MSME Industry in India: Its Economic Importance

MSME Industry in India Its Economic Importance

Micro, Small, and Medium Enterprises (MSME) is an acronym for Micro, Small, and Medium Enterprises. Micro and small-scale industries are at the bottom of the economic pyramid in India.They are the country’s principal employers and job producers, and they play an important role in its growth and development. Let’s take a closer look at micro, small, and medium-sized businesses (MSMEs).

Also, Read- udyam registration

In India, a small and medium-sized enterprise (SME) is defined as:

Micro, Small, and Medium Enterprises, or MSMEs, play a key role in the Indian economy, accounting for more than 37% of GDP (GDP). More than 60 million micro, small, and medium-sized businesses employ more than 100 million people in the country. MSMEs not only generate a big number of jobs at a lower cost of capital than large corporations, but they also help to industrialise rural and undeveloped areas.

India’s Micro, Small, and Medium-Sized Enterprises (MSME) Sector:

Through the Udyam Registration website, the Ministry of Micro, Small, and Medium Enterprises published new registration criteria for MSMEs on June 26. MSMEs were also subjected to new investment and turnover criteria. It’s also worth noting that the revised criteria apply to both service and manufacturing enterprises. Trading companies are currently exempt from the list, according to the most recent criteria.

Under the Atmanirbhar Bharat Abhiyan, the Indian government has given an INR 3 lakh crore collateral-free automatic loan to enable MSMs expand and survive. In addition, the World Bank has set up a USD 750 million relief fund for the world’s 15 million MSMEs.

In India, there is a list of MSME:

  • Exports make for 48% of the country’s total revenue.
  • Only 90.19 lakh people have signed up for the campaign.
  • MSMEs are made up of 99.4% microbusinesses.
  • Small businesses make up 0.52 percent of the total number of firms.
  • Medium-sized firms make up 0.007% of the total number of businesses.

The Benefits of MSME Registration include:

The federal and state governments provide registered MSMEs with privileges such as excise duty exemption, tax benefits, and a reservation in the delayed payment legislation, to name a few. The Micro, Small, and Medium Enterprises Development Act was passed by Parliament in 2006. (MSMED Act). This Act claimed to make it simpler for small businesses to grow, expand, and compete in a healthy way. The category in which an MSME registration is submitted determines many of the benefits.

Taxation’s Advantages:

The corporate tax rate has been reduced by 5%, from 30% to 25%. Companies with annual revenues of less than 50 crores rupees are subject to this rule. The duration of the Minimum Alternative Tax has been extended by 15 years. The presumptive tax has also been decreased by 2% for MSMEs having a turnover of less than Rs.2 crores.

Schemes run by banks:

Banks provide loans to MSME owners at a lower rate of interest. If there is a payment delay, they are given some leeway.

Excise Duty Exemption:

The government has eliminated excise duty for MSMEs having turnover of less than Rs 1.5 crore in the first financial year. However, MSMEs that produce goods under the company’s brand name are eligible for this advantage. Readymade apparel, for example, has a cheaper excise charge of 10% for MSME certificate holders.

Small Business Government Benefits:

With the implementation of GST, the aforementioned ceiling for Special Category Status has been reduced to Rs 20 lakhs.

  1. Concessions on Intellectual Property:

To MSME certificate holders or start-ups, the government will refund up to 80% of the patent application price. For filing an international patent application, a grant of Rs 2 lakhs is also available. Individuals and businesses with an MSME certificate are eligible for a 50% discount on trademark applications. For the national patent application, a one-time grant of Rs 25,000 is available.

  1. Benefits from the state government include:

The majority of states have a variety of initiatives to help small businesses. Only a few examples include sales tax exemptions, credit facilities, the availability of developed land for warehouse construction, fiscal aid in the hire/purchase of machinery, and electricity bill reductions.

Suggested Read- udyam registration portal

Features and Advantages of a Startup Business Loan include:

  • To get a new business loan, no collateral or security is required.
  • The repayment terms for startup business loans are simple and flexible.
  • The paperwork needed to obtain a startup business loan is modest.
  • The money is transferred to the applicant’s bank account as soon as possible.
  • The lender’s interest rate will be entirely determined by the applicant’s credit history.