We have already registered 10K companies in India!
The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is given below.
A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh, for micro service less than Rs. 10 lakh
A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore, for small service between Rs. 10 lakh to Rs 2 Crore.
A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore, for medium service between Rs 2 core to Rs. 5 crore.
Although, there is no compulsion to get MSME registration but is always advised to do so as it provides lots of benefits to the enterprises registered under the MSME Act. It gives you an identity as it is a certificate provided by the Government of India and will save you from a lot of inconveniences later on. You can apply for MSME easily through the Government’s online portal of udyogaadhar - https://udyogaadhaar.gov.in/UA/UAM_Registration.aspx
As said above, SSI/MSME registration is totally voluntary. Businessmen and entrepreneurs usually get this done to utilize the advantages offered under it. The registration process is quite easy and simple. You can easily avail it (provided you have a manufacturing plant or a commercial space where you render services), many businesses opt for it over other registrations.
It is advisable to get a Provisional SSI Registration Certificate (PRC) before starting your operation in your enterprise. The PRC will work smoothly for you and will help you out with particular NOCs and clearances from regulatory bodies.
MSMEs are recognized by all the institutions and banks. Special schemes are drafted to recognize them as well. Banks prefer MSMEs instead of normal enterprises to lend loans. The possibility of getting a sanctioned loan is much higher in a case of MSME. Bank loan interest rates will also be lower. There may also be preferential treatment in case of delay in repayment.
Many state government prefers enterprises which are registered under MSMED Act. Subsidy such as on power, taxes, and much more is offered by state governments. In most of the states, sales tax exemption is provided purchase preferences is given on goods produced. The enterprise may also relish excise exemption scheme and exemption from certain direct taxes in the initial years of your business.
The validation of a PRC is for 5 years and if the unit is still not under operational then you may still re-apply for it. As soon as you start with your operations, you can easily apply for the Permanent License.