MSME –Modern India’s Development Engine

Micro, Small, and Medium Enterprises (MSME) are the acronym for Micro, Small, and Medium Enterprises. Economic development is crucial in every developing world, including India. We will promote economic growth, build opportunities, and minimize poverty in the world with the aid of MSME.

The MSME sector accounts for 45 percent of total industrial employment in India, 50 percent of total exports in India, and 95 percent of all industrial units in the region, with over 6000 different goods produced in these sectors (As per msme.gov.in). When these sectors expand, the country’s economy as a whole expands and flourishes. These sectors are also referred to as small-scale industries (SSIs).

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MSME Categories

Micro, small, and medium companies are the two categories of firms.

1. Manufacturing Businesses– They are any industrial company that uses parts, elements, or raw materials to create a finished product. These final products may be supplied directly to customers or other production companies for use in the creation of a one-of-a-kind package.

Printing, Ayurvedic products, beedi/cigarette production, and other tobacco products are only a few examples of manufacturing enterprises.

2. Service Enterprises — They are companies that impart or make services and are characterized in terms of investment in equipment. Many goods fall into the category of service enterprises, such as printing, hospitals, restaurants, hotels, schooling, instruction, and software services.

Benefits of MSME

Because the government of India has always been in favor of offering benefits to MSME, there are several advantages of working with an MSME. You are eligible for an economic promotion subsidy, which would assist you in encouraging investment in your new venture.

It also provides up to a 50% subsidy on patent registration; however, to take advantage of this deal, you must apply your registration application to the relevant ministry. You will be able to get a reduction in your utility bills. You will also get collateral-free loans from banks, which leads to campaign funds for micro and small businesses.

Not only can you do this, but you can still get ISO-certified charges reimbursed. This is where you can get a breakdown of all the costs associated with ISO certification.

Associating with MSME entitles you to a 1% reduction in overdraft interest fees.

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Why the shift in MSME definition?

When Finance Minister Nirmala Sitharaman announced the move, she also discussed the reasons for it. She claims that the current term will offer many advantages that will help MSMEs increase in size.

This was done as part of the Atma-Nirbhar Bharat Abhiyaan Economic Package to alleviate India’s economic predicament in the aftermath of the pandemic.

The cumulative value of the aid package, when combined with all previous economic recovery efforts, comes to a staggering Rs. 20 lakh Crore.

Key announcements of Atma-Nirbhar Bharat Abhiyaan

 Automatic collateral-free loans worth Rs 3 lakh crore are available to MSMEs.

• Equity infusion of Rs 50,000 crore through MSME Fund of Funds.
• A subordinate debt of Rs 20 crore for MSMEs
• Extending the registration and completion deadlines of RERA-governed real estate projects.
• Both non-charitable trusts will obtain full pending returns.
• The deadline for filing the ITR for the fiscal year 2019-20 has been extended to November 30, 2020.

Existing MSME Classification

The previous MSME grouping was based on investment in plant and machinery or facilities. As a result, to reap the benefits of the MSME scheme, MSMEs must limit their investment to a lower threshold, as illustrated below:

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REVISED MSME CLASSIFICATION

The government has now updated the MSME classification under the Aatma Nirbhar Bharat Abhiyan (ABA) by including composite parameters of both expenditure and annual turnover. Besides, the MSME concept no longer distinguishes between the production and service industries. This elimination would result in sector parity. The revised MSME classification is as follows, where investment and annual turnover are both taken into account when determining an MSME.

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