MSME Registration: Process, Fee, & Documents Required in India

Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in the country’s economy. The Indian government aims to empower these ventures and support their growth through various incentives such as the process of MSME registration.

The process can be done online via the Udyam registration portal. While it is not mandatory for MSMEs, it is highly recommended due to the numerous advantages it provides. These benefits include favourable taxation conditions, simplified business establishment procedures, and improved access to credit and small business loan facilities, among others.

What is the Meaning of MSME Registration?

MSME registration serves as a means to categorise businesses according to their size and investment. MSMEs are entities that meet certain criteria. Initially, in 2006, the government based their classification in terms of the investment criteria in plant and machinery or equipment. But later on, the authorities introduced some changes to their classification by considering both the annual investment and turnover. The distinction between the manufacturing and services sectors was also removed.

Consequently, determining whether a business classifies as an MSME now requires evaluating both the investment and the annual turnover. The updated classification has proven to be beneficial for small and medium-sized businesses in India. The current revised classification, detailed below, takes into account both the investment and annual turnover to determine whether an entity qualifies as an MSME:

Criteria	Micro	Small	Medium
Investment	Rs 1 crore	Rs 10 crore	Rs 50 crore
Annual Turnover	Rs 5 crore	Rs 50 crore	Rs 250 crore

The MSME Registration Process

• The official website for MSME registration – https://my.msme.gov.in/MyMsme/Reg/Home.aspx – allows you to easily complete the process.
• To begin, visit the website and follow the on-screen instructions.
• Choose the appropriate category as per the instructions on the portal.
• Any business falling under the MSME category is eligible for registration, and the primary document required is your Aadhaar card.
• Additionally, you need to upload your PAN and GST details concerning your investment and turnover. Note that there are no MSME fees for registration.
• The government portal will fetch other relevant details from its database.

There are two categories for MSME registration:

1.  New entrepreneurs registering for the first time.
2. Entrepreneurs who have already registered under Udyog Aadhaar Memorandum (UAM) or Entrepreneurship Memorandum (EM)-II, either directly or through assisted filing.

A. For new entrepreneurs that have not completed MSME registration:

1. You can select the ‘For New Entrepreneurs who are not Registered yet as MSME’ option on the homepage.
2. Enter your Aadhaar Card number and name, then click ‘Validate and Generate OTP.’
3. If you have a PAN Card, the details will be automatically fetched from the government database. Otherwise, choose the option ‘No’ for PAN Card.
4. Proceed to fill in personal and industry details, and click ‘Submit and Get Final OTP.’ Keep in mind that there are no MSME fees for registration.
5.  After entering the final OTP, you will receive a successful registration message and a reference number.
6.  After verifying your registration (within a few days), you will receive the Udyam Registration Certificate.

B. For MSME registration without a PAN Card:

1. Follow the same initial steps as above and select ‘No’ for PAN Card when prompted.
2. Fill in all required details, and click ‘Final Submit’ to receive a registration number.
3. Note that registration does not involve any MSME fees and is possible without a PAN Card and GSTN, but it is necessary to apply for them afterwards. 
4. Updating these details is vital to avoid suspension of your Udyam Registration.

C. For entrepreneurs already registered under EM-II or UAM:

1. Choose the appropriate option on the government portal’s homepage.
2. Fill in the Udyog Aadhaar Number and click ‘Send OTP’.
3. Select your preferred option to receive the OTP (either on mobile or email) and click ‘Validate and Generate OTP’.
4. After entering the OTP, provide the details to complete the MSME registration procedure. There are no MSME fees involved.

Completing and submitting the form on the Udyam Registration Portal completes the process. Once you submit the form, a message will appear on the screen confirming the successful registration. To verify your MSME registration status, you can perform a quick check on the portal. It’s that simple and hassle-free!

NOTE: Each MSME can secure only one MSME registration, without any need for multiple registrations, even if the business engages in various activities or operates multiple branch units. However, the application must include all business activities and branches of the enterprise.

Eligibility Conditions for MSME Registration

Whether you run a proprietorship, partnership firm, one-person company, limited liability partnership, or any other undertaking, you are eligible to apply for this process. Now, let’s look at some industry-specific eligibility factors that may apply to your business:

1. If your business falls under the manufacturing sector, make sure to comply with specific quality standards or certifications required for certain industries. For instance, if you are in the food processing business, you will need ISO certification.
2. Also, pay attention to environmental and safety regulations applicable to manufacturing operations. Being environmentally responsible is crucial.
3. If you require MSME registration for a firm involved in high-tech manufacturing sectors, remember to include research and development (R&D) activities as part of the investment criteria.
4. On the other hand, if your business is in the service sector, you will need to look into the qualifications, certifications, or licences required for specific service-oriented industries. For example, professions such as IT services, healthcare services, and professional services require specific qualifications.
5. Ensure compliance with sector-specific regulations such as those governing financial services, legal services, or healthcare practices if that’s the sector you are in.
6. And don’t forget to consider the nature of your service offerings. Whether you are in creative industries, tourism, hospitality, or consultancy services, this registration can still apply to your business.

