, or medium-sized business must register as an MSME on the Udyam portal.

5. What is the turnover limit for MSMEs?

The turnover limit for MSME ranges from Rs 5 to 250 Crore, depending on the business size and investment amount.

6. How does MSME registration serve as business registration proof?

MSME registration certificate acts as a formal business registration Proof, validating the entity's existence and its eligibility for various benefits.