What is MSME?


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    Table of Contents


    What is MSME?

    MSME stands for Micro, Small, and Medium Enterprise.  These are the backbone of the Indian economy. These are mainly engaged in the production, manufacturing, processing of goods. These are introduced by the government with micro, small and medium enterprise development. It generates a larger number of employment opportunities in the economy.

    1. Definitions

    • Microenterprises are that enterprises whose annual turnover is not more than 5 cr. And investments for a service provider are not more than 10 lakhs and in the case of manufacturing units, it shall be up to 25 lakhs.
    • Small enterprises are that enterprises whose annual turnover is 5 cr to 75 cr and having investments for services provider are 10 lakhs to 2 cr and in case of manufacturing units 25 lakhs to 5 cr
    • Medium enterprises are that enterprises whose annual turnover is 75 cr to 250 cr and have investments for manufacturing units 5cr to 10 cr and for servicing units 2 cr to 5 cr.

    2. Features of MSME

    • It provides jobs, loans, and other services for various workers and artisans.
    • They encourage the growth of small enterprises and also improve and upgrade the skills of entrepreneurs.
    • They provide the bank with credit facilities.
    • It supports the modernization, development, and upgrading of technology and skills.
    • It promotes the growth of the economy by helping large-scale enterprises or through other services.

    3. Types of MSME

     According to the provisions of the micro, small and medium enterprises development Act, 2006, these are classified as manufacturing units and servicing units.

    4. Role in Indian economy

    Micro, small and medium enterprise plays an important role in the Indian economy. It helps in the increase of GDP of India by manufacturing and other activities. They manufacture a variety of products for the domestic market and export also.

    It had provided many employment opportunities for many unemployed individuals or artisans. By this, the unemployment rate reduced a lot. They collaborate and work with the government for the upbringing of rural areas. They employ in rural areas and also industrialized rural areas with low-cost capital in comparison to large-scale units. They are also working as a helping hand to large-scale industries.

    5. Importance of Micro, small and medium enterprise in the Indian economy

    • It became the second-largest employment generation sector after agriculture by generating approximately 120 million employment opportunities.
    • It has increased its contribution up to 50% in Indian GDP.
    • It has 45 percent of contribution in export.
    • It promotes growth and improves the living status mainly of people from rural areas and of weaker sections.
    • It also creates opportunities for people to avail the of banking and finance facilities.
    • It promotes innovations by providing opportunities to new entrepreneurs.

    6. Documents required for registration

    Documents required for MSME registration
    • Aadhaar number
    • PAN number
    • Address of business
    • Bank account number
    • Investments details
    • Main business activities
    • Turnover details
    • NIC 2-digit code
    • Sale and purchase bills copies
    • Copies of license
    • Bills of purchase of machinery

    7. Registration of micro, small and medium enterprise

    Those businesses who want to avail various benefits of government schemes have to register themselves. The registration process is free of cost, easy and online process.

    Steps to register are as follows: –

    • Visit UAM (Udyog Aadhaar Memorandum) portal where you need to fill a form.
    • Click on the first link on the first page for new registration.
    • Enter the Aadhaar number and name and generate OTP.
    • After that, you have to fill in PAN details and if you have no PAN then select no option.
    • Now, you will have to fill form having 5 – 24 fields numbers.
    • At the end of the form, again an OTP will be sent for verification.
    • After successful registration, you will receive a Thank You message and a registration number. Keep that number for the future.
    • It will take 2-3 days for approval.

    After the approval, you will get notified through email of the completion of registration.

    8. Validity period of the certificate

        There is no time limit for the certificate it is till the company’s existence.

    9. Who can register?

    New micro, small and medium enterprises, as well as old enterprise, can register with that same process.

    10. Cost for registration

    The registration process for the registration of micro, small and medium enterprise is free of cost. It will not charge any fee for registration.

    11. Is the registration process is fully online?

     Yes, the registration process of registration of micro, small and medium enterprise is fully online. The business owner has to fill the form through the government website and the whole process is online and easy.

    12. Benefits of MSME registration

    Benefits of MSME registration​

    Registered businesses can get many benefits from government schemes and other incentives also. The list of some of them are as follows: –

    • The low-interest rate on bank loans.
    • Easily accessible of credits for business.
    • Avail tax rebate specifically introduced for MSME by government.
    • One-time settlement fees for unpaid amounts.
    • Reimbursement for IOS certificate.
    • Concessions in electricity bills.
    • The special rebate and concessions for patents and industrial setup.
    • Credit guarantee schemes of the government.
    • Registration subsidies.
    • Special consideration for international trade fairs.

    13. Government schemes for MSME

    • Udhyog Aadhaar Memorandum-

    In this scheme, the Aadhaar number is the most important requirement. By registering through Aadhaar number, one can get ease in subsidies, credit facilities, low-interest loans.

    • Zero defect zero effect –

    Under this scheme, the quality of goods which going to export is checked so that there is no return back of goods. And these goods are also eligible for some rebates and concessions.

    • Quality management standards and quality technology tools

    Under this scheme, the use of new technologies and tools is conveyed through various seminars, campaigns, and activities. This scheme help enterprise to understand the implementation of new technology without sacrificing the quality of the product.

    • Grievance monitoring system

    This scheme helps business owners by giving them the right to open their complaints if they are not satisfied with the results.

    • Incubation

    This scheme promotes new ideas. Under this scheme, 75 percent to 80 percent cost of innovations related to implementing new ideas, designs, and products is financed by the government.

    • Credit linked capital subsidy scheme

    Under this scheme, the subsidy is provided for changing old and obsolete machinery with new technology. Micro, small and medium enterprises can directly go to the bank for this subsidy.

    The basic use of this scheme is for upgrading technology.

    • Women entrepreneurship

    This scheme is only for Women who want to start their own business. Under this scheme, the government provides training, capital, counseling, and other incentives to women so that they can carry business successfully.


    The government has introduced many more schemes for micro, small and medium enterprise such as-

    • Science and technology scheme
    • Market promotion and development scheme.
    • Coir Vikas Yojana.
    • Bar code scheme
    • Procurement and marketing support scheme.
    • Entrepreneurship skill development program
    • Assistance to training institutions
    • Micro and small enterprise cluster development.

    And many more.


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