Remember, MSME registration opens up various opportunities and benefits for your business at no cost – there are no MSME fees involved! So, start now and reap the advantages. FlexiLoans is an online lending platform that offers specialised MSME business loan services designed for MSMEs. With streamlined processes, fast approvals, and flexible financing options you can get the financial support you need to flourish. Click here to unlock your growth with FlexiLoans! 

Documents Required for MSME Registration

When you are looking to obtain MSME registration, it’s essential to keep a few key points in mind. First and foremost, the process is simple and hassle-free. You, as the owner of the enterprise, can easily provide self-attested certificates for the required information.

• To begin, you will need to fill out a form that includes your personal Aadhaar number, company name, address, bank account details, and other common information. Uploading the form successfully will provide you with a unique registration number.
• The best part is, there are no MSME fees for registration, making it cost-effective for entrepreneurs like yourself. Now, let’s take a quick look at the documents you need to submit:

1. Address Proof of the Enterprise: If you own the space, all you need are the allotment letter, possession letter, and property tax receipt. If your enterprise operates from a leased space, a rent receipt and a No Objection Certificate from the landlord will do.
2. Sale Bill or Purchase Bill: You will need to provide copies of bills for the products or services you sell, as well as purchase bills for the raw materials you purchase.
3. Partnership Deed, MoA, and AoA: If your business is a partnership firm, you will need to submit the partnership deed and registration certificate. If your enterprise is a company, you will have to provide copies of the Memorandum of Association and Articles of Association, along with the certificate of incorporation. Additionally, you must provide a copy of the resolution passed at the latest general body meeting and a board resolution authorising a director to sign the application.
4. Licences and Bills of Machinery: In some cases, you might need to submit an industrial licence obtained from the government. If you have machinery or equipment, include copies of related bills and licences, as needed.

After you complete the registration process, you will receive a permanent number known as the Udyam Registration Number. This unique identifier is essential for your official records.

You will receive the MSME Registration Certificate online. This certificate holds significant value as it proves your official identity as an MSME. The certificate will also include a dynamic QR Code, which you can scan to access the corresponding web page on the Udyam Portal. This web page will contain detailed information about your enterprise, making it convenient for anyone to verify your details with ease.

Benefits of MSME Registration

This process opens up several opportunities for your enterprise; you can benefit from various government schemes and initiatives at no cost as there are no MSME fees for registration. Here is a snapshot:

1. Enjoy Collateral-Free Bank Loans

The Indian government has taken a proactive approach to supporting small enterprises by providing collateral-free business loans. This initiative aims to offer financial security to both new and existing businesses in the country. These enterprises can benefit from the Credit Guarantee Trust Fund Scheme introduced by the government of India, SIDBI, and the Ministry of Micro, Small, and Medium Enterprises (M/o MSME).

2. Explore International Trade Opportunities

As a registered MSME, you have the opportunity to participate in international trade shows, exhibitions, business meetings, seminars, and conferences funded by the Indian government. This support facilitates knowledge sharing and exposure to the latest trends in business on a global scale.

3. Benefit from Lower Interest Rates

One of the major advantages of MSME registration is the access to bank loans at a reduced interest rate compared to other enterprises. Banks prioritise credit to registered MSMEs, ensuring that these businesses enjoy affordable business loan interest rates. The government aims to increase credit to micro and small firms by 20% within the next two years, with a focus on maintaining a 10% annual growth rate for these businesses. Furthermore, banks are required to allocate a minimum of 60% of their total lending to the MSME sector.

4. Enjoy Subsidies on Patent Registration

MSMEs registered with the M/o MSME are eligible for a 50% subsidy on their patent costs. This incentive encourages startups and small companies to nurture innovation and develop novel ideas and technologies. To benefit from this subsidy, interested enterprises can apply through the relevant ministries.

5. Enjoy Tax Exemption Benefits

The MSME registration offers numerous tax exemption benefits, enabling businesses to save money that would otherwise be subject to taxation. This relieves enterprises of the need to maintain extensive audit procedures and elaborate books of accounts.

6. Security Against Delayed Payments

The M/o MSME extends support to small enterprises by protecting them against delayed payments from buyers. In case of late payments, the buyers are liable to pay interest for the delay to the MSME-portal registered enterprise. The buyers have to pay interest every month, and if the payment is late for more than 45 days, they must pay compound interest, which is three times the rate set by the Reserve Bank of India (RBI).

7. Enjoy Electricity Bill Concessions

All businesses with an MSME registration can receive electricity bill discounts. This concession allows firms to enhance their productivity and accept more orders without worrying about the additional capital costs associated with electricity and maintenance. To avail of this benefit, small businesses can apply to the electricity department by attaching their registration certificate.

8. Get Reimbursed for ISO Certification

MSME portal-registered businesses can have their ISO certificate fees waived by applying with their MSME certificate to the appropriate authority. This step is crucial for increasing the efficiency standards of small businesses during the bidding process.

