Definitions of Micro, Small & Medium Enterprises In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:
1. Manufacturing Enterprises: The enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and Regulation) Act, 1951) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use. The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery.
2. Service Enterprises: The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.
Benefits of an MSME Registration:
Benefits from Banks: All banks and other financial institutions recognize MSMEs and have created special schemes for them. This usually includes priority sector lending, which means that the likelihood of your business being sanctioned a loan is high, and lower bank interest rates. There may also be preferential treatment in case of delay in repayment.
Tax Benefits: Depending on your business, you may enjoy an excise exemption scheme as well as exemption from certain direct taxes in the initial years of your business.
Benefits from State Governments: Most states offer those who’ve registered under the MSMED Act subsidies on power, taxes, and entry to state-run industrial estates. In particular, there is a sales tax exemption in most states and purchase preference on goods produced.
Benefits from Central Government: The central government, from time to time, announces schemes to benefit MSMEs, such as the credit guarantee scheme: