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Posted on
Mar 01, 2019


MSME stands for micro, small and medium enterprises and they are the backbone of any developing economy. To support MSMEs, the Government of India, through various subsidies, schemes and incentives promote MSMEs through the MSMED Act. Though India is still facing infrastructural problems, lack of proper market linkages and challenges in terms of the flow of institutional credit, it has seen tremendous growth in the MSME sector. The advantage of this sector is that it requires less investment and creates employment on a large scale. Moreover, this sector has survived almost all threats from both the domestic and international market.


To avail the benefits of MSME and the various schemes and subsidies provided by the government, one needs to ensure they are registered under the MSME Act. Registration under the MSME Act is not mandatory, however, only those who are registered under the act can avail the various benefits an MSME would get. Whether a company is an LLP, Sole Proprietary, Partnership, Public or Private Limited Company; registration is necessary for all. You can register as an MSME by following this link. Ensure that you have a valid Aadhar number for the registration of MSME and if you do not have one, you can follow this link to get your Aadhar number.

To know more about the MSME registration, the process, documents required and eligibility criteria read our blog on MSME Registration process.


As mentioned above, the registration of MSME is not mandatory, but the registration process has been provided so that all entrepreneurs can maximize their benefits under this scheme and reap the offers provided by the government. The benefits are many; from priority, lending to cluster financing and an opportunity to adopt latest quality management standards.

Let’s dive into the benefits of MSME registration point by point:

  • 50% Subsidy on Patent Registration

If you have created something new, a new innovative product or business model and want to patent it, there is a hefty fee applied for patent registration. But with the help of MSME registration, one can avail the patent registration at 50% subsidy. This move aims to encourage more entrepreneurs to invent and innovate. They can avail the 50% subsidy by registering with their respective industry.

  • Collateral Free Loans

One of the biggest benefits of MSME registration is the collateral free loans one can avail through banks and NBFCs. This essentially means that SMEs and MSMEs can now take various loans such as working capital loan and credit line loan, without providing any collateral.

  • Exemption of interest on Overdraft

MSMEs who have good credit history and have good relations with their banks can avail the overdraft facility. MSMEs get the advantage of 1% exemption on interest on overdraft facility. This could be extremely beneficial for MSMEs. However MSMEs should check with their lender as not all banks give this facility.

  • Reservation Policy

As mentioned above one of the greatest things about the MSME market is that it has hardly been affected by outsiders. Due to this, the success of the MSME sector has been magnificent. A major part of this success is due to the reservation policy of the government. There are some MSME sectors who have been given exclusive rights to manufacture certain products. Under the Government Stores Purchase Program, the central government has reserved the purchase of more than 300 products exclusively from this sector. This gives a boost to the MSME market and it is not affected by stiff competition.

  • Technological Upgradation for MSME’s

Some MSMEs may not be able to use their resources to full potential due to lack of sophisticated technology. The government, under the Capital Aid for Technological Upgradation Scheme, helps these enterprises to upgrade their equipment through latest technology by helping them get low-interest loans from banks. With the rise of technology, the government is encouraging more MSMEs to get into the space of technology through aid and financial support.

  • Protection against delayed payments

One of the major advantages of registering under the MSME scheme is the protection received by the government against delayed payments. This protection in delayed payments is against the buyers in the transaction of business. If any micro or small enterprise that has MSME registration, supplies any goods or services, then the buyer is required to make payment on or before the date agreed upon between the buyer and the micro or small enterprise. In case there is no payment date on the agreement, then the buyer is required to make payment within fifteen days of acceptance of goods or services. In case of delayed payment, the buyer is required to pay a fine to the MSME registered company. This helps most MSMEs to ensure they have no outstanding debtors or bad debts.


From the benefits mentioned above, one can understand how important and helpful it is for an MSME to get registered under the MSME Act. Also, with the government making it compulsory for large corporations to have a minimum set transaction with the MSME sector, the growth and the revenue of this sector has been increasing. So all in all, registering yourself as an MSME has various benefits that could uplift your business.