Bombay Chartered Accountants’ Society An Initiative of Corporate & Commercial Laws Committee Authors CAAnand Bathiya | CA Chirag Doshi CA Mrinal Mehta | CA Gunja Thakrar MSMEs Registration, Benefits, SOP's and FAQ's All About
| i | Bombay Chartered Accountants’ Society 7, Jolly Bhavan No. 2, Ground Floor, New Marine Lines, Mumbai 400 020. T : +91 22 6137 7600 • E : [email protected] • W : www.bcasonline.org E-Journal : www.bcajonline.org • E-learning : https://bcasonline.courseplay.co/ Authors CA Anand Bathiya | CA Chirag Doshi CA Mrinal Mehta | CA Gunja Thakrar
| ii | © BOMBAY CHARTERED ACCOUNTANTS’ SOCIETY Reprint Edition : December 2020 September 2020 Price : Printed + Ebook ` 125/- (Postage charges extra) The opinions and views expressed in this publication are those of the Contributor(s). The Society does not necessarily concur with the same. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Bombay Chartered Accountants’ Society. This publication is sold with the understanding that neither the publisher, nor the author(s) will be responsible for the result of any action taken on the basis of this work whether directly or indirectly for any error or omission, to any person whether a buyer of this publication or not. Published by CA Suhas Paranjpe, President for Bombay Chartered Accountants’ Society, 7, Jolly Bhavan No. 2, Ground Floor, New Marine Lines, Mumbai-400 020. T : +91 22 6137 7600 • E : [email protected] • W : www.bcasonline.org E-Journal : www.bcajonline.org E-Learning : https://bcasonline.courseplay.co/ Printed by Finesse Graphics & Prints Pvt. Ltd. Tel.: +91 22 4036 4600
| iii | Foreword Coronavirus pandemic and the nationwide lockdown has dealt a grievous blow to the country’s economy. In a bid to restore it, Prime Minister Mr. Narendra Modi announced a slogan, vocal for local to make it global as part of the Atma Nirbhar Bharat Abhiyan. The goal for achieving Atma Nirbhar is very much dependent on the Micro, Small and Medium Enterprise (MSME) sector which after agriculture, is the second-largest employment provider in India and can play a crucial role to bring the Indian economy back on track. There are nearly 63 million MSME in various industries, employing close to 111 million people. In all, the MSME sector accounts for 40% of merchandise exports and 28% of India’s GDP. Due to this, the MSME sector is called the growth engine of the nation. Strengthening them would have multiple impetuses boosting economy and employment as well as mitigating issues of migrating skilled, unskilled workers and professionals to metro cities. However, a lot more needs to be done for MSMEs to become a growth accelerator for India. Three critical aspects for the success of MSMEs are Availability of Skilled Labour in MSME clusters, Financial Stability, and Market Competitiveness of their products to both achieve import substitution as well as enhanced exports. Recently the government revised the eligibility criteria for MSME. Earlier, the MSMEs were defined on the basis of investments put in, now the revised definitions will also include turnover of the company. This revised definition has brought in its fold many companies which are now eligible to various benefits and incentives which the Government announces from time to time. Often, we professionals are asked various questions by our clients with regard to eligibility, registrations, benefits, incentives, etc. which are available to MSME. To answer all such questions, BCAS thought of bringing out a comprehensive publication on MSME which is the need of the hour. Though there is lot of material available on MSME but there was a need to have an updated and handy publication which collated and explained the MSME scheme in a simple and lucid manner so that it becomes a ready Referencer for professionals and entrepreneurs. We are thankful to the authors CA Anand Bathiya, CA Chirag Doshi, CA Mrinal Mehta and CA Gunja Thakrar for their sincere efforts and utilizing the lock down period to the benefit of the professionals and MSME enterpreneurs. We are also thankful to CA Abhay Mehta and CA Narayan Pasari for vetting this publication and sharing their experience with the authors. We believe that this publication, like all other publications of BCAS, will be very useful to all readers in general and professionals concerned with this subject in particular and will also be an important addition to their Library. We are sure you will help BCAS in its endeavour of disseminating knowledge by spreading the information about this quality publication amongst your clients which is a comprehensive guide for all concerned. Like any other publication, this also is not a substitute for professional advice. We would be very happy to receive your feedback and suggestions. CA Suhas Paranjpe CA Chetan Shah President Chairman Corporate & Commercial Laws Committee
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| v | MANAGING COMMITTEE President Suhas Paranjpe Vice President Abhay Mehta Hon. Joint Secretaries Mihir Sheth Samir Kapadia Treasurer Chirag Doshi Ex-Officio Manish Sampat Raman Jokhakar Members Anand Bathiya Anil Doshi Bhadresh Doshi Divya Jokhakar Ganesh Rajgopalan Hardik Mehta Jagdish Punjabi Kinjal M. Shah Kinjal Bhuta Mandar Telang Rutvik Sanghvi Shreyas Shah Vaibhav Manek Zubin Billimoria CORPORATE & COMMERCIAL LAWS COMMITTEE Chairman Chetan Shah Ex-Officio Suhas Paranjpe Abhay Mehta Convenors Anand Bathiya Bhavesh Gandhi Members Anup Shah Bhavesh Vora Chirag Doshi Gandharv Tongia Gaurav Save Gautam Doshi Gautam Shah Gunja Thakrar Harsh Dedhia Heneel Patel Hiren Mehta Jayant Thakur Kanu Chokshi Naushad Panjwani Nawshir Mirza Preeti Oza Robin Banerjee Sandeep Shah Sneh Bhuta Subhash Mutha Sujal Shah Urvish Mehta Zubin Billimoria Bombay Chartered Accountants’ Society (2020-21)
| vi | Dedication Dedicated to the selfless volunteers at Bombay Chartered Accountants Society who hold the flag high, who strive in pursuit of knowledge and who live by core values
| vii | Index Sr. No. Pg. No. 1. Introduction 1 2. A Snapshot of The Micro, Small And Medium Enterprises Development Act, 2006 3 3. Eligibility and Registration 5 4. Frequently Asked Questions (FAQ’s) – Eligibility and Registration 12 5. Measures for Promotion, Development and Enhancement of competitiveness of MSMEs 18 6. Promotional, Upgradation and Support Schemes of the MSME Ministry 19 7. Credit and Financial Support related initiatives / schemes 44 8. Delayed payments to Micro and Small Enterprises 56 9. Annexure – A - Details of Micro and Small Enterprises Facilitation Council Addresses 60 10. Annexure – B - FAQ of the MSME SAMADHAAN-Delayed Payment Monitoring System 72 11. Best practices and Standard Operating Procedures (SOPs) in relation to MSME 81
| viii | Abbreviations Sr. No. Abbreviation Description 1 ANBC Adjusted Net Bank Credit 2 ANSI American National Standards Institute 3 ASPIRE A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship 4 ATI Assistance to Training Institutions 5 BEE Bureau of Energy Efficiency 6 BI Business Incubators 7 BIS Bureau of Indian Standards 8 Board National Board for Micro, Small and Medium Enterprises 9 BPL Below Poverty Line 10 CE CE marking is an administrative marking that indicates conformity with health, safety, and environmental protection standards for products sold within the European Economic Area. 11 CFC Common Facility Centres 12 CGST Act Central Goods and Services Act 13 CGTMSE Credit Guarantee Trust Fund for Micro & Small Enterprises 14 CITUS Coir Industry Technology Upgradation Scheme 15 CPSE Central Public Sector Enterprise 16 CPSU Central Public Sector Undertaking 17 CVY Coir Vikas Yojana 18 DCCB District Central Co-Op Bank 19 DMP Domestic Market Promotion Scheme 20 DPR Detailed Project Report 21 EDP Entrepreneurship Development Programmes 22 EETs Energy Efficient Technologies 23 EMP Export Market Promotion 24 EOI Expression of Interest 25 ESDP Entrepreneurship Skill Development Programme 26 FU Factoring Unit 27 GDP Gross Domestic Product 28 GEDA Gujrat Energy Development Agency
