For any country, especially for developing countries, MSME industries are the backbone. These are known to be the prime contributors to the Indian economy.
What is MSME?
It will be better to understand MSMEs. MSME full form is Micro, Small and Medium Enterprises. It is no surprise then that the government goes the extra mile to promote this sector, and the GST relief being considered by the Budget 2019 is just one step in this direction.
However, in order to enjoy the government-sanctioned benefits such as access to MSME loans as an MSME owner, you must register your business first by getting an Udyog Aadhar or MSME certificate. In doing so, you open the doors to the benefits of the MSMED (Micro, Small & Medium Enterprises Development) Act and more.
Capital grants for development
As the MSME sector that is continually generating employment, both in the manufacturing and services fields, the government shows its support for the sector by offering capital grants for the development of entrepreneurs. It also offers grants for the development of infrastructure and provides training too. Additionally, if your business has the MSME registration, it may also be eligible for the Industrial Promotion Subsidy offered by the government.
Rebate for registration of trademark, patent and ISO certification
On registering your business and getting the MSME certification, you can enjoy 50% to 80% rebate on the government fees during the registration of your trademark and patent. You can also receive a grant of up to Rs.2 lakh for your patent registration. Additionally, if your business has ISO certification, you can claim a reimbursement for these expenses with your MSME certificate.
Concession in power bills
Thanks to your MSME registration certificate, you can enjoy concession on your electricity bills. All you need to do is make an application to the electricity department to avail of this benefit. This way your working capital is optimised and you save on major expenses such as the power bill.
Reduced chances of delayed payments
With your registration certificate in hand, you can protect your business’ future prospects by reducing the cases of delayed payments. In fact, you even have the right of interest on any delayed payments and can rely on your dispute being settled in the minimum amount of time.
When you are registered as an MSME business, the buyer is required to make the payment on or before the agreed date. In case the buyer does not make the payment post 15 days of this date, they will be required to pay compounding interest on a monthly basis. Further, the penal interest for such a situation is three times the rate set by the Reserve Bank Of India. All this helps you keep your working capital strong, and provides needed impetus in growing or expanding your business.
Prioritised and affordable access to collateral-free credit
You may require additional finances to boost your working capital, install new machinery or pay for multiple overheads. With an MSME registration, you can access MSME loans without the need to pledge collateral and at a lower interest rate. In fact, banks set aside credit that is to be used specifically for lending to MSMEs. With your registration certificate, it becomes easy to avail credit with top lenders. This, in turn, helps you access MSME loans with added benefits and features. Two of the most well-known credit schemes in this regard are the Pradhan Mantri Mudra Yojana and the Business Loan in 59 Minutes offered via authorised lenders.