In our great country of more than 135 crore Indians, there are nearly 6.5 crore micro, small and medium enterprises (MSMEs) which are providing employment to 11 crore citizens ~ equivalent to one third of domestic workforce. Historically, MSMEs have grown at faster pace than Indian economy at 10% p.a. besides contributing in excess of 30% of GDP. MSMEs also contribute for 40% of total exports and 45% of total manufactured output in India. Despite being such a vibrant sector, majority of MSMEs have often struggled to grow due to lack of timely financing and the situation is even worse after Covid-19 pandemic.
Historically, India had adopted very conservative norms for MSMEs by keeping lower investment limit for both – manufacturing and services sector. However, despite doing good business, many enterprises were not trying to grow in order to enjoy benefits offered by government. Hence, an urgency was felt to introduce new norms with common structure across both the categories. In order to bring more enterprises under MSMEs category, new rationalised pattern has been adopted with dual criteria of turnover as well as investments made.
Benefits for Registration with Udyam Portal:
Government of India has offered a free one-time registration facility to MSMEs through its Udyam portal and various incentives are available to registered entities. Traders are not allowed to do MSME registration and only manufacturing or service sector units can register with Udyam. Despite having 6.5 crores MSMEs, hardly 25% of them have been registered due to lack of awareness about following key benefits among the businessmen:
1. Priority sector lending under Credit Guarantee Trust Fund (CGTMSE) for
a. Overdraft interest rate concession of 1%
b. Collateral free loans to micro and small enterprises
This story is from the December 2020 edition of The Management Accountant.
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This story is from the December 2020 edition of The Management Accountant.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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