| ix | Sr. No. Abbreviation Description 29 GS1 India Only authorised body to issue GS1 barcodes, starting with 890, in India 30 GST Goods and Services Tax 31 GSTIN Goods and Services Tax Identification Number 32 IIQM Indian Institute of Quality Management 33 IPR Intellectual Property Rights 34 IRP Interim Resolution Professional 35 ISEC Interest Subsidy Eligibility Certificate 36 ITR Income Tax Return 37 ITR Income Tax Return 38 KVIC Khadi and Village Industries Commission 39 KYC Know Your Customer 40 LM Lean Manufacturing 41 LMC Lean Manufacturing Consultant 42 MCY Mahila Coir Yojana 43 MDA Market Development Assistance 44 MGIRI Mahatma Gandhi Institute for Rural Industrialization 45 MMDA Modified Market Development Assistance 46 MOU Memorandum of Understanding 47 MPDA Market Promotion & Development Scheme 48 MSE Micro & Small Enterprises 49 MSE-CDP Micro & Small Enterprises Cluster Development 50 MSEFC Micro and Small Enterprise Facilitation Council 51 MSME Micro, Small & Medium Enterprise 52 MSME Ministry Ministry of Micro, Small and Medium Enterprises 53 MSMEDA Micro, Small And Medium Enterprises Development Act, 2006 54 NABARD National Bank for Agriculture and Rural Development 55 NBFC Non Banking Financial Companies 56 NGO Non-Government Organisation 57 NIMSME National Institute of Micro, Small and Medium Enterprises 58 NMCP National Manufacturing Competitiveness Programme 59 NMP National Manufacturing Policy 60 NPA Non Performing Asset
| x | Sr. No. Abbreviation Description 61 NSIC National Small Industries Corporation 62 P&MS Procurement and Marketing Support Scheme 63 PAN Permanent Account Number 64 PCRA Petroleum Conservation Research Association 65 PMEGP Prime Minister Employment Generation Programme 66 PMRY Pradhan Mantri Rojgar Yojana 67 PMSBY Pradhan Mantri Suraksha Bima Yojana 68 PRI Panchayati Raj Institutions 69 PSS Payment and Settlement Systems 70 QCI Quality Council of India 71 QMS Quality Management Standards 72 QTT Quality Technology Tools 73 RBI Reserve Bank of India 74 REGP Rural Employment Generation Programme 75 RFP Request for Proposal 76 RRB Regional Rural Bank 77 RXIL Receivables Exchange of India Ltd 78 S & T Science and Technology 79 SC Schedule Caste 80 SCB Scheduled Commercial Banks 81 SFURTI Revamped Scheme Of Fund for Regeneration Of Traditional Industries 82 SIDBI Small Industries Development Bank of India 83 SPV Special Purpose Vehicle 84 SSI Small Scale Industries 85 ST Schedule Tribe 86 STQC Standardisation, Testing & Quality Certification 87 TERI The Energy and Resources Institute 88 TIRFSS Trade and Industry Related Functional Support Services 89 TReDS Trade Receivables Discounting System 90 UAM Udyog Aadhar Memorandum 91 UCB Urban Co-operative Bank 92 URC Udyam Registration Certificate 93 WDV Written Down Value 94 ZED Zero Defect & Zero Effect
| 1 | INTRODUCTION India is currently one of the fastest growing large economies of the world. Its culture of entrepreneurship, with recent opening-up of the Indian economy, paucity of adequate credit and growthrelated ecosystem, has led to a large part of Indian economy being contributed by micro, small and medium enterprises (‘MSME’). MSME sector is likely to continue to play a significant catalytic role in the growth of the Indian economy in the foreseeable future. Over the last decade, MSME sector has shown impressive growth on parameters like size of the enterprises, number of units, production, employment and exports. Given the right set of support systems and enabling framework, this sector can contribute much more, enabling it to actualize its immense potential and thereby enable India’s dream of reaching USD 5 trillion economy. The MSME sector in India is exceedingly heterogeneous in terms of size of the enterprises, variety of products and services, geographical spread and levels of technology employed. However, the sector has the potential to grow at a faster pace. To provide impetus to the manufacturing sector, the recent National Manufacturing Policy envisaged raising the share of manufacturing sector in gross domestic product (‘GDP’) from 16% at present to 25% by the end of 2022. In order to enable identifying and facilitating development of MSMEs, Government of India had enacted the Micro, Small and Medium Enterprises Development Act, 2006. Prior to the enactment of this Act, small industries encompassed tiny, cottage, traditional, and village enterprises and micro small and medium enterprises in India which were collectively termed as Small Scale Industries (‘SSI’) under the Industrial Development and Regulation Act, 1951. Micro, Small and Medium Enterprises Development Act, 2006 has provided the legal framework for identifying the concept of ‘enterprise’ which includes entities both in manufacturing and service sectors and has categorized the enterprises into three tiers viz., Micro, Small and Medium. India as a nation is bestowed with immense human capital and channelizing this resource into economic productivity remains a focussed policy priority. MSMEs provide employment opportunities at comparatively lower capital cost and act as ancillary units for large enterprises to support the system in growth. The MSME sector has in many years registered a higher growth rate than the overall growth of industrial sector. Some important facts as per Annual Report of the MSME Ministry for 17-18: • There are about 6.3 crore MSMEs • The sector contributes about 45% to manufacturing output,
| 2 | • The sector contributes more than more than 40% of India’s exports, • The sector contributes over 28% of the India’s GDP • The sector creates employment for about 11.1 crores people, which in terms of volume stands next to agricultural sector. The strategic importance of the sector can be gauged from the fact that the government over a period of time has assigned dedicated ministry for this sector. The Ministry of Small Scale Industries and Agro and Rural Industries was created in October 1999. In September 2001, the ministry was split into the Ministry of Small Scale Industries and the Ministry of Agro and Rural Industries. The Government of India (Allocation of Business) Rules 1961 were amended under the notification dated 9 May 2007 and merged into a single ministry, Ministry of Micro, Small and Medium Enterprises (‘MSME Ministry’).
| 3 | A SNAPSHOT OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 The Micro, Small And Medium Enterprises Development Act, 2006 (‘MSMEDA’ or ‘Act’) was promulgated on 16th June, 2006 as an Act for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto. Prior to enactment of the Act, Small scale industry was defined by notification under section 11B of the Industries (Development and Regulation) Act, 1951. Section 29B of the said Act also provided for notifying reservation of items for exclusive manufacture in the smallscale industry sector. Except for these two provisions, there did not exist a legal framework for this dynamic and vibrant sector of the country’s economy. Many Expert Groups or Committees appointed by the Government from time to time as well as the small scale industry sector itself had emphasised the need for a comprehensive Central enactment to provide an appropriate legal framework for the sector to facilitate its growth and development. Emergence of a large services sector assisting the small scale industry in the two decades prior to enactment of the Act also warranted a composite view of the sector, encompassing both industrial units and related service entities. Added to this, a growing need was then felt to extend policy support for the small enterprises so that they are enabled to grow into medium ones, adopt better and higher levels of technology and achieve higher productivity to remain competitive in a rapidly globalised world. Thus, as in most developed and many developing countries, it was felt necessary that in India too, the concerns of the entire small and medium enterprises sector are addressed, and the sector is provided with a single legal framework. Before the Act, the medium industry or enterprise was not even defined in any law. In enacting the Act, the Central Government draws source from a declaration as to expediency of control of certain industries that was made under section 2 of the Industries (Development and Regulation) Act, 1951. In addition to the 6 (six) chapters cumulating to 32 (thirty-two) sections, the Act is supported by 4 (four) Rules dealing with other aspects. The hitherto The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 was repealed by MSMEDA. The Act established a nodal body in the form of National Board for Micro, Small and Medium Enterprises (‘Board’) having head office in Delhi with representatives across ministries, regulators, trade, employees, etc. The functions of the Board were to examine various
| 4 | factors that affect the promotion and development of MSMEs alongwith making recommendations to the Central Government. Key chapters under the Act described in the book are as below: Chapter III: Classification of Enterprises. Chapter IV: Measures for Promotion, Development and Enhancement of competitiveness of MSMEs. Chapter V: Delayed payments to Micro and Small Enterprises. The chapters of this book are arranged in a such a manner to emulate the construction of the Act.
