Reap the Benefits of Udyam MSME registration
Reap the Benefits of Udyam MSME registration
Its time for MSMEs to reap the benefits of Udyam MSME registration. We have written earlier about MSMEs and their importance in the Indian Economy and their significant contribution to the GDP. The next most important thing to know as a business owner is, how to reap the benefits of Udyam MSME Registration . Because there are opportunities available for you to leverage the government schemes for your business growth.
One of the key benefits of registration as an MSME unit is that in case of Micro and Small enterprises, the payment for invoices is assured within 45 days under the MSME Act. In case the payment is not made to the MSME within 45 days, the buyer is liable to pay compound interest with monthly interests to the MSME. This is applicable on the invoice amount, at three times the bank rate notified by the Reserve Bank of India. Remember this is not for just government or public sector orders but any order or transaction with any company including MNCs.
Government departments and public sector companies are mandated to procure 25% of their requirement from MSMEs; therefore, the Udyam MSME registration gives them an edge while submitting tenders.
Some of the benefits introduced as a response to the setbacks to businesses due to the pandemic. Keeping in view the current economic scenario, new initiatives have been announced by the government to provide some extra support to the MSME sector.
There are a host of benefits provided by the government which includes collateral / guarantee-free loans, Interest subvention scheme, market support and export promotion, concession in electricity bills, reimbursement of ISO certification charges, etc. All these are explained in detail here.
- Subordinate debt scheme
Covid-19 has added a lot of stress to businesses across India and across all verticals. Particularly to the MSME sector. It comprises millions of business. In order to assist the promoters, the government has come out with other measures around subordinate debt. The subordinate debt scheme seeks to extend support to the promoters by providing a debt facility of up to 15% of the promoter contribution or `75 lakh, whichever is lower. Under this scheme, banks will be able to fund the promoter’s contribution and the funding gets guaranteed by the government. - Funds of Fund
The government has also announced a Funds of Fund Scheme with a corpus of `10,000 crore for providing financial relief and funding to MSMEs with growth potential and viability. This initial corpus of fund will be managed by a ‘mother fund’ to raise further corpus of `50,000 crore at levels of daughter funds. - Launch of CHAMPIONS portal
One more positive step for the MSME sector is a dedicated portal which helps the MSME in terms of finance, raw materials, labour, permissions, etc. This portal also seeks to help MSMEs to tap into new opportunities including manufacturing of medical items & accessories combined with a long-term view to identify the MSMEs with growth potential. - Faster clearance of payments by PSUs
The government has directed all public sector units to clear MSME payments within 45 days to improve liquidity status of MSMEs. These are important steps to help the MSME sector. - No global tenders up to `Rs. 200 crore
The new regulations disallow the government from floating a global tender for any procurement up to Rs. 200 Crores. This is a part of the Atmanirbhar package. This initiative provides huge opportunities. Through this new initiative, many MSMEs will benefit from increased business opportunities and it’s a boost to domestic manufacturing - Bank Loans (Collateral Free)
For Udyam registered MSMEs the government has made it possible to get collateral free credit. This is a big boost to businesses. It guarantees funds to micro and small sector enterprises. This scheme is available to old and new enterprises. A trust named The Credit Guarantee Trust Fund Scheme was introduced by the GOI(Government Of India), SIDBI(Small Industries Development Bank Of India) and the Ministry of Micro, Small and Medium Enterprise to make sure this scheme is implemented (Credit Guarantee Scheme) for all MSMEs. - Subsidy on Patent Registration
An Udyam registered MSME gets attractive subsidy on patent registration. The subsidy amounts to 50% of the patent registration fee. This subsidy can be availed for patent registration by giving application to respective ministry. - Overdraft Interest Rate Exemption
Businesses or enterprises registered under MSME can avail a benefit of 1% on the Overdraft as mentioned in a scheme. However this rate different from bank to bank. - Industrial Promotion Subsidy Eligibility
Udyam registered Enterprises are also eligible for a subsidy for Industrial Promotion as suggested by the Government. - Protection against Payments (Delayed Payments)
Needless to say, one of the biggest roadblocks for any SME is liquidity. As much as we avoid discussing it, long credit periods and delays in payments are a norm for most businesses in India. Credit is a trap. To stay in the race and generate business giving a credit period is necessary and this also causes liquidity crunch when payments get delayed. The Ministry of Micro, Small and Medium Enterprise lend a helping hand to such enterprises by giving them the right to collect interest on the payments that are delayed from the buyer’s side. The settlement of such disputes must be done in minimum time through conciliation and arbitration.
When any MSME registered enterprise supplies goods or services to a buyer, the buyer is required to make the payment on or before the agreed date of payment or within 15 days from the day they had accepted the goods and services. (if there is no mention of the date of payment). If the payment from the buyer is delayed beyond 45 days after accepting goods or services, the law now permits the supplier to charge a compound interest on the amount that was agreed to be paid. The interest rate is three times the rate that is notified by the Reserve Bank of India. - Lower Electricity Bills
This concession is available to all the Enterprises that have the MSME Registration Certificate by providing an application to the department of the electricity along with the certificate of registration by MSME. Its simple. This is a benefit any registered MSME can avail. - ISO Certification Charges Reimbursement
When a registered MSME goes for ISO certification, the expenses can claim reimbursement of the expenses
Conclusion:
The government is giving a lot of support to the MSME sector since the last few years although a lot of still desired. It encourages youngsters to dream and pursue their dream of starting a business. Therefore, knowledge about the registration process and its benefits is an absolute must to give a boost to the entrepreneurial spirit of MSME & SSI founders.
The World Bank is also working with the GOI on Trade Receivable System (TReDS) to facilitate credit to as many MSMEs as possible. This is a very interesting initiative and it truly helps in liquidity for MSMEs through Bill Discounting. Particularly the minimum criteria is that a business should have Udyam MSME registration. With this kind of support from the govt, the MSME sector should continue to have a robust growth ofcourse after course correction due to the pandemic. This sector alone provides employment opportunities to millions of skilled and unskilled people.
Its strongly recommended that SMEs register and reap the benefits of Udyam MSME Registration. As a part of our bouquet of services, EOB offers a simple, hassle free assistance for MSME registration. Just one click is all it takes to get your business registered for all these benefits. At EOB it doesn’t stop with just registrations, we provide assistance to help your business grow.