With a view to facilitate the promotion, development and enhancing the competitiveness of micro, small and medium enterprises, the Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED Act”) has been enacted.
- ELIGIBILITY FOR REGISTRATION: For an enterprise to get registration under the MSMED Act, it must qualify as a micro or a small or as a medium enterprise (“MSME”) as defined under the MSMED Act. The definition of enterprise is very broad under the MSMED Act, and includes proprietorship, hindu undivided family, association of persons, co-operative society, partnership firm, company or undertaking, by whatever name called, engaged in:
- manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951; or
- providing or rendering services.
Whether the entity is classifiable as a micro, small or medium enterprise depends on the basis of investment. There are separate thresholds for investment in manufacturing and service based enterprises, as described below:
Type of Enterprise Service Sector Manufacturing Sector Micro Investment in equipment must not exceed INR 10 lakhs Investment in plant and machinery must not exceed INR 25 lakhs Small Investment in equipment must be more than INR 10 lakhs but less than INR 2 crores Investment in plant and machinery must be more than INR 25 lakhs but less than INR 5 crores Medium Investment in equipment must be more than INR 2 crores but less than INR 5 crores Investment in plant and machinery must be more than INR 5 crores but less than INR 10 crores - ENTREPRENEUR MEMORANDUM: Any person who intends to establish a micro or small enterprise, at his discretion; or a medium enterprise engaged in providing or rendering of services may, at his discretion; or a medium enterprise engaged in the manufacture or production of goods shall file the memorandum of micro, small or as the case may be, of medium enterprise with District Industries Center of its area.The form of Memorandum is in two parts. Any person who intends to establish a micro, small or medium enterprise engaged in providing or rendering of services may file or those who want to establish medium enterprise engaged in the production or manufacture of products shall file Part-1 of the Entrepreneurs Memorandum to District Industries Center. Once the registered enterprises start production or start providing or rendering services, they should file Part II of the Entrepreneurs Memorandum to District Industries Center. In case of non-filing of Part II of the Entrepreneurs Memorandum within two years of the filing of Part I, the Memorandum (Part I) filed by the entrepreneur will become invalid.
- REQUIRED DOCUMENTS: The documents which may be required for registration includes:
- Residential address of all the directors in case of company / all partners in case of partnership firm / of Karta in case of Hindu undivided family / proprietor in case of proprietary concern.
- A self-certified copy of Power of Attorney / Board Resolution / Society Resolution, wherever applicable, while signing as Partner/Managing Director or authorised person.
- A certified / notarized copy of the Partnership Deed / Memorandum and articles of Association, as may be applicable.
- BENEFITS OF MSME REGISTRATION:A medium enterprise engaged in manufacture or production of goods has to compulsorily register under MSMED Act. For other enterprises the registration is not statutory. However, the MSME registration process in India has been conceptualized to provide maximum benefits to all types of enterprises.After registration, any enterprise becomes qualified to reap the benefits offered under the MSMED Act. Some of the benefits include easy sanction of bank loans, lower rates of interest, time bound resolution of disputes, protection against delay in payment from buyers, right of interest on delayed payments, etc,
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