In 2006, the Micro, Small, and Medium Enterprise Growth Act (MSMED Act) was enacted. The Ministry of Small-Scale Industries was combined with the Ministry of Agriculture and Rural Industries to create the Ministry of Micro, Small, and Medium Enterprise in order to boost productivity through encouraging entrepreneurship, jobs, and livelihood opportunities.

MSME stands for MICRO, SMALL, and MEDIUM Enterprises. The MSMED Act of 2006, which is administered by the Ministry of Micro, Small, and Medium Enterprises, governs it. It’s also known as Udyog Aadhar since the Aadhar card is needed to register under the MSME. It is an Indian passport for small businesses. Recently, for registration purpose this name further changed to Udyam Registration.

MSMEs not only play a crucial role in creating vast numbers of jobs at a lower cost of capital than large corporations, but they also aid in the industrialization of rural and backward regions, reducing regional imbalances and ensuring an equal distribution of national income and wealth.

MSMEs serve as ancillary units to large enterprises, and this sector makes a significant contribution to the country’s socio-economic growth.

The Ministry’s and its organizations’ schemes/programs are designed to help/provide.

  1. A sufficient supply of credit from financial institutions and banks.
  2. Upgrading and modernizing technology receive support.
  3. Quality assurance and modern research equipment.
  4. Modern management practices are available.
  5. Via adequate training facilities, entrepreneurship creation and capability upgradation can be achieved.
  6. Product production, design interference, and packaging assistance are all available.
  7. Measures to foster capacity-building on a cluster-by-cluster basis.
  8. To ensure Artisans and workers’ well-being.
  9. Assistance in gaining greater access to both domestic and international markets
  10. Infrastructure services that are integrated.
  11. Recovery of dues from debtors.

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Micro, Small, and Medium Enterprises (MSME) production that is globally competitive as a growth engine for the Indian economy.


Encourage the growth and creation of Micro, Small, and Medium Enterprises, including the Khadi, Village, and Coir industries, in order to generate new businesses and jobs. The Ministry’sMinistry’s long-term aim is to strengthen the country’s manufacturing base by improving MSME performance through skill and entrepreneurship growth.


There are two types of Micro, Small, and Medium Enterprises (MSME):

MANUFACTURING ENTERPRISES– Enterprises engaged in the manufacture or manufacturing of products belonging to any sector mentioned in the first schedule to the Industries (Development and Regulation Act, 1951), or in the process of adding value to a finished product with a distinct name, character, or usage. The Manufacturing Business is characterized by the amount of money invested in plants and machinery.

SERVICE ENTERPRISES– The businesses that provide services:

Earlier criteria for defining of Micro Small and Medium enterprises were:

  • Micro Enterprises: It is a company with a plant and machinery investment of Rs. 5 crores in the manufacturing sector and a service sector equipment investment of Rs. 2 crores in the service sector.
  • Small Enterprises: A company with a plant and machinery investment of Rs. 5 crores in the manufacturing sector and service investment of Rs. 2 crores in the service sector.
  • Medium Enterprises: A company with a manufacturing investment of Rs. 10 crores in plant and machinery and a service sector investment of Rs. 5 crores in equipment.

Ministry of Micro, Small & Medium Enterprises, Government of India, vide its office memorandum No. 5/2(2)/2021-E/P & G/Policy (E-19025) allowed Retail Trade and Wholesaler to take Udyam registration.

Later, the Ministry of Micro, Small and Medium Enterprises vide notification dated 26.06.2020 changed the criteria to:

S. No.Nature of EnterpriseInvestment in Plant & Machinery or Equipment (in INR)Annual Turnover (in INR)
IMicro EnterpriseUpto 1 CroreUpto 5 Crore
IISmall EnterpriseMore than 1 Crore but upto 10 CroreMore than 5 Crore but upto 50 Crore
IIIMedium EnterpriseMore than 10 Crore but upto 50 CroreMore than 50 Crore but upto 250 Crore

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The Govt. has introduced a number of initiatives for registered MSMEs, including:

Udyog Aadhaar Memorandum: 

In order to register under this scheme, the individual must have an Aadhaar passport. It is possible to do it both online and offline. It helps MSMEs by making loans, credit, and government subsidies more available.