| 5 | Chapter III: Classification of Enterprises Eligibility and Registration • The Act draws three classes of enterprises being Micro, Small and Medium based on certain criteria as laid down under the Act (as amended from time to time). The Act allows all enterprises whether proprietorship, hindu undivided family, association of persons, co-operative society, partnership firm, company or undertaking to be classified and registered (Section 7). • Enterprises compliant with the criteria are eligible to file a Memorandum with the authority as may be prescribed (Section 8). The Act prescribed classification of Micro, Small and Medium enterprises based on turnover and asset criteria as laid down. Recently, vide notification S.O. 2119(E) dated 26th June, 2020 the Central Government, after obtaining the recommendations of the Advisory Committee in this behalf, notified certain criteria for classifying the enterprises as micro, small and medium enterprises and specified the form and procedure for filing the memorandum (to be known as ‘Udyam Registration’), with effect from the 1st day of July, 2020. The said classification is as under: An enterprise shall be classified as a micro, small or medium enterprise on the basis of the following criteria, namely:- (i) a micro enterprise, where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees; (ii) a small enterprise, where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; and (iii) a medium enterprise, where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees. If an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category but no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover. All units with Goods and Services Tax Identification Number (‘GSTIN’) listed against the same Permanent Account Number (‘PAN’) shall be collectively treated as one enterprise and the turnover and investment
| 6 | figures for all of such entities shall be seen together and only the aggregate values will be considered for deciding the category as micro, small or medium enterprise. Calculation of Investment in Plant & Machinery: • The calculation of investment in plant and machinery or equipment will be linked to the Income Tax Return (‘ITR’) of the previous years filed under the Income Tax Act, 1961. In case of a new enterprise, where no prior ITR is available, the investment will be based on self-declaration of the promoter of the enterprise and such relaxation shall end after the 31st March of the financial year for which it files its first ITR. • On 21st July, 2020 the Income-Tax Department and the Ministry of MSME has entered into a MOU under which the Income Tax Department will start sharing data on depreciation, sales and gross turnover of Micro, Small and Medium Enterprises (MSMEs) as reported in their ITRs with the Union MSME ministry. The information to be shared include depreciation on plant and machinery as reported in ITR 3, 5 and 6, sales/gross receipts of business as reported in ITR-3, 5 and 6; and gross turnover/ gross receipts as reported in ITR-4. • The expression plant and machinery or equipment of the enterprise, shall have the same meaning as assigned to the plant and machinery in the Income Tax Rules, 1962 framed under the Income Tax Act, 1961 and shall include all tangible assets (other than land and building, furniture and fittings). • The purchase (invoice) value of a plant and machinery or equipment, whether purchased first hand or second hand, shall be taken into account excluding Goods and Services Tax (‘GST’), on self-disclosure basis, if the enterprise is a new one without any ITR. • The online Form for Udyam Registration captures depreciated cost as on 31st March each year of the relevant previous year. Therefore, the value of Plant arid Machinery or Equipments for all the enterprises shall mean the Written Down Value (‘WDV’) as at the end of the Financial Year as defined in the Income Tax Act and not the cost of acquisition or original price, which was applicable in the context of the earlier classification criteria. • Further, in accordance with the notification dated 5th October, 2006 (S.O. 1722(E)) the Central Government specifies the following items, the cost of which shall be excluded while calculating the investment in plant and machinery in the case
| 7 | of the enterprises mentioned in Section 7(1)(a) of the said Act, namely: i. equipment such as tools, jigs, dyes, moulds and spare parts for maintenance and the cost of consumables stores; ii. installation of plant and machinery; iii. research and development equipment and pollution controlled equipment; iv. power generation set and extra transformer installed by the enterprise as per regulations of the State Electricity Board; v. bank charges and service charges paid to the National Small Industries Corporation or the State Small Industries Corporation; vi. procurement or installation of cables, wiring, bus bars, electrical control panels (not mounded on individual machines), oil circuit breakers or miniature circuit breakers which are necessarily to be used for providing electrical power to the plant and machinery or for safety measures; vii. gas producers plants; viii. transportation charges (excluding sales-tax or value added tax and excise duty) for indigenous machinery from the place of the manufacture to the site of the enterprise; ix. charges paid for technical know-how for erection of plant and machinery; x. such storage tanks which store raw material and finished produces and are not linked with the manufacturing process; and xi. fire-fighting equipment. Calculation of Turnover: • Exports of goods or services or both, shall be excluded while calculating the turnover of any enterprise whether micro, small or medium, for the purposes of classification. • Information as regards turnover and exports turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN.
| 8 | • The turnover related figures of such enterprise which do not have PAN will be considered on self-declaration basis for a period up to 31st March, 2021 and thereafter, PAN and GSTIN shall be mandatory. Ineligibility of certain enterprises from obtaining registration under the Act: The Act provides for classification of enterprises engaged in manufacturing or production of goods as well as enterprises engaged in providing or rendering of services. In this context it is further clarified that the below activities would not be included in the manufacture or production of goods or providing or rendering of services in accordance with Section 7 of the MSMED Act 2006: NIC Code Activity 02 Forestry and logging 03 Fishing and aquaculture 45 Wholesale and retail trade and repair of motor vehicle and motorcycles 46 Wholesale trade except of motor vehicles and motor cycles 47 Retail trade except of motor vehicles and motor cycles 97 Activities of households as employees for domestic personnel 98 Undifferentiated goods and services producing activities of private households for own use 99 Activities of extraterritorial organization and bodies Further, NIC Code 01 – crop, animal production, hunting and related activities shall also be ineligible except for the following sub-classes: NIC Code Activity 01462 Production of eggs 01463 Operation of poultry hatcheries 01492 Bee - keeping and production of honey and bees wax 01493 Raising of silk worms, production of silk worm cocoons 01612 Operation of agricultural irrigation equipment 01620 Support activities for animal production
| 9 | NIC Code Activity 01631 Preparation of crops of primary markets, i.e. cleaning, trimming, grading disinfecting 01632 Cotton ginning, cleaning and bailing 01633 Preparation of tobacco leaves 01639 Other post-harvest crop activities, n.e.c 01640 Seed processing for propagation
| 10 | Process for Registration: • Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online in the Udyam Registration portal (https://udyamregistration.gov.in/), based on self-declaration with no requirement to upload documents, papers, certificates or proof. • Upon registration, an enterprise (referred to as Udyam in the Udyam Registration portal) will be assigned a permanent identity number to be known as Udyam Registration Number. • An e-certificate, namely, Udyam Registration Certificate (‘URC’) shall be issued on completion of the registration process. • There will be no fee for filing Udyam Registration. Aadhaar number shall be required for Udyam Registration. • The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF). • In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number. • In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on self-declaration basis. • No enterprise shall file more than one Udyam Registration: Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration. • Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or updation process shall be liable to such penalty as specified under section 27 of the Act. Migration from Udyog Aadhaar/Entrepreneurs Memorandum to Udyam Registration All existing enterprises registered under EM–Part-II or Udyog Aadhar Memorandum (UAM) shall register again on the Udyam Registration portal on or after the 1st day of July, 2020. • All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification.
| 11 | • The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31st day of March, 2021. Updation of Information • An enterprise having Udyam Registration Number shall update its information online in the Udyam Registration portal, including the details of the ITR and the GST Return for the previous financial year and such other additional information as may be required, on self-declaration basis. • Failure to update the relevant information within the period specified in the online Udyam Registration portal will render the enterprise liable for suspension of its status. • Based on the in formation furnished or gathered from Government’s sources including ITR or GST return, the classification of the enterprise will be updated. • In case of graduation (from a lower to a higher category) or reverse-graduation (sliding down to lower category) of an enterprise, a communication will be sent to the enterprise about the change in the status. • In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise will maintain its prevailing status till expiry of one year from the close of the year of registration. • In case of reverse-graduation of an enterprise, whether as a result of re-classification or due to actual changes in investment in plant and machinery or equipment or turnover or both, and whether the enterprise is registered under the Act or not, the enterprise will continue in its present category till the closure of the financial year and it will be given the benefit of the changed status only with effect from 1st April of the financial year following the year in which such change took place.
