What is MSME? What is Micro, Small & Medium Enterprise?

MSME Registration - All about Micro, Small & Medium Enterprise


As per the Indian Government, the definition of MSME - Micro, Small & Medium Enterprises, according to the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Enterprises:

  1. Manufacturing Enterprises
  2. Service Enterprises

As per the new notification issued by the Government of India on 26th June 2020 , the Ministry of MSME has started the new process of MSME registration known as Udyam Registration.

Definition of MSME


Old Definiton
Service Sector
Enterprise Investment in Equipment
Micro Enterprise < or = Rs. 10 lakh
Small Enterprise > Rs. 10 lakh, < Rs. 2 crore
Medium Enterprise > Rs. 2 crore, < Rs. 5 crore


Manufacturing Sector
Enterprise Investment in Plant and Machinery
Micro Enterprise < or = Rs. 25 lakh
Small Enterprise > Rs. 25 lakh, < Rs. 5 crore
Medium Enterprise > Rs. 5 crore, < Rs. 10 crore


Revised Definition
Enterprise Investment in plant and machinery or equipment Turnover
Micro enterprise Not more than INR 1 Crore Not more than INR 5 Crore
Small enterprise Not more than INR 10 Crore Not more than INR 50 Crore
Medium enterprise Not more than INR 50 Crore Not more than INR 250 Crore

The sector also contributes more than 40% of the total industrial employment in India and 50% in the exports. It also contributes to more than 90% in all the industrial units in India and manufactures 6000 different types of products. When the industries in MSME grow then it also accelerates the economy of the country as a whole. Functionally, these industries are known by the name of ‘small scale industries’.

Classification of MSME - Micro, Small & Medium Enterprise


Over the last few years, MSME has emerged as a highly functional and vibrant sector in the Indian economy. This has also secured the economy of the country from its recession in the year 2008 and it is still contributing to be the backbone of the Indian economy. The MSMEs are classified as-

Manufacturing Enterprises- The businesses or enterprises associated with the production of manufacturing of goods as per the Act or the employing machinery or plant in the process of their value addition for the final product have a distinct name, utility or character for the usage.

Service Enterprises- The enterprises for businesses engaged in rendering the services and they are defined in terms of the equipment of investment. In the year 2018, with the help of the union cabinet led by the then Prime Minister Shri Narendra Modi considered the change in MSME definition.

Now MSMEs are defined depending upon the annual turnover rather than the investment in their ‘investment and manufacturing plant’.


Advantages of MSMEs


Under the MSME Act, registration is done for the company involved with manufacturing and service lines. The benefit of this registration is that it provides various advantages in terms of setting the business, tax relaxation, credit facilities, and business loans.

1. Due to the registration, bank loans get cheaper along with low interest which is around 1 or 1.5%. This is comparatively lower than the regular loans provided by banks or other firms.
2. Multiple tax rebates are also provided to MSMEs.
3. The credit is allowed for the minimum alternate tax which has to be carried for upto 15 years rather than 10 years.
4. There are lots of government tenders limited to be open for MSME industries only.
5. MSME gets extremely easy access to the credit.
6. Once the registration is done or gets a patent, plenty of rebates and concessions are provided to assistance during the setting of the enterprise.
7. Businesses register address platforms are given the highest priority to get government licenses and various certificates.
8. MSME also provided a one-time settlement amount for all the non-paid fees.

List of Documents Required for MSME Registration


The registration has to be submitted along with many documents including the identity proof, multiple copies of selling and purchasing bill, license and no dues from the regulatory bodies. Let us have a brief on each one of them.

  • Aadhaar Card - The Aadhaar number will be of the owner in case of the partnership firm of the coordinating director in case of an organization or limited liability firm and of a karta by morals of a Hindu Undivided Family (HUF).

  • PAN and GSTIN - GSTIN and PAN along its Aadhaar number for the organisation or Limited liability Partnership of its authorized signatory.

  • PAN on self-declaration basis -In the case of an enterprise already registered with the PAN as an Udyam, any information deficiency for previous years when it has not had a PAN shall be filled in on the basis of self-declaration.

MSMEs launched by the Indian Government

The MSMEs became functional on 2nd October 2006 and its foundation was laid to promote, develop and facilitate the competitiveness of micro, small and medium enterprises. The government also includes facilities like-

1. Udyam Registration
2. Quality management standards and quality technology tools
3. Incubation
4. Zero defect zero effect
5. Grievance monitoring system
6. Women entrepreneurship

Contribution of MSME in the Indian Economy

Defined in terms of the investment size, MSME refers to the small entities. They are highly significant and their contribution is as-

Easy Instant MSME Registration Process


  • Step 1: Visit the MSME Registration Official Website (<--Click here)

  • Step 2: Fill all the details on MSME Registration Form

  • Step 3: Make the online payment for your MSME Application

  • Step 4: One of the registration executives will process your MSME application

  • Step 5: In 1-2 working days you will receive your MSME / Udyam certificate in your registered e-mail address

About msmeregistrar.org


We are helping new or old business companies in the MSME Registration process. We are one the most experienced and qualified online business services consultants, to help people in registration and certification and easily start and grow their business and company, at affordable service registration fees. Our major focus is to provide the Indian Entrepreneurs to grow their business and avail all the legal and regulatory requirements and government benefits.

Get your business/ service company MSME certified just fill-up the MSME Registration Form on our registration portal and avail super fast service, hassle-free, competitive rates, lifetime valid certificates, free consultation.

For any further information and query on any topic, you may contact us.

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