MSME Registration in India: Eligibility, Procedure and Documents Required

Introduction:

The Micro, Small, and Medium Establishments (MSME) can be regarded as the driving force of the overall growth and development of the Indian economy. The contribution of MSME towards development and employment creation in backward areas of the country has been remarkable.  As per the database of msme.gov.in, the contribution of MSMEs towards the industrial employment of the country is 45%. Further, the website mentions that MSMEs produce around 6500 products across the country.  

The MSME sector needs less investment and can manage with semi-skilled or unskilled employees as compared to large-scale organizations operating in India. This suggests that MSME reduces the cost and increases the success rate.

However, it is to be noted that registration of MSMEs is not compulsory but it is beneficial for most small-scale ventures. The Registration process for MSME is simple and can be done without or with a PAN. After the registration, the venture can get loans, credit facilities, tax benefits, etc. 

What are MSME or Micro, Small, and Medium Establishments?

As per the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006, businesses can be categorized under two categories based on the investment amount made. The two types of categories are mentioned below;
•    Manufacturing Enterprises: These are the businesses engaged in the manufacturing, production, and distribution of several commodities and products.
•     Service Enterprises: These are the businesses engaged in providing certain services.

A table containing details of Micro, Small, and Medium as per the two categories of business is provided below;

The above-mentioned existing conditions of the categorization of MSMEs is basically do not have scope for improvement and growth MSMEs. It has been observed that many companies are keeping their investment law in order to get the benefits of MSME. To get fit into the aforesaid categories, they do not focus to get potential growth and expansion.

Under the scheme of Atmanirbhar Bharath Abhiyan, the above-mentioned existing categories have been revised. Accordingly, a combination of annual turnover and investment of business is being considered for the categorization of MSMEs.

The details of which are as follows;

Eligibility for MSME Registration:

Any micro, small, and medium business which comes under the following business structures is eligible to get the registration and benefits of MSME;
•    Private Limited Company
•    Public Limited Company
•    Proprietorships
•    Co-operative Society
•    Trusts
•    Partnership Firm

However, it is to be noted that the above-mentioned businesses must come under the provided conditions in respect of investment and annual turnover for micro, small and medium enterprises.

Documents Required for Registration of MSME:

There are various documents required for the registration of MSMEs which must be either uploaded at the time of registration. The required documents for registration are:
•    Name of the Establishment
•    Aadhar Number
•    Address of the Establishment
•    Bank Details
•    Rent Agreement
•    Property Papers

Apart from the above-mentioned documents, some other documents may also be required for MSME registration. The following are some of such documents;
1.    Purchase or sale bill - The bills of raw materials purchased that a business needs for the production of goods have to be submitted as proof. Apart from that,   bills generated due to the sale of goods are also considered a valid document.
2.     Partnership deed - In case the MSME is a partnership firm, then a partnership deed has to be submitted. 
3.    Certificate of Incorporation - In case the MSME is a company registered under the Companies Act, 2013, then the certificate of incorporation or copy of Memorandum of Association (MOA) or Articles of Association (AOA) has to be submitted.
4.    Address proof of the company - In case the MSME is a proprietorship, a copy of the property tax receipt, possession letter, or lease deed must be submitted. If the property is rented then documents related to renting payment such as rent receipt is required.
5.    License of Machinery - In certain cases, a license of machinery is required if the MSME is a manufacturing unit. However, it has to be an industrial license issued by the Government of India.