| 12 | Frequently Asked Questions (FAQ’s) – Eligibility & Registration ELIGIBILITY Q1. Which type of entities can be classified under MSME? Ans. Proprietorship, HUF, Association of Persons, Co-op Society, Partnership Firms, LLP, Company or any undertaking, by whatever name called can be classified under MSME if it meets the specified investment or turnover criteria. Q2. What should be the date on which the value of Plant & Machinery be calculated for determining classification? Ans. The value of Plant & Machinery should be determined at the time of obtaining the registration under Udyam. Any subsequent changes in the value of Plant & Machinery needs to be reviewed on annual basis and the classification changed accordingly. Q3. Are there any exclusions to the investments in Plant & Machinery? Ans. The following are excluded while calculating the investment in Plant and Machinery: (i) equipments such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumable stores; (ii) installation expenditure for Plant and Machinery; (iii) research and development equipment and pollution control equipment; (iv) power generation set and extra transformer installed by the enterprise as per the regulations of the State Electricity Board; (v) bank charges and service charges paid to the National Small Industries Corporation or the State Small Industries Corporation. (vi) Procurement or installation of cables, wiring, bus bars, electrical control panels (not mounted on individual machines), oil circuit breakers or miniature circuit breakers which are necessarily to be used for providing electrical power to the Plant and Machinery or for safety measures. (vii) gas producer plants;
| 13 | (viii) transportation charges (excluding sales-tax or value added tax and excise duty) for indigenous machinery from the place of their manufacture to the site of the enterprise. (ix) charges paid for technical know-how for erection of Plant and Machinery. (x) such storage tanks which store raw materials and finished products only and are not linked with the manufacturing process, and (xi) fire fighting equipment. Q4. Whether there are any exclusions to the value of turnover for purpose of classification? Ans. Exports of goods or services or both, shall be excluded while calculating the turnover of any enterprise whether micro, small or medium, for the purposes of classification. Q5. Whether any evidence / proofs are to be provided for determining the ceiling limits? Ans. The calculation of investment in plant and machinery or equipment will be linked to the Income Tax Return (ITR) of the previous years filed under the Income Tax Act, 1961. In case of a new enterprise, where no prior ITR is available, the investment will be based on self-declaration of the promoter of the enterprise and such relaxation shall end after the 31st March of the financial year in which it files its first ITR. Information as regards turnover and exports turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN. The turnover related figures of such enterprise which do not have PAN will be considered on self-declaration basis for a period up to 31st March, 2021 and thereafter, PAN and GSTIN shall be mandatory. Q6. What are the implications if an entity crosses the ceiling limits of investment in Plant & Machinery or turnover? Ans. If an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category but no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover.
| 14 | Q7. Whether separate GSTIN’s of a single entity (under same PAN) to be treated separately for determining the ceiling limits of MSME? Ans. All units with Goods and Services Tax Identification Number (GSTIN) listed against the same Permanent Account Number (PAN) shall be collectively treated as one enterprise and the turnover and investment figures for all of such entities shall be seen together and only the aggregate values will be considered for deciding the category as micro, small or medium enterprise. Q8. Are pure trading entities allowed to be registered under Udyam Registration? Ans. A pure trading entity will not be eligible to be classified as MSME and hence cannot register under Udyam. However a manufacturing or service entity, who also carries out some trading activity shall not become ineligible just by the conduct of trading activity. Q9. Are professionals like Chartered Accountants, Lawyers and Company Secretaries eligible for benefits under the MSMEDA? Ans. Professionals like CA’s, Lawyers & CS’s are eligible for benefits under the MSMEDA as per the eligibility criteria applicable to service entities. REGISTRATION Q1. Which is the web portal for registration under MSME Act, 2006? Ans. WEF 01/07/2020, the registration under MSME Act, 2006 will be called as UDYAM Registration and a dedicated web portal has been made available for registration at following web address: https://udyamregistration.gov.in Except the above portal of Government of India and Government’s Single Window Systems, no other private online or offline system, service, agency or person is authorized or entitled to do MSME Registration or undertake any of the activity related with the process. Q2. Whether any fees are payable for Udyam Registration? Ans. Registration Process is totally free. No Costs or Fees are to be paid for Udyam Registration.
| 15 | Q3. What are the information required to be entered while filing the Udyam Registration Ans. Aadhar card of partner/director/proprietor along with registered mobile number PAN of company/firm/individual Enterprise Name Detailed Address of Enterprise Date of incorporation /registration of enterprise Date of commencement of production/business Bank details of company/firm/individual along with IFSC code Number of employee (Male & Female separately) Investment in Plant & Machinery (For Manufacturer) or in Equipment (For Service Provider) in lacs Mobile number & email id of company/firm/Individual (i.e. contact details of company) Nature of manufacturing/services provided (all the activities of company/firm/Individual) GST Registration Number of Enterprise Q4. Whether the existing Udyog Aadhar Memorandum (UAM) or EM – Part II will remain valid? Ans. All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal on or after the 1st day of July, 2020. All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification. The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31st day of March, 2021. Q5. Whether Aadhaar Number is compulsory for obtaining Udyam Registration? Who’s Aadhar Number to be used for non-individual entities? Ans. Aadhaar number is mandatory for obtaining Udyam Registration. The Aadhaar number shall be that of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF). In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.
| 16 | Q6. Whether PAN and GSTIN are compulsorily required to be linked with the Udyam Registration? Ans. PAN and GSTIN are mandatory for Udyam Registration from 01.04.2021. Entities are advised to apply for PAN and GSTIN immediately and update the same on this website by 31.03.2021, to avoid suspension of Udyam Registration. Q7. Will the Udyam Registration be required to be renewed on periodic basis? Ans. There will be no need for renewal of Registration. Q8. Any periodic updation of information is required to be done on Udyam Registration? Ans. An enterprise having Udyam Registration Number shall update its information online in the Udyam Registration portal, including the details of the ITR and the GST Return for the previous financial year and such other additional information as may be required, on self- declaration basis. Failure to update the relevant information within the period specified in the online Udyam Registration portal will render the enterprise liable for suspension of its status. Q9. In case of changes in the value of Plant & Machinery or Turnover impacting the classification of MSME what shall be the transition period (date from which the change will take effect)? Ans. Based on the in formation furnished or gathered from Government’s sources including ITR or GST return, the classification of the enterprise will be updated. • In case o f graduation ( from a lower to a higher category) or reverse-graduation (sliding down to lower category) of an enterprise, a communication will be sent to the enterprise about the change in the status. • In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent reclassification, an enterprise will maintain its prevailing status till expiry of one year from the close of the year of registration. • In case of reverse-graduation of an enterprise, whether as a result of re-classification or due to actual changes in investment in plant and machinery or equipment or turnover or both, and whether the enterprise is
| 17 | registered under the Act or not, the enterprise will continue in its present category till the closure of the financial year and it will be given the benefit of the changed status only with effect from 1st April of the financial year following the year in which such change took place. Q10. Is registration under Udyam a must for availing the benefits available to MSME? Ans. Most of the benefits available to the MSME’s as announced by the Government of India are linked to the Udyam Registration Number and hence the registration becomes mandatory.
