What are the benefits of the MSME Certificate?

The benefits of the MSME Certificate is increasing continuously. Because the importance of the MSME certificate is also growing.

Ministry of Micro Small and Medium Entreprises concentrating on helping the MSME. I personally utilised some of the benefits of the MSME Certificate.

Most of the Benefits of the MSME certificate are available in this article. Once you thoroughly read this article, you will know to use the benefits at the needed time.

Benefits of the MSME Certificate

As I told you earlier, the benefits of the MSME certificate is continuously increasing. So I am listing one by one under different categories. I will be updating schemes under the relevant categories. So be in touch with this article to get continuous updates.

Companies that have MSME Registration while making applications for Government Tenders:

Marketing Benefits
Company Standardisation Assistance
Tax Benefits
Bill Payment Protection
Financial Benefits

Marketing Benefits

Government Procurement (Union)

Under Union Government, there are 46 nos of Central Ministries, 51 nos of Departments, and 277 nos of CPSUs (central public sector units).

These institutions are running by spending public money for their employee’s salaries and procurements.

This total procurement value is approximately Rs.6 Lakhs Crores. Government Procurement is all made through e-tenders to maintain the process open to the public.

Reservation for Micro and Small Business Persons

MSMEs have a preference in getting government tenders. MSMEs receive special treatment while procuring Service products by CPSU (Central Public Sector Units).

25% of procurement is reserved for Micro and Small Entrepreneurs from the Total procurement of every year.

25% of Reservation to the MSEs includes 4% to SC/ST Entrepreneurs and 3% to Women Entrepreneurs.

This Reservation Policy has two objectives. One is to ensure increased production of consumer goods in the small scale sectors, and the second is to expand employment opportunities by setting up small scale industries.

Here, Government Procurement is nothing but the Union government’s procurement. But Every State government has its own separate policy and schemes. We will cover Every States Policies one by one in future.

Security Deposit

Usually, The tender department collects 3% of the Total Contract Value as a Security deposit from the contractor.

The tenderer is collecting this amount from the contractor to protect the contract in case of improper service.

Exemption of EMD

EMD stands for Earnest Money Deposit. To ensure serious bidders participate in the tender, the tenderer is collecting EMD. Or else anyone will participate in the tender and cause confusion and delay in the tender process.

For the goodwill of MSEs, including and allowing them to participate in all tenders, EMD exemption is given to all MSME Registration Certificate holders.

Tender Documents

Every tender will be expressed on paper or on Some documents. The most tender document will be sold for some minimum cost. Now it is Free for MSEs.

Price Preference for MSEs

The least price quoting company will get the tender. The least price quoted will be called L1, the second most negligible Value mentioned used to be L2, and the third price quoted will be called L3.

L1<<<<< L2 <<<<<L3

Usually, the L1 price will be preferred to get the order.

As per Public Procurement Policy 2012, MSME Act,

if an MSE quoted

more than the Value of L1 and but less than 15% of L1 plus L1 Value (L1+15%of L1)

will also be allowed to supply a portion of the amount by equating the price to L1 Value.

It is called P15% of Price preference of MSE.

MSEs quoted a higher Value than L1 will also get a chance to participate in tender instead of rejection.

If more than one such Micro and Small company comes quoted under P15% Price preference, the supply shall be shared proportionately.

Trade Fairs and Exhibitions

Domestic Exhibitions

MSEs participating in Domestic Exhibitions can avail 80% of the Total Stall Rent.

Special consideration on international trade fairs

Indian MSMEs Participating in international exhibitions, trade fairs, buyer-seller meet, international conferences and seminars can get economy Flight Charges and

Accommodation charges. Maximum Limit to Rs.3 Lakhs for Micro, Rs.2.5L for Small and Rs.1.5lakhs for Medium companies.

TAX Benefits

Benefits of the MSME Certificate by tax deduction

Octroi Exemption

Some of the Places in India has special taxation abilities like Octroi. Octroi is a tax on the product at the entry point by the local Government.

