What is SSI/MSME Registration?
Small Scale Industries (SSI) or Micro, Small and Medium Enterprises (MSME) can register themselves under the MSMED Act. It isn't necessary, but very beneficial to do so, as it only exists to offer benefits to those registered under it. These benefits include priority sector lending, excise and direct tax exemptions, capital investment subsidies and power tariff subsidies.
To qualify as an MSME, manufacturing enterprises need to have investment of less than Rs. 10 crore in plant and machinery, while service enterprises must have no more than Rs. 5 crore invested in plant and machinery. If, at any time, you cross this investment limit, you need to cancel your registration under the MSMED Act.
The central and state governments offer several tax and infrastructural benefits, as well as subsidies, to small and medium-sized Indian businesses with an SSI Registration.
6 Essential Facts on SSI/MSME Registration
Yes.SSI Registration is required to avail of subsidies and benefits. It is compulsary. However, as it is a fairly easy registration to get quickly (provided you have a manufacturing plant or a commercial space where you render services), many business opt for it over other registration.
This is because you can avail of a Provisional SSI Registration Certificate (PRC). The PRC will enable the unit to obtain term loans and working capital under priority sector lending and make it easier to procure various NOCs and clearances from regulatory bodies, such as Pollution Control Board.
You may apply for the PRC without an industrial license in case your unit is listed in Schedule-III of the Industrial Licensing Exemption Notification. Other units must first acquire an industrial license. The unit should also have obtained all other clearances, whether statutory or administrative. For example, a drug license under the drug control order or an NoC from Pollution Control Board, if required. The unit should not violate any locational restrictions in force. The unit should not be owned, controlled or subsidiary of any other industrial undertaking. The PRC is issued based on the application form. No field enquiry is made.
The benefits range from cheaper bank loans, easy access to credit, quicker approvals from state and central government bodies, tax rebates, cheaper infrastructure, including electricity and VAT exemptions.
Any entity with an SSI Registration that fails to follow any regulations laid by the government will be deregistered. Also, in case you exceed the investment limits, as noted below, your firm’s registration will be cancelled.
All banks and other financial institutions recognise MSMEs and have created special schemes for them. This usually includes priority sector lending, which means that the likelihood of your business being sanctioned a loan is high. Bank loan interest rates will also be lower. There may also be preferential treatment in case of delay in repayment.
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