| 18 | Chapter IV: Measures for Promotion, Development and Enhancement of competitiveness of MSMEs • General power to undertake measures: The Act grants wide powers to the Central Government to undertake measures for the purposes of facilitating the promotion and development and enhancing the competitiveness of MSME, particularly of the micro and small enterprises, by way of development of skill in the employees, management and entrepreneurs, provisioning for technological upgradation marketing assistance or infrastructure facilities and cluster development of such enterprises with a view to strengthening backward and forward linkages, specify, by notification, such programmes, guidelines or instructions, as it may deem fit (Section 9). • Specific power for access to credit related matters: The Act recognizes the need for better access to credit facilities and hence enables the Reserve Bank of India to frame policies and practices in respect of credit to the MSMEs thereby ensuring timely and smooth flow of credit to MSMEs, minimise the incidence of sickness among and enhance the competitiveness of such enterprises. (Section 10). • Specific power for preference policies in procurement of goods: The Act grants powers to the Central Government or the State Government to notify preference policies in respect of procurement of goods and services, produced and provided by MSMEs, by its Ministries or departments, as the case may be, or its aided institutions and public sector enterprises (Section 11). • Specific power to set-up Funds: The Act allows the Central Government to form one or more Funds to be called by such name as may be specified in the notification and there shall be credited thereto any grants made by the Central Government (Section 12). • The various benefits available to MSME is bifurcated as below: 1. Promotional, Upgradation and Support Schemes of the MSME Ministry 2. Credit and Financial Support related initiatives / schemes
| 19 | 1. PROMOTIONAL, UPGRADATION AND SUPPORT SCHEMES OF THE MSME MINISTRY A briefly summary of various schemes announced by the Ministry of Micro, Small and Medium Enterprises as listed on the website www.msme.gov.in. is produced below. Sr. No. Scheme Description 1 Prime Ministers Employment Generation Programme and Credit Support Scheme 1.1 Prime Minister Employment Generation Programme (PMEGP) 1.2 Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE) 1.3 Interest Subsidy Eligibility Certificate (ISEC) 2 Development of Khadi, Village and Coir Industries 2.1 Market Promotion & Development Scheme (MPDA) 2.2 Revamped Scheme Of Fund for Regeneration Of Traditional Industries (SFURTI) 2.3 Coir Vikas Yojana (CVY) 2.3.1 Coir Industry Technology Upgradation Scheme (CITUS) 2.3.2 Science and Technology (S&T) for Coir 2.3.3 Skill Upgradation & Mahila Coir Yojana (MCY) 2.3.4 Export Market Promotion (EMP) 2.3.5 Domestic Market Promotion Scheme (DMP) 2.3.6 Trade and Industry Related Functional Support Services (TIRFSS) 2.3.7 Welfare Measures (Pradhan Mantri Suraksha Bima Yojana (PMSBY)) 3 Technology Upgradation and Quality Certification 3.1 Financial Support to MSMEs in ZED Certification Scheme 3.2 A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE) 3.3 National Manufacturing Competitiveness Programme (NMCP) 3.3.1 Credit Linked Capital Subsidy for Technology Upgradation 3.3.2 Marketing Support/Assistance to MSMEs (Bar Code) 3.3.3 Lean Manufacturing Competitiveness for MSMEs 3.3.4 Design Clinic for Design Expertise to MSMEs 3.3.5 Technology and Quality Upgradation Support to MSMEs 3.3.6 Entrepreneurial and Managerial Development of SMEs through Incubators
| 20 | Sr. No. Scheme Description 3.3.7 Enabling Manufacturing Sector to be Competitive through QMS&QTT 3.3.8 Building Awareness on Intellectual Property Rights (IPR) 4 Marketing Promotion Schemes 4.1 International Cooperation 4.2 Marketing Assistance Scheme 4.3 Procurement and Marketing Support Scheme (P&MS) 5 Entrepreneurship and skill Development Programme 5.1 Entrepreneurship Skill Development Programme (ESDP) 5.2 Assistance to Training Institutions (ATI) 6 Infrastructure Development Programme 6.1 Micro & Small Enterprises Cluster Development (MSE-CDP) 7 MSME Sambandh 8 MSME Sampark 1. Prime Ministers Employment Generation Programme and Credit Support Scheme 1.1 Prime Ministers Employment Generation Programme (PMEGP) Description The scheme is implemented by Khadi and Village Industries Commission (KVIC). The total cost of eligible projects will be financed through part subsidy and balance in form of Term / Working Capital Loan. Eligible Project Manufacturing Entity Service Entity Max. Cost of Project admissible ` 25 lakhs ` 10 Lakhs Benefit – Assistance as a % of Project Cost Category / Area Urban Rural General 15 % 25 % Special 25 % 35% The balance amount of total project cost will be financed by bank term / working capital loan. Special Category includes SC/ST/OBC/Minorities/ Women/Ex-Servicemen /Physically Handicapped, NER, Hill & Border Areas
| 21 | Eligible Entities • Individual above 18 years of age • At least VIII standard pass for projects costing above ` 10 Lakhs in manufacturing and above ` 5 Lakhs in the service sector. • Self Help Groups (including those belonging to BPL provided that they have not availed benefits under any other Scheme), Institutions registered under Societies Registration Act,1860; Production Cooperative Societies, and Charitable Trusts are also eligible. Ineligible Entities • Existing Units (under PMRY, REGP or any other scheme of Government of India or State Government) and the units that have already availed Government Subsidy under any other scheme of Government of India or State Government are NOT eligible. Website for application https://www.kviconline.gov.in/pmegpeportal/ pmegphome/index.jsp 1.2 Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT SME) Description Ministry of MSME & SIDBI established the Credit Guarantee Trust Fund in order to implement Credit Guarantee Scheme for Micro & Small Enterprises. 75% of the loan amount to the bank is guaranteed by the Trust Fund. Assistance Collateral free loan up to a limit of ₹ 100 lakh is available for individual MSE on payment of guarantee fee to bank by the MSE. Eligibility Both existing and new enterprises are eligible under the scheme. Website for application www.dcmsme.gov.in/schemes/sccrguarn.htm 1.3 Interest Subsidy Eligibility Certificate (ISEC) Description An important mechanism of funding khadi programmes Assistance Under the ISEC Scheme, credit at a concessional rate of interest of 4% per annum for working capital, is made available as per the requirement of the institutions. The difference between the actual lending rate and 4% is paid by the Central Government through KVIC to the lending banks.
| 22 | Eligibility The Khadi institutions, having valid Khadi certificate and sanctioned Khadi programme. How to apply? The Khadi institutions will apply to the financing bank for working capital alongwith the ISEC certificate issued by KVIC. 2. Development of Khadi, Village & Coir Industries 2.1 Market Promotion & Development Scheme (MPDA) Description MPDA is a unified scheme for publicity, marketing, market promotion and marketing development assistance. Assistance Modified MDA (MMDA) shall be allowed @ 30% on the Prime cost of Khadi (cotton, silk, woollen) and Polyvastra. Further, grant/subsidy will also be available for construction of Khadi plazas. Eligibility The Khadi institutions, having valid Khadi certificate and categorised as A+,A,B and C How to apply? The total amount of MMDA on production will be claimed by the producing Institution from the KVIC and will be distributed amongst the stakeholders viz., spinners and weavers, producing Institutions and selling Institutions in the ratio 40%, 20% and 40% respectively. Producing Institutions shall submit quarterly claim of MMDA based on the actual production achieved during the preceding quarter of the financial year. The difference, if any, would be adjusted in the last quarter of the financial year on the basis of accounts audited by a Chartered Accountant. The MMDA, preferably, shall be reimbursed electronically by the State/Divisional office of the KVIC on a quarterly basis. 2.2 Revamped Scheme of Fund for Regeneration of Traditional Industries (SFURTI) Description To organize the traditional industries and artisans into clusters in order to make them, competitive and provide employment, skill development, and marketing support for their long term sustainability
| 23 | Assistance The Scheme would cover three types of interventions namely: ‘Soft Interventions’, ‘Hard Interventions’ and ‘Thematic Interventions’. No. of Artisans Project Outlay Heritage Cluster 1000-2500 ` 8 Crores Major Cluster 500-1000 ` 3 Crores Mini Cluster Upto 500 ` 1.5 Crores *For NER/ J&K and Hill States, there will be 50% reduction in the number of artisans per cluster. Soft Interventions: A max. ceiling of ₹ 25.00 lakhs (100% scheme funding) Hard Interventions: As per project requirement (75% scheme funding) Thematic Interventions: additional 5% of the total budget allocation can be claimed. Cost of Technical Agency is calculated at 8 % of Soft and Hard Interventions (100% scheme funding). Cost of Implementing Agency/ Cluster Executive is fixed at a ceiling of ₹ 20.00 lakhs (100% scheme funding). Eligibility Non-Government Organizations (NGOs), Institutions of the Central and State Governments and, SemiGovernment institutions, field functionaries of State and Central Govt., Panchayati Raj institutions (PRIs), and similar agencies, with suitable expertise to undertake cluster development. How to apply? The above eligible agency/organization has to submit the proposal to the State O ffice, KVIC and the proposed is to be scrutinized at State Level and Zonal Level before being submitted onwards to the Scheme Steering Committee for approval. 2.3 Coir Vikas Yojana (CVY) The interventions under CVY Scheme envisage a wide range of activities like skill development of artisans, mahila coir yojana, for modernization, upgradation and/or establishing a new unit under Coir Industry Technology Upgradation Scheme (CITUS), promoting the domestic as well as export market, providing of trade and industry related functional support services, and welfare of coir workers.