MSEs in this country has the opportunity to get Octroi Exemption.

Stamp Duty and Registration Fees

Stamp Duty and Registration fees are eligible for All industrial units having expansions.

Excise Exemption Scheme

Companies with MSME Registration can enjoy Excise Exemption at the initial year of business can have the excise tax Exemption.

Excise Exemption scheme depends on business activity.

Company Standardisation Assistance

Benefits of the MSME Certificate for standardaization

MSME certificate is to just recognise your company as an MSME by the Government. Only an MSME certificate is not enough for your customers, vendors and investors.

Bar Code registration subsidy:

Providing 75% subsidy on one-time registration fee and annual recurring fee (for first three years) paid by MSEs

Subsidy on NSIC Performance and Credit ratings:

MSEs can avail Subsidies on NSIC Performance and Credit ratings from listed global rating companies.

Reimbursement of ISO Certification

Reimbursement for ISO Certification Expenses by applying to respective authorities and MSME.

50% subsidy for patent registration

MSEc can avail 50% subsidy for patent registration by applying to the respective authority.

Bill Payment Protection

Protection against delay in payment

Ministry of MSME is not accepting Delays in payments from Buyers. The right to get compound Interest on delayed payment.

If any issue is raised on this transaction, that should be solved through conciliation and arbitration and settlement of disputes to be closed in a minimum time.

If there is no payment on the date of the agreement, the buyer must make payment within fifteen days of acceptance of goods or services.

Further, in any case, an amount due to a Micro or Small company cannot exceed 45 days from the day of acceptance or the day of approval.

In case of failure by the buyer to make payment on time, the buyer must pay compound interest to the supplier on that amount from the date of payment or 15 days of acceptance of goods or services.

The penal Interest chargeable for delayed payment to an MSME company is three times the bank rate notified by the Reserve Bank of India.

Financial Benefits

Government urges the banks to follow below rules:

The banks should achieve a 20% growth in loans given to micro and small companies. 10% annual growth in the number of micro-companies current accounts.

60% of the total loans should be given to the Micro and Small companies.

40% of the complete advances must go to micro and small companies involved in manufacturing,

having investment in plant and machinery up to Rs.10 lakh and service companies having investment in equipment up to Rs.4 lakh.

20% of the total advance to micro and small companies should be given to

manufacturing companies that have above Rs.10 lakh till Rs.25 lakh investment in the plant and machinery and

for service companies that have equipment above Rs.4 Lakhs investment in the plant and machinery.

Credit Guarantee Fund Scheme

The Government of India launched the Credit Guarantee Fund Scheme for Micro and Small companies (CGS) to make available collateral-free credit.

The credit guarantee fund scheme is eligible for the existing and the new companies.

The Ministry of MSME and Small Industries Development Bank of India (SIDBI) established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

CGTSME implements the Credit Guarantee Fund Scheme for Micro and Small Enterprises.

Reduction in rate of Interest from banks

The interest rate for the MSEs is lower than other companies. Banks are maintaining Specific targets while lending to the Micro and Small companies.

15% CLCSS subsidy to purchase

Credit Linked Capital Subsidy Scheme (CLCSS) is for the technology up-gradation of MSEs. This scheme provides a 15% capital subsidy (limited to a maximum of Rs.15 lakhs) to purchase a Plant & Machinery.

1% exemption on the interest rate on OD

All MSMEs can benefit from a 1% exemption on the interest rate on Over Draft (usually called Cash Credit).

That’s all for now from me.

Benefits of the MSME Certificate – Conlusion

There are many schemes for MSMEs in the Government. I covered only the vital needs and direct benefits to an MSME. The remaining schemes you can download and read from a free book available. Download the book here.

This article is for those doing small businesses and lost hope in government schemes. If we ask any entrepreneur about “what they want ?”.They usually reply they need only loans from the Government.

Obviously, Money is essential. But other than money, there are many things. Ask other than that money to me in the comment box, I will try to answer.

if you have a doubt about a particular scheme, please write the question in the comment section. I will try to answer.