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MSME Registration Process and Schemes in India

Sakshi Jain
Sakshi Jain at March 19, 2023

MSME Registration in India - Background

Over the last 5 decades, MSME, Micro Small Medium Enterprise or Small Scale Industries (SSI), emerged as the most dynamic and vibrant sector of the Indian economy. As per the report, MSME contributes around 8% of India's GDP and covers around 90% of total India's industrial unit producing more than 6,000 products. In addition to this, these industries provide the total industrial employment of around 45% and contribute 40% to India's total export. MSMEs contribute enormously to the socio-economic development as it aims to reduce regional imbalances and also assures more equitable distribution of national income and wealth.

Definition of MSME

As per the provision of the MSME Development Act 2006, MSME can be classified into two classes:

1) Manufacturing enterprise; and

2) Service enterprise.

As per the vide notification no. 1642(E) dated 29.09.2006 the limit for investment in plant and machinery/equipment for manufacturing and service enterprises are mentioned below:

Classes MICRO



Manufacturing Enterprises

Up to Rs. 25,00,000

More than Rs 25,00,000 but less than Rs 5,00,00,000

More than Rs 5,00,00,000 but less than Rs 100,000,000
Service Enterprises Less than Rs 10,00,000 More than Rs 10,00,000 but less than Rs 2,00,00,000 More than Rs 2,00,00,000 but less than Rs 50,000,000

Objectives of the MSME Act

The MSME Development Act, 2006 was introduced with a motive of promoting and development of MSMEs as well as enhancing competitiveness among them. MSME Act also emphasized on the matters connected with MSME such as:-

  • Removing hurdles of multiple laws
  • Registration procedures
  • Creating credit policies for MSME
  • Introduction of recommendatory bodies in MSME policies

MSME Registration Process

AADHAR number is now mandatory for registering under the MSME Act. The person has to furnish an online application using the UDYOG AADHAR Registration, and this can be verified using e-AADHAR OTP.

  1. To register as an MSME, the owner has to fill a single form which he can be furnished either online or offline.
  2. A person having more than one business can obtain individual registration.
  3. The documents required for the registration are AADHAR number, industry name & address, bank details  including some common information.
  4. The owner has to provide self attested copies of all the above-mentioned documents.
  5. Nil fees are applicable on the MSME registration.
  6. Upon the successful furnishing and uploading the required documents along with prescribed form the owner will get the MSME registration number.

Further, in the initial 5 years, if an entity has not started its business a provisional registration is given to them. During such tenure, it can apply for the bank loans and No Objection Certificates (NOC) from regulatory bodies. The entity can apply for a permanent license once it starts operating, the validity of such a license is throughout life unless it is revoked or cancelled.

MSME Registration Benefits

  • The bank loan for MSME becomes cheaper due to the lower interest rate around 1 to 1.5%.
  • MSMEs enjoy various tax rebates.
  • MAT (Minimum alternate tax) credit can be carried forward for the maximum tenure of fifteen years instead of ten years
  • Many government tenders are exclusively opened to the MSMEs.
  • For government certification and license higher preferences are given to MSMEs.
  • Any unpaid amount of MSME can be settled with One Time Settlement Fee.
  • As per the Interim budget 2019, MSMEs registered under GST can get 2% interest rate subvention from the Government for incremental loans of Rs 1 crores.

Documents Needed to Obtain MSME Registration

To register a business under the MSME Act following documents are required:

Business Address Proof

  • In a case if the premises are owned by the person then in such case allotment or possession letter or property tax receipt.
  • In a case, if the business place is rented then in such case rent agreement and NOC from the landlord is required.

Copies of Sale and Purchase Bill

In order to obtain the registration, business has to submit a copy of the sale bill of all the product supplied and purchase bill of all the purchases a business has made to produce that product.

Partnership Deed/ MOA and A0A

If the business who wants to register is a partnership firm then in such case it has to submit its partnership deed and registration certificate in case it is a registered partnership firm.

In case of a registered company, a copy of MOA and AOA along with incorporation certificate has to be submitted.

Note: A business has to submit a copy of the resolution passed in general meeting to sign the MSME application.

Copy of Licenses and purchase bills of Machinery/equipment

In a few cases, the industrial license has to be submitted by the applicant which can be obtained by giving an application to the Government of India.

Further, on demand of the MSME Development authority, the applicant may have to submit all the purchase and installation receipts related to plant and machinery/equipment.


Schemes Launched by the Government for MSMEs

Here is the list of schemes launched by the government for MSMEs:


Any owner of MSME having AADHAAR card can register under this scheme. This scheme provides various benefits to the MSME owners, some of them are listed below:

  • Collateral free loans from the bank
  • International trade fair special consideration
  • Reduction in the bank interest rates
  • Bar code registration subsidy
  • MSME Registration fees and stamp duty waiver
  • Electricity bills concessions
  • 50% subsidy on patent registration

Zero Defect Zero Effect

If an existing MSME registers under this scheme, then they are eligible for rebates and concessions. Some of the concession and rebates under this scheme as per are:

  • 0.5% concession in the loan interest rate
  • 50% concession in processing fees
  • Rs. 25 Lakhs for adopting the technology
  • Rs. 10 Lakhs for registration of domestic patent
  • Rs. 20 Lakhs for registration of international patent
  • Rs. 5 Lakhs for testing equipment
  • Rs. 10 Lakhs for ZED certification and hand holding
  • Extra 80%, 60% and 50% subsidy on the ZED certification over and above the subsidy provided by the government

Quality Management Standards (QMS) and Quality technology Tools (QTT)

The main motive behind this scheme is to encourage the MSMEs to use the latest QMS and QTT ensuring effective and efficient working of the MSMEs. The main component of this scheme is listed below

  • Efficient use of the available resources,
  • Improvement in the quality of the product,
  • To ensure rejection and re-work in the manufacturing process
  • To manage and reduce the inventory in the form of work-in-progress, raw materials, finished products etc. at the various stages

Grievance Monitoring System

Any MSME can be registered under this scheme to address their problem or grievance. In case the owner wants to verify the grievance status, they need to follow the below procedure

  • Enter valid grievance number along with the correct captcha image
  • Click on submit button
  • After this, a new page will open showing grievance status.

However, in a case, if the owner is not satisfied with the outcome, he/she can reopen the registered grievance.


To help the innovators to implement their new design, ideas or products, this scheme was introduced. The innovator can get finance up to 80% for their projects from the government. The idea behind the introduction is to promote:

  • New ideas
  • Designs
  • Products and services

Credit Linked Capital Subsidy Scheme

If an MSME registers under this scheme, they will be provided with a capital subsidy to adopt new technology and replace their old and obsolete technology. To get these subsidies the MSME can directly approach to the banks under this scheme.

Women Entrepreneurship

This scheme was introduced to encourage women to start their own business to achieve freedom in terms of financial status. Under this scheme, the government will provide capital, training, counseling and delivery methods and techniques to these women so that they could effectively manage their business and expand it in the future.

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