Can MSME Registration Help Startups Get Better Government Support

Micro-Small and Medium Enterprises (MSME) is characterized largely by the amount of money they invest. MSMEs are classified as service sector companies in the manufacturing sector based on the amount of money invested in the plant.

These businesses contribute significantly to the economy by employing a large number of unskilled and semi-skilled workers. In terms of employment, export, and output, they make a significant contribution to the economy.

Previously, Indian MSMEs were seen as less prominent than those in other countries, but after the passage of the MSMED Act, the industry has evolved into a competitive entity. It is important to remember that in order to benefit from the MSMED Act, an Udyam registration is required.

The MSME provides a slew of advantages to small businesses, a few of which are listed below.

Benefits of the Banking Industry:

MSMEs are properly recognised by a slew of banks and financial institutions around the country, which have prepared a slew of lucrative programmes to help them achieve smooth commercialization. This results in priority sector financing, in which the firm may anticipate a loan to be approved quickly and at a cheaper interest rate. When it comes to repayment delays, special treatment has its place.

Benefits from Taxes:

MSMEs may be eligible for exemptions from central excise and direct taxes in the early years of operation, depending on the kind of firm.

State Governments’ Benefits:

MSMEs that operate under the MSMED Act are eligible for sales tax exemptions and other state government incentives.

Patent Registration Subsidy:

The MSME-certified businesses are eligible for a patent registration incentive. For the purpose of registration, one must submit an application to the relevant ministry.

Exemption from Overdraft Interest Rates:

Under the MSME umbrella, businesses can get a 1% discount on OverDraft, which varies from bank to bank.

Electricity bills are lower:

As proposed by the government, MSME-accredited businesses can get a subsidy for Industrial Promotion.

This freedom is granted to all businesses operating under the MSME Registration Certificate. To take advantage of this incentive, you must submit an application to the electrical department, together with proof of MSME registration.

Central government perks include:

MSMEs benefited from government-sponsored programmes as well. It is a quick and uncomplicated process to register an MSME. When compared to other types of organisation creation, MSME documentation is far less time-consuming and inconvenient.

For MSME commencement, the following papers will be required:

  • A lease agreement or a deed of sale.
  • The bank statement and the cancelled cheque
  • Aadhar Card, Passport, and Pan Card are three types of identification cards.
  • Registration of Small and Medium-Sized Businesses

MSME stands for micro, small, and medium-sized businesses. MSME, as a major economic engine, guarantees that everyone benefits equally. MSME Enterprises, in comparison to huge corporations, are labor-intensive and provide significant employment potential for a little capital cost.

MSME accounts for a significant portion of India’s industrial production and exports. It is presently driving the industrial economy’s development to unprecedented heights.

MSME Registration is required in order to take benefit of the MSMED Act. The Act covers a wide range of businesses for registration, including:

  • Firms that are sole proprietorships
  • Limited Liability Corporation (LLC)
  • Firms that form partnerships
  • Limited Liability Companies (LLCs)
  • LLPs

Types of MSME Registrations:

MSME Provisional Registration:

Provisional Registration is often issued during the unit’s pre-investment phase. The following are some of the advantages of registering:

To get permits, lodging, and land facilities.

To get regulatory approvals and no-objection certificates (NOCs).

MSME Registration for Life:

Registration for a Lifetime Awarded to an established industrial unit in exchange for a variety of incentives, including:

  • Exemption from paying taxes.
  • For products produced, price and purchasing preference are important.

MSME businesses are the foundation of a strong economy, and with the passage of the MSMED Act, these businesses have gained international recognition.

Micro and Small Enterprises (MSEs) encompass a wide range of products and services, including the following:

Pickles and chutneys, mustard oil, bread, groundnut oil, registers, and exercise books are just a few of the items available. Candles, safety matches, laundry soap, pyrotechnics, glass bangles, agarbattis, steel almirahs, and aluminium utensils are all prohibited.

Although the products listed above are designated for MSMEs, they can also be produced by medium or large units. However, there is one exception. These units must meet the export minimum standards, which require them to produce 50% of the MSE reserved products’ yearly output.

Because financial institutions are obligated to make a significant portion of their loans to small firms, the MSME sector has easy access to credit.

Apart from the credits to the small business sector, 60% of the credits are set aside for micro-enterprises and 40% for small businesses. Financing to micro and small businesses is prioritized above lending to medium-sized companies.

The scheme’s goal is to raise MSME knowledge about Intellectual Property Rights (IPRs) so that they may make plans to safeguard their business strategies. As a result, numerous IPR activities are being used under this plan to assist the MSME sector in addressing the problems of liberalization.

Suggested Read- udyam registration portal


The MSMED Act, in conclusion, is a boon to the economy, and it will almost certainly be bolstered by other Central Government initiatives. In the end, this would result in quicker economic growth and increased competitiveness among MSMEs.

By Manali