Zero Defect, Zero Effect: 

To be registered under this program, products produced for export must meet the requirements. This will enable them to be accepted in other countries and prevent them from being returned to India. For their exported products, companies registered under this program are eligible for some rebates and concessions.

Quality Management Standards and Quality Technology Tools:

By registering under this scheme, MSMEs will be able to better understand and sustain the relevant quality standards as new technology becomes available. This program organizes events (seminars, promotions, etc.) to inform companies about emerging technologies on the market.

Grievance Monitoring System: 

MSMEs profit from this scheme because it addresses concerns from business owners. The owners will check the status of complaints and keep the complaints open if the result is unsatisfactory.

Women Entrepreneurship: 

This program is designed specifically for female entrepreneurs. The government provides capital, training, counseling, and teaching of distribution techniques to women-run MSMEs who register under this scheme. Its aim is to make it easier for women to run and grow their businesses.

Credit Linked Capital Subsidy Scheme:

Registration under the Credit Linked Capital Subsidy Scheme provides MSMEs with modern technologies to replace their old and outdated technology. MSMEs receive a capital subsidy to help them upgrade their operations. MSMEs that have registered for this program will contact banks directly to receive these subsidies.


Well, the process of registration is very simple and can be done with ease. You do not require any hard copies of documents however, just need few details in order to fill online application. The whole process of registration is online. You just required to visit

Wherein you need to click the first tab if you are applying for the first time and all those applicant who already having the MSME certificate needs to click on the second tab as it is now mandatory to migrate yourself and take Udyam Registration. After clicking that a window wil appear to authenticate you based through adhaar card (mandatory) and once verify you need to fill few details as mentioned herein below:

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Now that you understand how to classify companies based on their essence of operation and investments and thereafter, process of MSME registration or process of Udyam registration. This registration necessitates the submission of a few personal information, information about the applicant, and so on.

Make sure you have an Aadhar Card before beginning the procedure. The Aadhar Card is required for MSME registration.

The documents needed for the registration process are listed below.

  1. The applicant’s Aadhar number;
  2. The applicant’s name, gender, PAN number, email address, and mobile number;
  3. The organization’s PAN, place, and address;
  4. The No. of workers you intend to hire and the date you intend to open your company;
  5. IFSC code and bank account number;
  6. The company’s primary business operation;
  7. 2-digit NIC code;
  8. Plant and machinery/equipment investment;
  9. Verification through OTP

The process of MSME registration or process of Udyam registration is broken down into steps.

Complete the Application Form

The first step is to fill MSME Registration form, which contains all of the required information about the business you are engaged in, such as the company name, registration number, GST number, and so on.

Fill in your personal details.

At this point, you must fill in all of your personal information, including your name, address, PAN card, bank account information, and other information that is needed during the MSME registration process. A picture must also be uploaded. Please make sure the photo’s size is within the allowed limits before uploading it to the site.

The application will be processed by an office.

An MSME executive will review your application during this point. If there is a difference, you will be told and given the opportunity to correct it.

Obtain a Mail Certificate

You will receive a certificate for MSME Registration or Udyam registration after completing the entire form. You can download a copy of the Sample MSME Certificate to see how it will look. You will not get a hard copy from the Ministry. For MSME Registration, you will receive a virtual certificate.

This is the process of MSME registration or process of Udyam registration for registering a company as an MSME. It is important to note that the entire registration process is free of charge. However, several web portals charge a fee to complete the registration process on behalf of businesses.


Bank loans are granted easily

All small and micro-business sectors in India now have access to collateral-free credit from the Indian government. This program provides funding to micro and small businesses. Benefits can be claimed for both old and new businesses under this scheme. The GOI (Government of India), SIDBI (Small Industries Development Bank of India), and the Ministry of Micro, Small, and Medium Enterprises established the Credit Guarantee Trust Fund Scheme to ensure that the Credit Guarantee Scheme is enforced for all Micro, Small, and Medium Enterprises.

