The Role of MSME/Udyam Registration in Accessing Subsidies and Financial Aid: What You Need to Know

Introduction

The predominance of micro, small, and medium enterprises in the Indian economy is something that cannot be overstated. MSMEs control a huge share of contribution to the GDP, employment, and export sectors in the country. On realizing this fact, the Government of India puts forth many subsidies and financial aids specifically for MSMEs. To avail themselves of these, it has become necessary to obtain MSME registration in India. Seedling Associates is one of the best consultancy firms that helps businesses get MSME/Udyam Registration so enterprises can realize the full potential of the Government Schemes.

About MSME Registration in India

Registration in the MSME category in India, hence, is the most important requirement to be fulfilled by any business entity wishing to be recognized as a micro, small, or medium enterprise by the government under the MSMED Act, 2006. This would make your business face formal and also open up channels for the other benefits in the form of subsidies and support systems that the government of India offers for the growth and sustenance of small businesses.

What is MSME Registration?

MSME registration is the online registration of your business as a documented existence in the eyes of the legal taxation authority of India. MSME delivers the facility of classifying your firm either as a micro, small, or medium enterprise. This is per set parameters: investment in plant and machinery or equipment, along with annual turnover. For this categorization, the kind of benefits and support that a business could receive from the government would be based on it. The registration process has been smoothened over the years to be accessible to entrepreneurs across the country. This makes sure even the smallest of businesses can cash out on the opportunity.

Why is Registration of MSME Important

Legal recognition means the most important benefit of getting MSME registration in India: legally recognized under the micro, small, or medium enterprise. It is legal recognition through which businesspeople can take their businesses into formal agreements or contracts, including qualifying for government schemes and subsidies. Being registered, MSMEs are more credible in the eyes of financial institutions, customers, and suppliers, hence opening themselves up to opportunities.

1. Financial Support: Some of the other financial benefits that an MSME can avail itself of include priority sector lending by banks, which makes it easier for the enterprise to access credit at a lower rate of interest. The government also offers collateral-free loans under the scheme of the Credit Guarantee Fund Trust for Micro and Small Enterprises—thus, businesses can source capital, which may be necessary for expansion or operation, without being bogged down by collaterals.
2. Tax Benefits: MSMEs enjoy a range of tax benefits, which include exemptions for certain direct taxes, reduced tax rates, along concessional duties on stamp duty and registration fees. This can be reduced to a large extent and helps small businesses get relief rather than paying such a financial burden, reinvesting their savings for growth and development.
3. Government Subsidies and Incentives: The government of India offers some subsidies and incentives to MSMEs to encourage their growth and competitiveness. These include capital subsidies for technology upgradation, subsidies on patent registration, and reimbursement on account of participating in international trade fairs and exhibitions. The subsidy of power tariffs is allowed to all registered MSMEs and largely reduces the cost of operation.
4. Protection from Delayed Payments: The MSMED Act provides a statutory base that safeguards the interest of its MSMEs from delayed payments by their buyers. If a buyer fails to make a payment within 45 days of the date of acceptance of goods or services, he shall be liable to pay interest compounded monthly on the amount due. This protection of interest of MSMEs helps them maintain a healthy cash flow, critical for survival and growth.
5. Government Procurement Preference: GOs and PSUs have to buy at least a certain proportion of their total purchase from MSMEs. This makes the MSMEs registered to have a significant advantage for buying from them related to government contracts and therefore to a periodic, very lucrative source of income.

What is Udyam Registration Registration?

The registration under Udyam Registration, also popularly known as Aadhaar Udyam Registration, was introduced to simplify the registration process of MSMEs. It has replaced the complex earlier system that was there, thereby easing it for business owners who could now get recognition easily with the submission of an online single-page form. Although 'Udyam Registration' registration has been replaced with 'Udyam' registration with effect from 1 July 2020, its legacy will prevail in having eased the process of registration for countless businesses.

Whether it is how to register for MSME or how to migrate to Udyam, Seedling Associates helps at each step, making the entire process hassle-free.

Role of MSME/Udyam Registration in Availing Subsidies

The biggest advantage of MSME registration in India is that it opens up access to a variety of subsidies offered by both the central and state governments. These subsidies play an important role in reducing operational costs and ensuring profitability, specifically for small enterprises.

• CLCSS: This program provides a subsidy of 15% on capital investment for technology upgradation to all registered MSME entities. This scheme is one of the major aims to help firms secure state-of-the-art machinery with advanced technology to enhance productivity.
• Patent Registration Subsidy: A full 50% of the fee paid for patent registration will be provided to an MSME with valid registration. This motivates them toward innovation and the protection of intellectual property.
• Subsidy on Electricity Bills: State governments often provide a subsidy on electricity bills for MSMEs. This considerably reduces the operational costs of manufacturing units.
• Market Development Assistance: For MSMEs that participate in international trade fairs and exhibitions, they can secure a part subsidy on the stall or rent for the stall, airfare, and other miscellaneous expenses incurred in this regard. This helps companies reach out to more markets and explore opportunities to export.

