With the advent of globalization, the Indian economy has been fuelled and pumped by startups. MSME or micro, small and medium enterprises have become the backbone of the Indian economy. MSMEs offer several benefits to the economy and are pushing technological innovation and transformation in the country due to which the Indian government is supporting and encouraging such enterprises through subsidies, schemes and incentives. In order to avail the benefits under the MSMED Act from the State or Central government or from the banking sector, businesses are required to register as MSMEs. There are several monetary and non-monetary advantages of trade and entrepreneurial development that businesses can acquire by doing so. Here are some of the top benefits that businesses can avail with the grant of MSME registration:
1. Access to greater credit
One of the biggest advantages that MSMEs have is that unlike other small businesses which may face difficulties in securing loans in the absence of collateral security, banks will offer loans at interest rates lower than usual if your business is MSME registered. Banks have been specifically instructed to offer loans at rates of interest that are lower than the usual and MSME registered businesses can take advantage of this from several banking institutions for their financing and lending needs.
In fact, the Ministry of Micro, Small and Medium Enterprises and the Small Industries Development Bank of India (SIDBI) has established a trust called the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement a credit guarantee fund scheme for micro and small enterprises. Under the same MSMEs can avail collateral-free loans for up to Rs. 50 lakhs.
2. Subsidy on patent registration
Businesses that have MSME registration can get 50% subsidy on patent registration. This is to help encourage enterprise and innovation in the economy.
3. Lower rate of interest on overdraft
Enterprises that have MSME registration can also get the benefit of 1% exemption on any interest rates that banks charge on overdrafts. This makes cash flow and conducting day to day business easier.
4. Priority Lending
The Reserve Bank of India has earmarked certain funds that banks will only grant to MSME businesses. Hence if you are ever in the need for short or long term financing, you can avail loans from banking institutions easily and in a hassle-free manner.
5. Income Tax Exemptions
Another important benefit is that if you possess the MSME certificate you can save lakhs of rupees that would otherwise be paid as income tax. Due to the presumptive basis of taxation you are relieved from maintaining detailed books of accounts and undergoing the audit process.
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6. Capital grants for infrastructure development
MSMEs generate employment in the economy and also give a boost to entrepreneurship, due to which the government identifies training sectors for MSMEs and provides capital grants for improvisation of infrastructure and support for any entrepreneurial development.
7. ISO certification reimbursement
Since the government aims to improve standards and certifications received by MSMEs in a bid to improve sector-wise performance MSMEs can avail an exemption from any expenses incurred in the process of obtaining government certifications. This includes the ISO 9000, ISO 14001 and HACCP certification.
8. Market development assistance scheme
The government follows and price and purchase preference policy under which there are more than 350 items from MSMEs listed for exclusive purchases by the Central Government.
9. Technological support to MSMEs
The government aims to improve cost-effectiveness and promote the use of clean energy in manufacturing. Hence, the government reimburses are project costs MSME sector units may incur towards these goals. Additionally, any expenses incurred to implement any clean technology, the procurement of an audit report and any subsidies for licensing products as per international and national standards are all reimbursed.
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