Reimbursement of ISO certification fees

The expenses for ISO certification can be claimed back by registered MSME businesses.

Electricity bill refund

This concession is applicable to all MSME Registration Certificate holders who submit an application to the Department of Electricity along with their MSME Registration Certificate.

Protection against payments

Buyers of services or goods from MSMEs or SSI’s have a habit of delaying payment. The Ministry of Micro, Small and Medium Enterprises lends a hand to these businesses by allowing them to receive interest on payments that have been postponed by the buyer. Conciliation and arbitration must be used to resolve certain conflicts in the shortest amount of time possible.

If an MSME registered business provides products or services to a customer, the buyer must pay on or before the agreed-upon payment date or within 15 days of accepting the goods and services from the MSME or SCI registered business.

If a buyer refuses payment for more than 45 days after accepting the goods or services, the buyer will be charged compound interest as well as monthly interest on the agreed-upon sum. The interest rate is three times the Reserve Bank of India’s published rate.

Eligibility for industrial promotion subsidies

MSME-registered businesses are also eligible for a government-suggested subsidy for industrial promotion.

Exemption from overdraft interest rates

Businesses or businesses that are MSME-registered will receive a 1% discount on their Over Draft, according to a scheme that varies by bank.

Patent registration subsidy

Enterprises that have received a certificate of registration from MSME are eligible for a generous 50% subsidy. Through submitting an application to the appropriate MinistryMinistry, this subsidy may be obtained for patent registration.

Exemptions from income tax

There are some advantages that can save thousands of dollars in taxes if this credential is not obtained. Enterprises may benefit from a presumptive basis of taxes, which relieves them of the burden of keeping comprehensive books of records and undergoing audit procedures.


  • If MSMEs have invented something new (products/models, etc.), they will receive a 50% subsidy on patent registration.
  • MSMEs would be eligible for no-collateral loans to help them operate their companies.
  • If MSMEs have a good credit background and good relationships with their banks, they would be excluded from paying interest on overdrafts.
  • The central government has set aside over 350 items for purchase exclusively from this market.
  • The government assists MSME in upgrading their facilities with cutting-edge technology by assisting them in obtaining low-interest bank loans.
  • Regardless of their arrangement, MSMEs will be protected from buyer payments (i.e., the buyer will pay within 45 days).


  • MSME have a more challenging time obtaining funds because they lack the financial clout of large corporations.
  • Gaining the confidence of a large number of customers can be difficult.
  • SMEs will face significant barriers to benefiting from economies of scale, resulting in higher costs in some types of businesses.
  • Despite being more adaptable to change, a SME’s lack of financial capacity will trigger significant issues if it is forced to undergo long periods of crisis.
  • Small businesses have no negotiating leverage with vendors and consumers.
  • Access to professional workers is restricted for MSMEs.


  • A collateral-free automatic loan with a four-year term and a 12-month principal repayment moratorium.
  • Include subordinate debt to stressed MSMEs.
  • Equity injection via a fund of funds model for MSMEs with growth potential.
  • MSME definition to be updated to increase expenditure and turnover limits in order to broaden coverage (already discussed in the classification of MSME). 


MSMEs are rapidly expanding, thanks to government funding and young people who are motivated and brave enough to start their own company. As a result, understanding the registration process and its advantages is critical in boosting the entrepreneurial spirit of MSME and SSI founders.

To summarize, India’s MSME sector is today at the forefront of global development, thanks to a sustainable and high-quality product range. However, government assistance is needed to reduce the transaction costs of technological upgrades, market penetration, and infrastructure modernization, among other things. The MSME sector is frequently referred to as a developing economy’s “engine of growth.”

It is concluded that MSMEs in the Indian economy have shown tremendous growth and excellent output thanks to the government’s policy structure and effective steps taken from time to time to promote MSMEs’ growth and development.

For more information, please contact us on or call us Mb. No. 85100 58386 or 9310 717274.