| 24 | 2.3.1 Coir Industry Technology Upgradation Scheme (CITUS) Description Scheme for giving away assistance to the entrepreneurs for procurement of eligible Plant & Machinery for modernization, upgradation and/ or establishing a new unit on making application for the purpose to go for larger investment in the coir sector. Assistance The financial assistance shall be 25% of the cost of admissible items of Plant and Machinery procured by the Coir units. The upper ceiling of the financial assistance will be ` 2.50 crores per coir unit/ project. Eligibility All newly established coir production/ processing units registered with Coir Board under Coir Industry (Registration) Rules, 2008 and having Udyog Aadhar are eligible to apply for financial assistance for modernisation under this scheme How to apply? File application with the Joint Director (Planning), Coir Board Ph: 9447187059 Email: [email protected] 2.3.2 Science & Technology (S&T) for Coir Description The component envisages extension of the outcomes of research at the laboratory level for application at the field level and extension of testing and service facility. Assistance Technology Transfer, Incubation, Testing and Service Facilities Eligibility The Research and Development activities of the Board are carried out through the twin research institutes: the Central Coir Research Institute, Kalavoor and Central Institute of Coir Technology, Bangalore. These institutes are eligible for use of funds released under Science & Technology. How to apply? Manufacturers/Entrepreneurs/Coir Workers can approach Research Centre in order to avail of assistance in Technology Transfer, Incubation, Testing and Service facilities.
| 25 | 2.3.3 Skill Upgradation and Mahila Coir Yojana (MCY) Description The Mahila Coir Yojana (MCY) is intended to provide self-employment opportunities to rural women artisans in regions processing coconut husk. Assistance The stipend per trainee for the skill development programmes will be limited to ` 3,000/- per month and in the case of training programmes of less than one month duration, stipend will be disbursed on prorata basis. The honorarium for the trainer will be limited to ` 15,000/- per month. An amount of ` 400/- per head per month will be provided as financial assistance to the training sponsoring agency to meet the operational cost of the training for raw material, power charges, other incidentals etc. Eligibility Coir artisans and workers engaged in the coir industry may avail of the financial assistance for procurement of machines/ equipments under PMEGP scheme for setting up of new coir units for which the maximum project cost is ` 25 lakhs. How to apply? The officer-in-charge of the Regional Extension Centre will handle selection of trainees for training programmes conducted at the Regional Extension Centres. 2.3.4 Export Market Promotion (EMP) Description Coir Board is implementing Export Market Promotion with a view to improve the export performance of Indian Coir Sector through various export market promotion activities. Assistance 1. Delegation, Consultancy & Information Sourcing 2. Participation in seminars and conferences 3. Participation in international fairs/buyerseller meets 4. Publicity abroad 5. External Market Development Assistance 6. Coir Industry Awards. Eligibility Manufacturers, Entrepreneurs and Exporters of Coir How to apply? The application forms can be had either from the Coir Board HO or it can be downloaded from the website http://coirboard.gov.in/
| 26 | 2.3.5. Domestic Market Promotion (DMP) Description The activities undertaken by the Board for the purpose of popularizing coir and coir products and expanding the domestic market, are publicity, participation in domestic exhibitions, extension of performance linked Market Development Assistance (MDA), construction/ renovation/interior decoration of new and existing showrooms/market development centres of the Board and field demonstration/displays. Assistance The MDA is granted at the rate of 10% of the average annual sales turnover of eligible entities of coir products during the preceding three financial years, subject to the condition that 5% increase should have been achieved over the immediate previous year. This Assistance will be shared on 1:1 basis between the Central Government and the concerned State/Union Territory Government. Eligibility Apex Co-operative Societies, Central Co-op. Societies, Primary Co-operative Societies, Public Sector Enterprises, Franchisees appointed by Coir Board in the coir industry and the Showroom and Sales Depots / Hindustan Coir of the Coir Board. How to apply? The MDA application form can be obtained from the Coir Board HO and it also can be downloaded from the website of coir board. http://coirboard.gov.in/ 2.3.6. Trade and Industry Related Functional Support Services (TIRFSS) Description Introduction and maintenance of an updated and effective IT related management in formation system is an in escapable requirement for the development of this highly competitive sector. Assistance The component provides accessible export data such as name of importing countries, value and quantum of export to each country. Survey & Study reports of various sectors are available for the Coir Industry. HRD Program can be utilised by coir workers for the betterment o f their knowledge in tune with modern technology.
| 27 | Eligibility The Board’s officials, stake holders of the industry, manufacturers, coir workers and major market player can avail of HRD program organized under the scheme. How to apply? Interested can approach the Head Office and Regional Offices of the Board in order to participate in the HRD programs organized from time to time in different regions. 2.3.7. Welfare Measures (Pradhan Mantri Suraksha Bima Yojana (PMSBY)) Description The scheme titled “Coir Board Coir Workers Group Personal Accident Insurance Scheme” which was in operation up to 31.05.2016 has been converged to “Pradhan Mantri Suraksha Bima Yo jana”(PMSBY) with e ffect from 01.06.2016. Assistance The scheme is for a period of one year cover, renewable from year to year. Accident insurance coverage is given for death or disability cover for death or disability on account of accident to coir workers. Eligibility The coir workers to be enrolled through Coir Board may be self-employed, employed under the SFURTI coir clusters, coir workers engaged in the units already registered with the Board, coir workers coming under the fold of Welfare Fund Board, PSUs, Corporations, Federations, Co-Op Societies, etc. How to apply? All coir workers in the country in the age 18 to 70 years having Aadhar linked Savings Bank account will be entitled to join. 3. Technology Upgradation and Quality Certification 3.1. Financial Support to MSMEs in ZED Certification Scheme Description The objectives of the scheme include inculcating Zero Defect & Zero Effect (ZED) practices in manufacturing processes; ensure continuous improvement and supporting the Make in India initiative. After ZED assessment, MSMEs can reduce wastages substantially, increase productivity, expand their market as IOPs, become vendors to CPSUs, have more IPRs, develop new products and processes etc.
| 28 | Assistance Assessment & Rating / Re-rating / Gap analysis / Hand holding: The subsidy provided by the Government of India for Micro, Small & Medium Enterprises will be 80%, 60% and 50% respectively. There shall be an additional subsidy of 5% for MSMEs owned SC/ST/Women and MSMEs located in NER and J&K for assessment & rating/re-rating/gap analysis/hand holding: a) Assessment/Rating by empanelled Credit Rating Agencies/other Agencies valid for 4 years (Ministry of MSME will subsidize* 80% of Micro, 60% of Small, 50% of Medium Enterprises’ Certification Fee: average 70% of Fee) (Assessment Fee ` 10,000/- & ` 80,000/- per enterprise respectively for Desktop Assessment and ZED rating Complete Assessment). b) Additional rating for Defence angle i.e. Defence ZED by empanelled Credit Rating Agencies/other Agencies valid for 4 years (Ministry of MSME will subsidize* 80% of Micro, 60% of Small, 50% of Medium Enterprises’ Certification Fee: average 70% of Fee) (Assessment Fee ` 40,000/- per enterprise.) c) Gap Analysis, Handholding, Consultancy for improving rating of MSMEs by Consultants through QCI/NPC, Field formations of O/o DCMSME viz. MSME-DI, MSME-TC including its autonomous bodies, BEE etc. (Ministry of MSME will subsidize* 80% of Micro, 60% of Small, 50% of Medium Enterprises’ Consultancy charges: average 70% of Fee) (Hand holding charges ` 1.9 Lakh per enterprise whereas in case of MSMEs owned by SC/ST entrepreneurs additional support of Rs 10,000/- will be provided.) d) Re-Assessment/Re-Rating by Credit Rating Agencies & Other Agencies (Ministry of MSME will subsidize* 80% of Micro, 60% of Small, 50% of Medium Enterprises’ Certification Fee: average 70% of Fee) (Assessment Fee ` 40000/- per enterprise.). Eligibility All manu facturing MSME having Udyog Aadhar Memorandum can apply.
