Collateral Free loans from banks

The Government of India created the Financing Guarantee Fund Scheme for Micro and Small Enterprises (CGS) to provide collateral-free credit to the micro and small business sector. Existing and new businesses are also eligible for coverage under the plan. The Ministry of Micro, Small and Medium Enterprises of the Government of India and the Small Enterprise Development Bank of India (SIDBI) established the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises.

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Manufacturing/production sector reservation policies

One of the main policy initiatives for boosting this sector has been the reservation of products for exclusive manufacturing in the SSI sector, as allowed for by the Industries (Development and Regulation) Act, 1951.

The Reservation Policy serves two purposes:

  • Ensure that high-quality consumer items are created on a small-scale basis.
  • Increase job prospects by establishing small-scale enterprises.

Very easy to get Licenses, approvals, and registrations:

It has made it much easier for firms with an MSME Certificate to get licenses, approvals, and registrations from competent authorities in any sector for their company, as they may now submit the Certificate of MSME Registration with their application.

Regarding foreign trade shows, take into account the following:

Financial assistance is provided on a reimbursement basis to State/Central Government organizations, industries/enterprises Associations, registered societies/trusts, and organizations associated with MSME under the International Cooperation Scheme for deputation of MSME business delegations to other countries for exploring new areas of MSMEs, and participation by Indian MSMEs in international exhibitions.

Stamp Duty and Registration Fees are Waived:

IT units in public IT parks are now free from stamp duty and registration costs until March 31, 2006. All new industrial units with MSME registration, as well as expansions, will no longer be subject to Stamp Duty and Registration costs.

Exemption from Direct Taxation:

MSME-registered businesses are eligible for Direct Tax Exemption in the first year of operation, as specified in the government’s program and depending on the kind of firm.

Subsidy for bar code registration:

The scheme’s Bar Code Registration discount is available to MSME-registered firms.

NSIC Performance and Credit Rating Subsidy:

An NSIC Performance Subsidy is available to MSME-registered firms.

Eligible for IPS subsidy:

As stated under the plan, MSME-registered businesses are eligible for the Industrial Promotion Subsidy (IPS).

Protection against payment delays:

The Ministry of Micro, Small, and Medium Enterprises protects MSME-registered businesses against late payments from buyers, as well as the right to interest on late payments, through mediation and arbitration, with dispute resolution taking place in the shortest period possible. If a buyer buys items or services from an MSME-registered micro or small business, the buyer must pay on or before the agreed-upon date between the buyer and the micro or small business.

If the agreement does not include a payment deadline, the buyer must pay within fifteen days of receiving the goods or services. In any event, a payment owed to a micro or small business cannot be delayed for more than 45 days from the date of acceptance or presumed acceptance. If the buyer does not pay on time, the buyer owes the supplier compound interest with monthly interest that rests on the amount owing from the due date or fifteen days after receipt of goods or services. The penalty interest charged to an MSME for late payment is three times the Reserve Bank of India’s stated bank rate.

Banks’ interest rates are being reduced:

In comparison to other businesses, MSME-registered businesses have a reduced rate of interest. Banks are required to lend to Micro and Small Businesses in order to meet certain objectives. Banks must target a 20% increase in credit to micro and small businesses, a 10% yearly increase in the number of micro business accounts, and 60% of overall lending to the micro and small business sector. The following rules must be followed by banks:

1. Micro and small businesses engaged in manufacturing with an investment of up to Rs.10 lakh in plant and machinery, as well as service businesses with an investment of up to Rs.4 lakh in equipment, shall get 40% of total advances.

2. Manufacturing companies with investments in plant and machinery between Rs.10 lakh and Rs.25 lakh, and service enterprises with investments in equipment above Rs.4 lakh, shall get 20% of the total advance to micro and small enterprises.

3. To keep things simple, 60 percent of the funds must go to microbusinesses.

Enterprises possessing an MSME Registration Certificate can apply for reimbursement of ISO Certificate Expenses by submitting an application with supporting documents to the proper authorities.

Scheme for Excise Exemption:

MSME-registered businesses are eligible for Excise Exemption in the first year of operation, as specified in the Government’s Excise Exemption plan and based on company activities.

Preference in government procurement:

MSME-registered businesses have a leg up on the competition when it comes to government contracts. When applying for government bids, MSME Registered organizations are given special consideration.

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Obtaining both MSME and Udyog Aadhar registration is a better choice. Both of these registrations contribute to the company’s profitability. The government’s objective is to help Micro, Small, and Medium Enterprises (MSME) expand and flourish, therefore assisting the Indian economy’s progress. MSMEs’ performance has improved as a result of MSME registration and Udyog Aadhar registration.

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