Benefits of MSME Registration in India


Benefits of MSME Registration

Micro, Small and Medium Enterprise as per Micro, Small and Medium Enterprises Development Act, 2006

The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under Enterprises engaged in the manufacture or production, processing, services or preservation of goods as specified below:

Enterprise TypeSector
(Investment in plant & machinery)
(Investment in equipments)
A Micro EnterpriseDoes not exceed Rs. 25 LakhsDoes not exceed Rs. 10 Lakhs
A Small EnterpriseMore than Rs. 25 Lakhs but does not exceed Rs. 5 CroresMore than Rs. 10 Lakhs but does not exceed Rs. 2 Crores
A Medium EnterpriseMore than Rs. 5 Crores but does not exceed Rs. 10 CroresMore than Rs. 2 Crores but does not exceed Rs. 5 Crores

MSME Registration

MSME enterprises are the backbone of the economy of any nation. Apart from this, they are also an engine of the economic growth that promotes equitable development for everyone. Basically, an MSME enterprise majorly deals with the labor-intensive rather than the large corporate sectors. Also, an MSME enterprise promotes employment at a very high potential and lowest capital cost. Majorly, it contributes to the industrial production and exports in India. Adding more to it, an MSME enterprise plays a pivotal role in the development of the industrial economy.

As MSMEs are highly beneficial in the overall development of the nation, henceforth, in order to promote it on a high level, the MSMED or the Micro, Small & Medium Enterprises Development Act of India, 2006 came into existence. Adding more benefits, the MSMED Act facilitates the promotion and development of enterprises through incentives, schemes, and subsidies. For availing the benefits of MSMED Act, you should be registered through MSME Registration. MSME registration is also known as Udyog Aadhar registration from 2015.

Benefits of MSME Registration

To encourage the growth of MSME, both state and central governments have conceptualized it in such as a way as to provide maximum benefits to the enterprises falling under the MSME sector. Registration of an MSME is not legally mandatory but registering it will help you reap several benefits from the government including:

  1. Collateral Free loans from banks:

The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) was launched by the Government of India to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme. The Ministry of Micro, Small and Medium Enterprises, Government of India and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises. This scheme allows collateral-free loans of up to 50 lakhs for individual MSMEs.

  1. 1% Exemption on the interest rate on overdraft:

Enterprises that have MSME Registration can avail the benefit of 1% exemption on the interest rate on Overdrafts as mentioned in the scheme.

  1. 50% subsidy for Trademark registration:

Enterprises that have MSME Registration Certificate can avail 50% subsidy for trademark or patent registration by making application to respective authority.

  1. Eligible for Industrial Promotion subsidy:

Enterprises that have MSME Registration are eligible for Industrial Promotion Subsidy as may be prescribed by the government in this behalf.

  1. Concession in Electricity bills:

Enterprises that have MSME Registration Certificate can avail Concession on electricity bill by making application to the electricity department along with MSME Registration Certificate.

  1. Reimbursement of ISO Certification:

Enterprises that have MSME Registration Certificate can reimburse ISO Certificate Expenses by making application to respective authority along with MSME.

  1. Protection against delayed payments:

The Ministry of Micro, Small and Medium Enterprises gives protection to MSME Registered Business against the delay in payments from Buyers and right of interest on delayed payment through conciliation and arbitration and settlement of dispute be done in minimum time. If any micro or small enterprise that has MSME registration, supplies any goods or services, then the buyer is required to make payment on or before the date agreed upon between the buyer and the micro or small enterprise. In case there is no payment date on the agreement, then the buyer is required to make payment within fifteen days of acceptance of goods or services. Further, in any case, a payment due to micro or small enterprise cannot exceed forty-five days from the day of acceptance or the day of deemed acceptance. In case of failure by the buyer to make payment on time, the buyer is required to pay compound interest with monthly interest rests to the supplier on that amount from the agreed date of payment or fifteen days of acceptance of goods or service.

  1. Special Consideration on International Trade Fairs:

Under the International Cooperation Scheme, financial assistance is provided to organizations associated with MSME for deputation of MSME business delegation to other countries for exploring new areas of MSMEs, participation by Indian MSMEs in international exhibitions, trade fairs, and buyer-seller meet and for holding international conference and seminars which are in the interest of MSME sectors.


As Micro, Small and Medium-sized Enterprises (MSMEs) are considered the “engine of growth” for any developed or a developing country, they are being given every possible benefit so as to make them sustain devoid of any economic conditions. The benefits offered to them especially in India are huge in terms of support system given to them by both the central and state government. Putting it all together, it is beneficial to register your business under the MSME subject to the eligibility to get the potential benefits from the MSMED Act.

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