| 29 | How to apply? The ZED Certification Scheme is a 4 steps process: Step 1: Register free on the online portal of ZED (www.zed.org.in), using the following link: http://assessment.zed.org.in/Assessment/Assessment_ BeforeLogin.aspx, using the valid (Indian) mobile number and email address. Step 2: Online self-assessment on the ZED parameters followed by Desktop Assessment. Step 3: Site-assessment, if selected on the basis of Desktop Assessment. Step 4: Consultancy: Rated MSMEs will have the option to avail the service of an authorized ZED consultant for gap-analysis and handholding. The guidelines o f ZED scheme is available on www.dcmsme.gov.in/schemes/nmcp_scm.htm 3.2. A Scheme for promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE) Description The main objectives of the scheme are to: (i) Create new jobs and reduce unemployment (ii) Promote entrepreneurship culture in India (iii) Boost Grassroots economic development at district level (iv) Facilitate innovative business solution for un-met social needs, and (v) Promote innovation to further strengthen the competitiveness of the MSME sector. Assistance NSIC/KVIC or Coir Board or any GoI or State Government agency to set up 80 Livelihood Business Incubators. One-time grant of 100% of cost of Plant & Machinery other than the land and infrastructure, or an amount up to ` 100 lakhs, whichever is less is to be provided. In case of incubation centres to be set up under PPP mode with NSIC, KVIC or Coir Board or any other Institution/agency of GoI/State Government, onetime grant of 50% of cost of Plant & Machinery, other than the land and infrastructure, or Rs 50.00 lakhs, whichever is less is to be provided. Assistance towards the training cost of incubates will be met out of the ATI scheme of the Ministry as far as possible for both centres. Total budget plan is ` 62.50 cr.
| 30 | Eligibility The scheme provides funds for the incubator/ incubation and creates necessary synergy between this scheme and the Livelihood Business Incubators/ Technology Business Incubators and Incubation schemes of MSME / NSIC / KVIC / Coir Board / Other Ministries/Departments as well as Private incubators. How to apply? Application can be sent to Aspire Scheme Steering Committee of the Ministry of MSME. The Council will be chaired by Secretary, Ministry of MSME. 3.3. National Manufacturing Competitiveness Programme (NMCP) 3.3.1. Credit Linked Capital Subsidy for Technology Upgradation (CLCSS) Description CLCSS provides 15% subsidy for additional investment up to ₹ 1 cr for technology upgradation by MSEs. Technology upgradation would ordinarily mean induction of state-of-theart or near state-of-the- art technology. In the varying mosaic of technology covering more than 7,500 products in the Indian small scale sector, List of technologies is available at http://www. dcmsme.gov.in Units looking to replace existing equipment/ technology with the same equipment/technology will not qualify for subsidy under this scheme. Similarly, units upgrading with used machinery would not be eligible under this scheme. Assistance The revised scheme aims at facilitating technology upgradation by providing 15% up front capital subsidy to MSEs, including tiny, khadi, village and coir industrial units, on institutional finance availed by them for induction of well established and improved technologies in specified sub-sectors/products approved under the scheme. Eligibility Any MSE unit
| 31 | How to apply? Candidates meeting the eligibility criteria may approach 12 nodal banks / agencies. Web link: www.dcmsme.gov.in/schemes/credit_link_ scheme.htm 3.3.2 Marketing Support/Assistance to MSMEs (Bar Code) Description Under this scheme the Ministry conducts seminars and reimburses registration fees for bar coding in order to encourage MSEs to use bar-codes. Assistance Financial assistance for reimbursement of 75% of one-time registration fee (Under MSE-MDA) and 75% of annual recurring fee for first three years (Under NMCP) paid by MSEs to GS1 India for the use of bar coding. Eligibility The scheme applies only to MSEs registered with GS1 India (Authorised body to issue GS1 barcodes). How to apply? After getting registration for use of barcode for products, (http://www.gs1india.org) The application form along with formats for supporting documents may be collected from the Director, MSME-DI, or download from http:// www.dcmsme.gov.in/ Fill the prescribed application form for claiming reimbursement on bar code; Submit the filled-in application form with required documents to the office of MSME-DI. The filled-in along with formats with required documents is to be submitted to the office of MSME-DI. 3.3.3. Lean Manufacturing Competitiveness for MSMEs Description The objective of the scheme is to enhance the manufacturing competitiveness of MSMEs through the application o f various Lean Manufacturing (LM) techniques.
| 32 | Assistance Financial assistance is provided for implementation of lean manufacturing techniques, primarily the cost o f lean manufacturing consultant (80% by GoI and 20% by beneficiaries). Lean manufacturing consultants (LMCs) will raise bills for services provided to Special Purpose Vehicle (SPV). SPV will, in turn, pay the first installment of 20% to the LMC and will obtain reimbursement from the NMIU. Thereafter, Ministry of MSME will transfer funds to the NMIU. SPV payments to LMC will be on a milestone basis in 5 tranches, each of 20% of the amount fixed. Eligibility The scheme is open to all manufacturing MSEs. The units are required to form MC, ideally of 10 units each with a minimum 6, by signing among themselves a Memorandum of Understanding (MOU) to participate in the scheme. How to apply? A group of SMEs can apply for the scheme. Either a recognised SPV can apply on its own, or a mini cluster can be formed by a group of 10 or more such units. The SPV can apply to the National Monitoring and Implementing Unit (NMIU) (National Productivity Council for the Scheme) in the given format. 3.3.4. Design Clinic for Design Expertise to MSMEs Description The scheme is for increasing competitiveness of MSMEs through adoption of design and its learning. Assistance Funding support of: (1) ` 60,000 per seminar and 75% subject to a maximum of ` 3.75 lakhs per workshop, (2) To facilitate MSMEs to develop new Design strategies and or design related products and services through project interventions and consultancy. (Government of India contribution @ 75% for micro, 60% for SMEs for the project cost range ` 15 lakh to ` 40 lakh.)
