About MSME in India
The Micro, Small, and Medium Enterprises (MSME) sector has become a very active and vibrant sector of the Indian economy over a few years. MSME plays a vital role in the growth of the country’s economy. It is realized that industrial production plays a significant role in generating maximum jobs.
India has more than 60 million Micro, Small, and Medium Enterprise units which contribute to 29% in India’s GDP and about 49% in exports. The MSME sector is known as the backbone of the economy. It engages more than 100 million people and generates more than 8000 products varying from traditional to technical goods.
MSMEs are divided into two parts first is Manufacturing enterprises and second is Service enterprises. There is an outstanding growth record in both sectors. Ventures are an essential part of their culture and growth for Indian MSMEs. They are always ready to adopt new technologies and innovations whether it is related to digital payments, banking, online bidding, e-commerce, or tax filing. The MSME sector in India is formed by hardworking entrepreneurs and their expert teams.
Challenges in MSME
- Inadequate loans from banks- MSMEs are facing more problems with loans from banks. The loan approval process of banks is long and asks for documentation with high processing fees. Banks also do not give essential credit for MSMEs.
- High competition from MNCs- MSMEs face high competition from multinational companies. Because multinational companies provide quality products at cheaper costs.
- Weak infrastructure- Although MSMEs are developing fast but there is weak infrastructure. Due to the shortage of essential materials, their production ability is low.
- Unavailable resources- It is very challenging to produce goods at affordable costs due to the lack of raw materials and other resources in the market.
- Lack of Technology- People are lacking awareness of advanced technologies of production in the field of MSME. They are still using traditional techniques to produce goods.
- Lack of marketing channels- MSMEs are lacking ideas to promote their product distribution and advertisement. Due to limited advertising and cheap marketing channels, it leads to low sales.
Future of MSMEs in India
- Creating Jobs- There are huge opportunities in the production and service sectors of MSMEs in India. MSMEs are producing a variety of jobs in the retail and manufacturing sectors.
- Focus on Customer Satisfaction- MSMEs are focusing on making products that meet the expectations of the customers. Therefore MSMEs are getting more customer-oriented.
- Reduce regional imbalance- MSMEs are utilizing manpower in rural areas to develop products equally in such regions of the country. It will help to reduce regional imbalance.
- Expansion of Exports- There is a huge demand for Indian products such as wood products and other handcrafted products. So it is likely to promote Indian exports due to MSMEs.
- Foreign Investment Attraction- Indian MSMEs are sectors that are improving their growth rates and return on investments. It may attract foreign investment in India due to which its extension rate will increase.
How to register your MSME in India?
Registrations for MSME in the two sectors can be done through the MSME Act. Although registration is not compulsory by the government, it is beneficial to register your MSME business because it offers many advantages such as business setup, credit facilities, taxes, and credit.
- An MSME owner must fill out a form to register that can be done either online or offline.
- If you want to enroll in more than one enterprise, you can register yourself privately.
- The document needed for registration is an Aadhaar number, address, enterprise name, bank account details, and other general information.
- You are free to add a self-certified certificate.
- No registration fee is needed for this process.
- You will get a registration number after you fill in the details and upload it.
Advantages of MSME registration
- Bank loans will become cheaper due to MSME registration as the interest rate will be very low. This will be much lower than the interest on normal loans.
- It also offers different tax incentives.
- It will provide an alternative tax credit to be increased to 15 years instead of 10 years
- There will be many government tenders open to MSME businesses.
- The cost of starting a business will be decreased after the cost of obtaining a patent is registered and the availability of multiple discounts.
- Government licensing and certification will be provided for businesses registered under MSME.
- There will be a one-time compensation fee for expenses not paid by MSME.
There has been a significant change in India’s capabilities and strategy today. If we maintain the current speed of development, our MSMEs will give the world a new definition of multinational enterprises. The government also supports MSMEs to be registered. The government is also trying to expand the trading efficiency of the MSME sector.