The Government of India is encouraging start-ups and small businesses. In pursuance of this, it has established the Ministry of MSME (Micro, Small & Medium Enterprises). This ministry is regulated by NSIC (National Small Industries Corporation Ltd). The companies can register themselves under the MSME ministry if they fall under the eligibility criteria of same.
What is MSME?
Before going further, one has to study the definitions of Micro Small and Medium Enterprises.
Micro Enterprises: The companies whose investment in plants and machinery is upto one (1) crore and the total turnover does not exceed five (5) crore falls under the category of micro enterprise.
Small Enterprises: Those companies whose investment in plant and machinery is upto ten (10) and the total turnover does not exceed fifty (50) crores fall under the category of small enterprises.
Medium Enterprises: The companies whose investment in plant and machinery is upto fifty (50) crores and the total turnover does not exceed two hundred and fifty (250) crores fall under the category of medium enterprises.
What are the important changes that came after the amendment in 2020?
With the amendment in MSME criteria following things are also changed with respect to MSME:
- Retail and Wholesale businesses are now included in MSME.
- The limit of investment and turnover is increased as mentioned above.Now, the export turnover is not added to the total turnover.
- Now, the depreciation cost is calculated as per the IT (Information Technology) Rules instead or Commercial rates,
- Now, the threshold limits are the same for the manufacturing and service sector as the different limits for the different sector is creating confusion in the mind of people.
What are the different opportunities provided by MSME?
- The MSME provides employment opportunities to workers and unemployed people.
- The MSME provides growth opportunities to small scale businessmen who are not able to grow due to lack of money.
- The MSME provides development opportunities to skilled labours by providing training at regular intervals.
- The MSME provides opportunities to grow in the international market by providing the basic framework and access to international programmes and seminars.
Why MSME is important for the Indian economy?
- MSME contributes in the growth of rural development as it provides employment opportunities in rural areas.
- With the introduction of MSME the export rate of India is increased than before.
- Highest contributors to GDP after agriculture.
- MSME promotes innovations by bringing new ideas into the market which eventually leads to increased competition in the market.
With the growth of MSME, India is moving towards a developed country as MSME is creating employment opportunities and the technology upgradation that eventually supports the national economy and acts as defence from global economic threats.
Associate at Aggarwals& Associates, S.A.S Nagar, Mohali