Sunday 15 May 2016

FAQs on Micro, Small, Medium Enterprise (MSME)

FAQ 1: What is MSME?
MSME stands for Mico, Small and Medium Enterprise. As per Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the MSME are classified in two classes:-

Nature of Enterprise
Manufacturing Sector
(Investment in Plant & Machinery excluding Land and Building)
Service Sector
(Investment in Equipment excluding Land and Building)
does not exceed Rs. 25 lakh
does not exceed Rs. 10 lakh
more than Rs. 25 lakh but does not exceed Rs. 5 crore
more than Rs.10 lakh but does not exceed Rs. 2 crore
is more than Rs.5 crore but does not exceed Rs.10 crore
more than Rs. 2 crore but does not exceed Rs. 5 crore

FAQ 2: Why we get registration under MSMED Act, 2006?
Benefits for MSME (Micro, Small & Medium Enterprise)

1.       Up to 1% Reduction in rate of Interest on Overdraft Facility from banks
2.       Preference in procuring Government tenders
3.       Easy finance availability from Banks, without collateral requirement
4.       2% concession on Interest rate of term loan
5.       Easier to get registrations, Licenses, permissions & approvals
6.       15% CLCSS (Credit linked capital subsidy scheme) subsidy on fully automatic machine brought under bank term loan
7.       Manufacturers will be eligible for IPS Subsidy.
8.       All new industrial units will be exempt from payment of Stamp duty, registration fees, in C, D, D+ areas
9.       80-90% refund of Octori under B, C, D, D+ areas
10.   Electricity duty exemption for 15 years under  C, D, D+ areas
11.   Subsidy on ISO Certifications
12.   Subsidy on NSIC Performance and Credit ratings
13.   Protection against delay in payment from Buyers and right of interest on delayed payment
14.   Special consideration in International Trade fairs & exhibitions
15.   50% subsidy on the expenses incurred for patent registration.
16.   Reservation policies to manufacturing / production sector enterprises
17.   Time-bound resolution of disputes with Buyers through conciliation and arbitration
18.   Tax subsidies, power tariff subsidies, capital investment subsidies 
19.   Credit prescription (Priority sector lending), differential rates of interest etc.
20.   Excise Exemption Scheme
21.   Exemption under Direct Tax Laws.
22.   Reimbursement of ISO Certification Expenses
23.   Statutory support such as reservation and the Interest on Delayed Payments Act.
24.  Participation in Government Purchase registrations

FAQ 3: Who are eligible to get registration under MSMED Act, 2006?
        a)      Proprietorship enterprises,
        b)      Enterprises managed by Hindu undivided family,
        c)       Enterprises run by association of individuals,
        d)      Co-operative societies,
        e)      Partnership firms and
        f)       Enterprises managed by companies or undertakings etc.

FAQ 4: What is the procedure to get MSME Registration?
There are two stages of registration
        a)      Provisional Registration
        An enterprise is granted provisional registration when it is at a pre-investment stage.

        b)      Permanent Registration
        After getting Provisional registration, an enterprise can apply for permanent registration just before launching its production facilities. However, an enterprise that is already functioning can apply for permanent registration directly.

FAQ 5: What is the validity of Provisional registration?
Provisional registration is valid for a period of 2 years from the date of its Issue. In case Unit is not set up during two years, applicant may apply afresh and obtain a new provisional registration.

FAQ 6: Can MSME registration be revoked?
If MSME violate the regulations of MSMED Act, 2006 then the registration may be revoked. The following are the ways which will make it liable for de-registration: 

a)      If it starts manufacturing of any new item that require an other kind of statutory license.
b)      If it crosses the specified investment limits. 
c)      It does not satisfy the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.