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Eligibility criteria for MSME Registration

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Image result for msme certificate

  • Harshit Sharma,

3rd Year, B.A., LL.B.(Hons.), Amity Law School, Amity University Madhya Pradesh.

In clear senses, MSME stands for “Micro, Small and Medium Enterprises” and MSME registration in India criteria is fixed by the Ministry of MSME and the Parliament under the MSMED Act, 2006. MSME are classified under two branches; First is, Manufacturing and Second is, Service-Providers. Enterprises working in both the categories have eligibility for MSME certificate. This till date is not a mandatory procedure, but to avail various benefits in terms of loan, taxation, credit-facilities etc. the MSME registration should be done.

The classification of MSME are hereby reproduced:

  MICRO SMALL MEDIUM
Manufacturing Enterprises ₹25,00,000 Less than ₹5,00,00,000 Less than ₹10,00,00,000
Service Enterprises Less than ₹10,00,000 Less than ₹2,00,00,000 Less than ₹5,00,00,000

In order to understand the eligibility concept, firstly we should know what is the main object behind incorporating these. Therefore, MSME registration criteria is made with the following objectives:

  1. To tally and maintain a roll of the small industries to which the package of incentives and the support are targeted.
  2. To provide a certificate that enables the units to avail of the statutory benefits, mainly in terms of protection.
  3. To help serve the purpose of collection of the statistics.
  4. To help create nodal centres at the centre, the state and the district levels to promote SSIs.

In respect of the same, the Eligibility for MSME certificate of enterprises can be classified into 3 categories:[i]

  1. Who can apply for MSME certificate.
  2. Criteria for applying for MSME certificate.
  3. When one can apply for MSME registration.

These are briefly discussed below,

  1. Who can apply for MSME certificate.

Eligibility for MSME certificate or Udyog Aadhar Registration in India can be obtained by any type of business entity. Which includes: Proprietorships, Joint Hindu Family, Partnership Firm, One Person Company, Limited Liability Partnership, Private Limited Company, Limited Company, Producer Company, any association of persons, co-operative societies or any other undertaking can obtain MSME registration in India. Micro, Small & Medium businesses having MSME registration enjoys various benefits under the Micro, Small and Medium Enterprises Development Act, 2006. Hence, it is recommended that all small businesses obtain MSME registration or Udyog Aadhaar after starting up their business under the MSMED Act, 2006. Therefore, it can be said that, any business organisation or co-operative societies are eligible for MSME certificate if they fulfil the below-mentioned criteria.

  1. Criteria for applying for MSME certificate.

Entities which can be classified as a Micro, Small or Medium Enterprises under the following criteria as per the MSMED Act, 2006 is eligible to obtain MSME certificate or Udyog Aadhaar, which is shown in the form of table above and is now followed by the textual description of the same:

In case of,

Entities engaged in manufacturing or production of goods:

Micro enterprise: Any entity wherein the investment in plant and machinery does not exceed ₹25 lakhs.

Small enterprise: Any entity wherein the investment in plant and machinery does not exceed ₹5 crores and not less than ₹25 lakhs.

Medium enterprise: Any entity wherein the investment in plant and machinery does not exceed ₹10 crores and not less than ₹5 crores.

entities engaged in providing or rendering of services:

Micro enterprise: Any entity wherein the investment in equipment does not exceed ₹10 lakhs.

Small enterprise: Any entity wherein the investment in equipment does not exceed ₹2 crores and not less than ₹10 lakhs.

Medium enterprise: Any entity wherein the investment in equipment does not exceed ₹5 crores and not less than ₹2 crores.

  1. When one can apply for MSME registration.

Eligibility for MSME certificate or Udyog Aadhaar arises right after the registration to any of the forms of Business organisation to enjoy various benefits like protection against delayed payments under the MSMED Act of 2006 etc.

Now we should talk about the procedural and documents compliances, so as to completely understand the eligibility criteria for MSME certificate.[ii]

  1. A unit can apply for the Permanent Registration Certificate (PRC) for an item which doesn’t require any industrial license, meaning that, the items which are listed in the Schedule-III and not in Schedule-I or Schedule-II of the licencing Exemption Notification. The units employing less than 50/100 workers with or without power can also apply for registration even for the items which are included in Schedule-II, of the above notification.
  2. Application should be made in the prescribed format. Without any field inquiry, the certificate is issued.
  3. PRC is valid for a period of five years. If the entrepreneur is unable to set up his unit during this period, he can once again apply at the end of this period.
  4. Afterwards, when the unit commences production, it has to apply for a permanent registration on the prescribed form.

The following forms the basis of the evaluation process, before granting PRC:
1. The unit has to obtain all the necessary clearances and No Objection Certificates, whether statutory or administrative.
2. The unit doesn’t violate any jurisdictional restrictions of the area where it is to be setup, at the time of evaluation.
3. The unit have made investment within the prescribed limits.
4. The unit is neither owned, controlled nor a subsidiary of any other industrial undertaking (not fall under the MSMED Act, 2006) as per the notification passed by appropriate government.

Conclusion

Hence, MSME registration criteria is very well explained under the Micro, Small & Medium Enterprises Development Act, 2006 in spite of the enforcement of the Competition Act of 2000, so as to protect these enterprises and to bring them on the equal footing as that of the domestic well-established business organisation as well as in competition with the International Standards. In lieu of the same, the above-mentioned criteria and procedural compliances have to be taken into consideration for getting MSME certificates and benefits thereon. To get your MSME Registration Certificate today visit Company Vakil and their Legal Experts are always available at your service.