| 33 | Eligibility Expert agencies (Industry Associations, Technical Institutions or other appropriate bodies), for conducting seminars and workshops, MSMEs or groups of MSMEs, Academic Institutes/ design companies/ design consultants, etc., applying as co-applicants along with a designated MSME. How to apply? Expert agencies can directly apply to design clinic centres expressing intent to conduct workshops and seminars. MSMEs can apply alone or along with a design company or a design consultant/academic institute for design projects by submission of a proposal to the Design Clinic Centre or through the internet by making an online application. 3.3.5. Technology and Quality Upgradation Support to MSMEs Description The scheme advocates the use o f Energy Efficient Technologies (EETs) in manufacturing units so as to reduce the cost of production and adopt clean development mechanism. Assistance 1. Capacity building of MSME clusters for energy efficiency/clean development and related technologies. Funding support of up to 75% for awareness programmes, subject to maximum of ` 75,000 per programme; 2. Implementation o f energy e fficient technologies in MSME units 75% of actual expenditure for cluster level energy audit and preparation of model Detailed Project Report (DPR); 3. Setting up of Carbon Credit Aggregation Centres. 50% of actual expenditure subject to maximum ` 1.5 lakh per DPR towards preparation of subsequent detailed project reports for individual MSMEs on EET projects; 4. Encouraging MSMEs to acquire product certification / licenses from National / International bodies. 75% of the actual expenditure, subject to a maximum ` 1.50 lakhs;
| 34 | 5. 25% of the project cost as subsidy by Government of India, balance amount to be funded through loan from SIDBI/banks/ financial Institutions. MSMEs are required to make the minimum contribution as required by the funding agency; 6. 75% subsidy towards licensing of products to national/ international standards; ceiling ` 1.5 lakh for obtaining product licensing/ marking to National standards and ` 2 lakhs for International standards. Eligibility Expert organisations like PCRA, BEE, TERI, IITs, NITs, etc. State Govt. agencies like MITCON, GEDA, etc. Cluster/industry based associations of MSMEs NGOs and Technical Institutions. How to apply? Obtain product certification from national standardisation bodies (like BIS and BEE) or international product certifications (CE, UL, ANSI, etc.) Applicant applies in the specified format (given in Annexure-IV of scheme guidelines) along with required documents for re-imbursement of fees, forwarding it, to MSME-DI concerned. www.dcmsme.gov.in/schemes/TEQUPDetail.htm 3.3.6. Entrepreneurial and Managerial Development of SMEs through Incubators Description The objective of the scheme is to provide early stage funding to nurture innovative business ideas (new indigenous technology, processes, products, procedures, etc.) that could be commercialised in a year. The scheme provides financial assistance for setting up business incubators. Assistance Funding support for setting up of ‘Business Incubators (BI)’:
| 35 | The cost may vary from ` 4 to 8 lakh for each incubatee/idea, subject to overall ceiling of ` 62.5 lakh for each BI. a) Upgradation of infrastructure ` 2.50 lakh b) Orientation/training ` 1.28 lakh c) Administrative expenses ` 0.22 lakh Total assistance per BI ` 66.50 lakh Eligibility Any individual or MSME with innovative ideas ready for commercialisation can apply to the host institution (e.g., IITs, NITs, technical colleges, research institutes, etc.) in order to obtain fund support. Any technical institution (as given in the EoI) that wants to become a host institution can apply to the office of the Development Commissioner-MSME or their nearest MSME-DI for funding support. How to apply? Application can be made by the technical institution desirous o f becoming the host institution, once a Request for Proposal (RFP)/ Expression of Interest (EoI) is released. Any individual or MSME can apply directly to their nearest host institution. 3.3.7. Enabling Manufacturing Sector to be Competitive through QMS & QTT Description The scheme endeavours to sensitize and encourage MSEs to understand and adopt latest Quality Management Standards (QMS) and Quality Technology Tools (QTT). Assistance Funding support for introduction of appropriate course modules in technical institutions through expert organisations. Funding support up to ` 79,000/- per programme for conducting QMS/QTT awareness campaign for MSEs through expert organisations. Funding support up to ` 2.5 lakh per unit for implementation of QMS and QTT in selected MSMEs through expert organisations. Funding support for conducting C-watch study for product having threat from foreign goods.
| 36 | Eligibility Organisations like Quality Council of India (QCI), National Recruitment Board for Personnel and Training, Consultancy Development Corporation, National Productivity Council, Standardisation, Testing & Quality Certification (STQC, a Society under the Ministry of IT), IIQM (Indian Institute of Quality Management), Industry Associations that have taken active interest in QMS/QTT, Technical Institutions, Engineering Colleges, Tool Rooms and similar bodies and MSEs can apply for assistance under this scheme. How to apply? MSEs or clusters may contact Office of the DC- MSME. The DC o ffice will finalise the MSME clusters for conducting the Awareness Programme on Quality Management Standards and Quality Technology Tools (QMS/QTT). Web link: www.dcmsme.gov.in/schemes/QmsQtt. htm 3.3.8. Building Awareness on Intellectual Property Rights (IPR) Description The purpose o f the scheme is to enhance awareness among the MSMEs about Intellectual Property Rights, to take measures for protecting their ideas and business strategies. Effective utilisation of IPR tools by MSMEs would also assist them in technology upgradation and enhancement of their competitiveness. Assistance Conducting awareness/sensitization programmes on IPR (Applicants in this case are MSME organisations and expert agencies) GoI assistance of ` 1 lakh per awareness programme Conducting pilot studies for selected clusters/groups of industries (Applicants in this case are MSME organisations, competent agencies and expert agencies). GoI assistance of ` 2.5 lakh per pilot study.
| 37 | Funding support for conducting interactive seminars / workshops (Applicants in this case are MSME organisations and expert agencies), specialised training on IPR (Applicants – Expert agencies), setting up IP Facilitation. Funding support in the form of Grant on Patent/GI Registration (Applicants in this case are MSME units and MSME organisations) Eligibility Registered MSME units, association, consultancy firms, expert agencies etc. How to apply? Application forms for each of the components are provided along with scheme guidelines at: www.dcmsme.gov.in/schemes/IPRDetail.html 4. Marketing Promotion Schemes 4.1. International Cooperation Scheme International Events (Exhibitions, Trade Fairs etc.) approved under International Cooperation (IC) Scheme for the year 2020-21. Description The scheme covers the following activities: a) Visit of MSME delegations to other countries in international exhibitions/ trade fairs, conferences/ summits/workshops etc. for exploring new areas of technology infusion/upgradation, joint ventures, improving market of MSMEs products, etc. b) Participation of MSME delegations in international exhibitions, trade fairs and buyer-seller meets in foreign countries. c) Holding international conferences/summits/ workshops/seminars relating to MSME sector to be organized in India by the Industry Associations/ Government organizations. d) Holding/organising mega international exhibition or fair and international conferences/seminars/ workshops, Joint Committee Meetings/Joint Working Group Meetings/Government to Government bilateral meetings with others
| 38 | countries in India by Ministry o f MSME or organizations under it. e) Sending a delegation of the Ministry of MSME to an International Exhibition/Fairs/Conference in foreign countries. Assistance IC Scheme provides financial assistance on reimbursement basis for airfare, space rent, freight charges, advertisement & publicity charges and entry/ registration fee on reimbursement basis in case of participation in international exhibitions/trade fairs. Eligibility Government Institutions and Registered Industry Associations associated with promotion and development of MSME sector. How to apply? Applications for financial assistance can be sent in the prescribed form to the Director (International Cooperation), Ministry of MSME, Udyog Bhawan, New Delhi-110011. 4.2. Marketing Assistance Scheme Description The marketing assistance scheme provides assistance for the following activities: a) Organisation o f exhibitions abroad and participation in international exhibitions/ trade fairs b) Co-sponsoring of exhibitions organised by other organisations/industry associations/ agencies; c) Organising buyer-seller meets, intensive campaigns and marketing promotion activities. Assistance (a) The maximum net budgetary support for participating in an international exhibition/trade fair would normally be restricted to an overall ceiling of ` 30 lakh per event (` 40 lakh for Latin American countries). (b) The budget for organizing the Domestic Exhibitions/Trade Fair would depend upon the various components of the expenditure, i.e. space rental including construction and fabricating charges, theme pavilion, advertisement, printing material, transportation etc. However, the budgetary support towards net expenditure for organizing such exhibition/trade fair would normally be restricted to a maximum
| 39 | amount of ` 45 lakh. The corresponding budgetary limit for participation in an exhibition/ trade fair shall be ` 15 lakh. (c) Financial assistance will be provided ranging from 25% to 95% of the Air-Fare and space rent to entrepreneurs on the basis of size and type of the enterprise. Financial assistance for co-sponsoring an event would be limited to 40% of the net expenditure, subject to a maximum amount of ` 5 lakh. Eligibility MSMEs, Industry Associations and other organisations related to MSME sector are eligible to apply. How to apply? Applications/proposals seeking assistance under the scheme should be submitted to the Branch Manager of the nearest office of the National Small Industries Corporation, with full details and justification in support of the application. (a) The Guideline of Marketing Assistance Scheme is available on the Ministry’s Website i.e. http:// msme.gov.in 4.3. Procurement and Marketing Support Scheme (P&MS) Description The Procurement and Marketing Support Scheme would cover the following activities: • To encourage Micro and Small Enterprises (MSEs) to develop domestic markets and promotion of new market access initiatives. • To facilitate market linkages for e ffective implementation of Public Procurement Policy for MSEs Order of 2012. • To educate MSMEs on various facets of business development. • To create an overall awareness about trade fairs, latest market technique and other such related topics etc.