By: Shrijay Sheth | Co-founder, LegalWiz 24 Oct 2018, Wednesday

Understanding MSME Registration in India & its Benefits

With the advent of Indian youth skewed towards startups and the existence of MSMEs since 2001, the things are getting more organized and advanced. Being a young nation, India is turning out to be an overtly transforming nation. The government too is shy no more in introducing beneficial schemes for supporting MSMEs to exist and grow swiftly.

The Ministry of MSME too is working firmly to encourage MSM Enterprises engaged in the manufacturing and production, and processing or preservation of goods to realize entrepreneurs that starting up doesn't cost an arm and a leg anymore.

Understanding MSME as per the Law: The Government of India has devised the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. In legal terms, the definition of micro, small and medium enterprises can be best understood as

Enterprise Category

Investment in Plant & Machinery

(Manufacturing & Production Industry)

Investment in Equipment

(Service Industry)


The investment in plant and machinery does not exceed Rs. 25 lakh

The investment in plant and machinery does not exceed Rs. 10 lakh


The investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore.

The investment in plant and machinery is more than Rs. 10 lakh but does not exceed Rs. 2 crore.


The investment in plant and machinery is more than 5 crore but does not exceed Rs. 10 crore

The investment in plant and machinery is more than 5 crore but does not exceed Rs. 10 crore


What all it requires to be registered as MSME?

It is an online process that requires your Aadhar number to get it certified. One can avail the certificate online without any need of the physical copy. Moreover, the process is simplified even further for the enterprises having the MSME Certificate to obtain licenses, approvals and registrations in any field for their business from their respective authorities. Such that they can produce the Certificate of MSME Registration while making an application itself. Not just that, applicants can reimburse the ISO Certificate Expenses by making an application to the respective authority supported by MSME Certificates.


What are the benefits of getting registered?

There are many; from priority lending to cluster financing with encouraging bank loans, and an opportunity to adopt latest quality management standards.

Let's have a look at them one by one

All new industrial units having MSME Registration and expansions are exempted from payment of Stamp Duty and Registration fees and Direct Tax Exemption in the initial year of business


Propitious subsidies

  • Your enterprise may avail Bar Code Registration subsidy - 50% subsidy for the patent registration by making application to its respective authority; also for Trademark registration for selected category.
  • Subsidy on the expenditure for obtaining product certification licenses from National/International standardization bodies. Under this Activity, a subsidy to an extent of 75% of the actual expenditure is granted towards licensing of the product to National/International Standards. The maximum GOI assistance allowed per MSME is Rs.1.5 lakh for obtaining product licensing/marking to National Standards and Rs. 2.0 lakh for obtaining product licensing/marking to International standards.


How helpful are Banks?

Rate of Interests are lower for the registered ones as compared to other enterprises.Public sector banks are permitted to categorize their MSME general banking branches as specialized MSME brancheshaving 60% or more of their advances to MSME sector. This is to provide for a better service to this sector as a whole.

As per RBI Master Circular on lending to the MSME sector dated July 1, 2010, a composite loan limit of Rs.1crore can be availed.


The Business Incubators

The Ministry implements the Support for Entrepreneurial and Managerial Development of SMEs through Incubators. The main purpose of this scheme is to nurture innovative business ideas (new/indigenous technology, processes, products, procedures, etc) that can be commercialized in a year.

Under the Scheme, financial assistance falling in 75% to 85% of the project cost, upto a maximum of INR6.25Lakh per idea is provided which is limited to 10 ideas for the Business Incubators (BIs) or the host institute. The BIs are also eligible to avail Rs. 3.78 lakh for infrastructure and training expenses for incubating 10 ideas (Rs. 37,800 per idea). Any individual or Micro and Small Industries (MSEs) that has an innovative business idea at near-commercialization stage can approach the Business Incubators approved under the scheme. And then, various institutions like Engineering Colleges, Management Institutions, Research labs, etc. having an in-house incubation facilities and faculty for providing handholding support to new idea/entrepreneur can apply in the prescribed application form.



Anything out of the box is a Trend these days. Moreover, not following any fixed pattern makes us wonder how versatile could a singular idea be? Same is the case with the entrepreneurialspirit here.

With the support from Government and youth’s interesting in starting a new business, the MSMEs are growing rapidly. 

Hope the article could be of some help to those who want to work for themselves or have business ideas but are not able to overcome a lot of confusions about how to start or fund their enterprises. If nothing, the idea of getting your company registered can actually be a good start towards the dreams.



About the Author:

Shrijay Sheth is the co-founder at LegalWiz provides legal consultancy and accounting services for Indian business entities; ranging from registering a business to bookkeeping. Shrijay is a seasoned entrepreneur and a serial Startup evangelist with interests in eCommerce, legal services, and business consultancy.

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