9. Receive Marketing and Promotion Assistance from the Government

The Indian government actively organises international trade-related events, craft fairs, exhibitions, and exchange programmes. Enterprises have access to these platforms that foster international trade cooperation and encourage commercial relationships with various countries. Additionally, the government provides subsidies, tax breaks, and technical assistance to MSMEs involved in exporting goods and services.

10. Access Technology Upgradation Support

The M/o MSME provides financial support to MSMEs for technology upgradation. This includes reimbursing project costs related to clean technology implementation, preparing audit reports, and offering subsidies for licensing products that adhere to national and international standards. Such measures aim to enhance cost-effectiveness and promote the use of clean energy in the manufacturing sector.

Types of MSME Loan Options

Let’s explore the various types of loan options available for private enterprises that have completed MSME registration with M/o MSME.

1. Merchant Cash Advance: With a Merchant Cash Advance, you can receive a lump sum amount swiftly. The repayment is based on your daily sales through the organisation’s point-of-sale terminals. If your products or services are promptly paid for through these terminals, this type of loan is a perfect fit for you. 
2. Invoice Financing: Maintaining a healthy cash flow can be challenging, especially with pending invoices. Invoice Financing allows you to raise capital against your outstanding invoices, and manage day-to-day operations more effectively. Here’s how it works:
   Upon invoice clearance, the lending organisation deducts a percentage covering the processing fee, principal, and accrued interest. To be eligible, your enterprise should have been operational for over a year, with a turnover of more than Rs 24 lakhs. Additionally, you need to have raised invoices with a reputed corporate entity and possess valid work invoices amounting to at least Rs 1 lakh.
3. Working Capital Loans: These loans bridge the gap between delivering finished products and paying for them. With an MSME registration, you can avail of these loans on favourable terms with a repayment tenure of 1-2 years. The best part is that no collateral is required to be eligible for them. Your enterprise can qualify if it has been operational for at least a year and generates an annual turnover exceeding Rs 24 lakhs. The documentation required includes KYC documents, a business incorporation certificate, and the last six months’ Current Account bank statement.
4. Line of Credit: Wouldn’t it be great to have credit options readily available for your day-to-day expenses? The Line of Credit loan allows you to do just that. You can access a pool of funds, and the best part is that you only pay interest when you utilise the loan amount. Additionally, you get the benefit of a revolving line of credit and reduced interest rates. It’s hassle-free and doesn’t require collateral. You can avail of loans ranging from Rs 50,000 to Rs 1 crore, with a repayment tenure of one year.

FlexiLoans provides loans for business and loan-related services through its online platform, making it easy for small and medium-sized enterprises (SMEs) to get MSME loans sanctioned. This leading fintech company addresses the financing needs of SMEs that often face challenges in obtaining traditional bank MSME business loans due to limited credit history, collateral requirements, and lengthy approval processes.

Role of the Government in MSME Registration

The Indian government is actively supporting MSMEs by implementing digitisation and ease of doing business to speed up capital-raising processes and nurture more entrepreneurs, all with absolutely no MSME fees involved. Check out the following schemes that can benefit you if you have completed MSME registration:

• Credit Linked Capital Subsidy Scheme: Obtain technology subsidies to upgrade outdated systems and enhance your business efficiency.
• SIDBI Make In India Loan For Enterprises (SMILE): Accelerate growth with loans at an 8% interest rate and a repayment tenure of up to 120 months under this scheme.
• PM MUDRA Yojana: Enterprises can secure funding at competitive interest rates and flexible repayment tenure for borrowing requirements under Rs 10 lakh.
• Grievance Monitoring System: Entrepreneurs can easily file and track complaints with the promise of swift resolutions.
• Technology and Quality Upgradation Scheme: Upgrade to energy-efficient technologies in your manufacturing units, reducing production costs and contributing to the environment.
• Incubation: Receive financial aid for implementing innovative ideas, designs, and products.

Steps of MSME Registration

Steps	Description
1	Click on the provided link to initiate the MSME Registration Process.
2	Complete the registration form with basic business details such as company name, registration number, GST number, and other necessary information.
3	Provide your personal information including name, address, PAN Card, bank account details, and other mandatory data required during your enterprise’s registration process. Make sure to upload a photo within the specified size limit.
4	MSME portal executives will review your application. If any discrepancies are found, they will notify you to make the relevant changes.
5	After the successful submission of the form, you will receive your certificate via email. The Ministry will not issue a physical copy. Instead, you will receive a virtual MSME registration certificate.

Unlock the Growth Potential of your Venture with FlexiLoans

Though vital contributors to the Indian economy, MSMEs often encounter various financial and administrative hurdles that impede their progress. FlexiLoans is here to rescue them with specialised loan services tailored to their needs. By simplifying the business loan process, eliminating paperwork, and offering fast approval, we address the challenges of credit history, credit score, and collateral requirements. To ensure the approval of your MSME loan, click here and access the timely and crucial financial support that your enterprise rightly deserves!