What is an MSME/SSI/Udyam Registration?

The Micro, Small and Medium Enterprises (MSME) are considered essential for our Indian Economy as this sector not only acts as a job creator for our youth but also plays a crucial role in the Industrialization of the Rural and Backward areas. An MSME Registration is obtained as per the MSMED Act. However, obtaining registration is not at all mandatory, but it shall be taken into consideration that the businesses or entity with MSME Registration are eligible to avail the benefits and schemes made by the Government.

Examples of such benefits are exemption from the Direct Tax, Private-Sector lending, exemption from Excise Duties, power tariff subsidies, capital investment subsidies. Some of the prominent and well-known MSMEs in India are DFM Foods, Ankur Scientific Energy Technologies, Molecular Connections, SL Packaging, Chem Process System, Mynd Solutions, etc.

Further, MSMEs and SSIs (Small Scale Industries) are eligible to obtain registration under the MSMED Act. Furthermore, according to the MSMED (Micro Small and Medium Enterprise Development) Act, 2006, the term MSME includes the following two listed:

Service Enterprise This Industry is mainly engaged in providing services to other industries.

Manufacturing Enterprise This Industry is engaged in manufacturing activities.

However, the same distinction has been eliminated by the Ministry of Finance by way of an announcement made on May 13, 2020.

What is a Micro Small and Medium Enterprise?

As per the MSMED Act, 2006, MSMEs and SSIs were enacted to strengthen and boost the Small-Scale sector in India. Earlier, both Service and Manufacturing were considered distinct and separate from each other, having different amount prescribed for the Investment Required.

However, as per the latest amendment made in the definition of MSME by the Ministry of Finance, the difference between the manufacturing and service sectors has been eliminated, Investment Limits have been Revised, and a Turnover Criteria has been introduced. This amendment was announced by our Finance Minister, Mrs. Nirmala Sitharaman, on 13 May 2020. The following listed are considered as MSMEs under the MSMED Act, 2006:

Micro-Enterprise

Type of Industries Type of Investment Investment Amount Turnover Amount Manufacturing and Service Sector In Plant and Machinery Less than Rs 1 Crore Less than Rs 5 Crore

Small-Enterprises

Types of Industries Type of Investment Investment Amount Turnover Amount Manufacturing and Service Sector In Plant and Machinery Rs 1 Crore to Rs 10 Crore Rs 5 Crore to Rs 50 Crore

Medium Enterprises