Hence, the Aadhaar Udyam registration, as this is now known to all entrepreneurs, is a prerequisite for unlocking such subsidies. Seedling Associates does full-fledged registration of your business and makes it duly eligible to take advantage of such wonderful initiatives offered by the government.

Financial Help through MSME/Udyam Registration Registration

Getting financial aid is a headache, mostly for MSMEs; however, with the widespread recognition of MSMEs in India, doors are being opened in every direction toward financing. Seedling Associates works hand in hand to ensure the same aspects with the firms, hence they can access different available financial aids and credit facilities.

• Priority Sector Lending: A certain percentage of the bank lending has to be made available to the priority sector, in which MSMEs also fall. There are loans available to registered MSMEs with differential rates of interest and other preferential conditions.
• Collateral-Free Loans: The CGS or Credit Guarantee Fund Scheme for Micro and Small Enterprises provides a collateral-free loan to MSMEs. This is very helpful in the case of small businesses that do not have substantial assets that could be shown as collateral.
• MUDRA Loans: The Pradhan Mantri Mudra Yojana allows MSMEs to take loans of up to INR 10 lakhs. Such loans, although available at low interest with flexible repayment terms, are very easily accessible to registered MSMEs.
• Subsidized Credit for Women Entrepreneurs: The government extends special credit facilities and subsidies regarding lower interest rates, longer repayment periods, and reduced processing fees to women entrepreneurs in the MSME sector.
• Interest Subsidy: Some state governments provide interest subsidies to MSMEs, which in turn reduce the effective cost of borrowing for an MSME.

Seedling Associates facilitates the access of businesses to the complex maze of financial subsidies. Just by helping you get your requisite business registration, Seedling Associates can help ensure your financial interests get the support they require, for growth and success.

The Process of MSME Registration in India: How to Register for MSME

Knowing how to register for MSME is critical for businesses looking forward to benefiting from government schemes. The registration process is now simplified and is now allowed via online processes with the help of expert guidance from Seedling Associates.

1. Step 1 – Visit the Udyam Registration Portal: Begin the process of registration by visiting the Udyam registration portal, which has replaced the Udyam Registration system recently.
2. Step 2 – Enter Aadhaar Details: Provide the Aadhaar number and name of the owner as per the Aadhaar card; the same will be verified by an OTP sent to the mobile number registered with Aadhaar.
3. Step 3 – Fill in Business Details: After successful Aadhaar verification, details are to be filled in regarding business such as name and type of business, PAN, location, bank account details, etc.
4. Step 4: Classify Business: After the form is filled in, the business has to be classified as a micro, small, or medium enterprise based on the investment or turnover criteria.
5. Step 5: Submission and Registration: After relevant details are filled, the same is submitted. A registration number is generated, and a certificate is issued that bears the number, confirming the MSME registration in India.

Seedling Associates takes care of the whole registration process systematically, letting you care for your business operations while we handle all the formalities.

Due Diligence That Must Be Complied With Periodically

Once you obtain MSME registration, it is essential to update the information related to your business. This includes updating turnover details, investments made in a plant and machinery, and other details. Its periodic updating shall make your business continue to be eligible for government perks. Seedling Associates does not leave customers with just registration. Proper statutory requirements are followed up by offering services on GST return filings, maintaining accounts, and labor laws to keep the business in good books with the regulatory bodies.

Challenges Faced by MSMEs After Registration

Despite the numerous advantages of MSME registration in India, it is usually seen that businesses are not in a position to avail of those advantages. We help you overcome all such obstacles, the most common of which include:

1. Lack of Awareness: Most business owners simply don't know about the various schemes and subsidies that can help their business. We at Seedling Associates will guide you properly so that you will remain well-informed about the opportunities availed to you.
2. Addressing Bureaucratic Hurdles: Although governments are making registration procedures easier, in practice, bureaucratic red tape may sometimes slow down your ability to access subsidies or loans. Seedling Associates shall assist in smoothening this and reducing delays to ensure you get timely access to such benefits.
3. Access to Credit: Securing credit is a tough challenge that NMSMEs face in the current day and age, despite the best efforts of governments. Seedling Associates prepares and properly presents the case of your loan application for better chances of success on your part.
4. Technological Barriers: The conversion to online registration and application processes is quite problematic for rural businesses that neither have good access to the internet nor digital literacy. Seedling Associates offers personalized support in bridging this gap so that all businesses benefit from registration.

Conclusion

Udyam Registration played a pivotal role in simplifying MSME registration and offering essential benefits to small and medium enterprises in India. Though it has been replaced by Udyam Registration, understanding its framework helps businesses navigate the current system effectively. Seedling Associates is dedicated to guiding businesses through every step of the registration process, ensuring they leverage available benefits for growth and sustainability. Our expertise in MSME registration can help you transition smoothly and maintain compliance, ultimately supporting your business’s success.

Contact Seedling Associates:
Phone: +91 74288 99959
Email: [email protected]