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What are the benefits for MSME in India?

India has always been a self-reliant country. Though the MSME Development Act was enacted in 2006, most of the attention was given only to Khadi and Coir. Now with the changing geopolitical conditions, the focus has again been shifted towards shaking the Indian entrepreneurial spirit which was somnolent for the past few years because of lack of cash flow, overburdened by compliances, and difficulty in arranging credit. 

The MSME ministry has understood this fact that if India has to develop it has to grow at least at the rate of 10%  per year for the next 10 years. To achieve this in real terms industries have to be promoted, infrastructure has to be built and people have to be made employable. So it makes sense for the government to incentivize the MSME sector as it is the only sector that has the potential to make India a developed economy in the next 10 years. By providing benefits to the MSMEs, the policymakers are not doing any benevolence or being gratuitous towards them, they are giving them their right and hoping that they will perform and cover for their incompetence, socialist and authoritarian policies. The private sector has always come to the rescue, in the hour of need.

This large pool of indigenous bright minds is being wasted for want of opportunities and institutes to fine-tune their ideas into practical business ventures. India is a land where there is no dearth of resources. Be it Hydrogen fuel cells, electric vehicles, sand laced with Thorium, and conversion of seawater into potable water. Now the attention has been shown, under Atma Nirbhar Scheme,  through MSMEs, to some critical industries like defense, clean energy generation, pharmaceuticals, telecommunication, information and technology, and medical equipment, etc.

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What are the benefits for MSME in India?

The MSME ministry has made it mandatory for every manufacturing and service-providing enterprise to register under the Udyam portal. Many benefits are there for the taking, for those who have registered on the portal. We are sharing them with you for your knowledge. If you are an entrepreneur and have not registered yet, then you should do so. If you have already registered then, you should avail of them.


#1.  Reservation policies for the manufacturing and production  sector

According to the Industries (Development and Regulation) Act, 1951, the items manufactured in the SSI (Small scale industry) sector have been given statutory reservation in government procurement.

The Reservation Policy has two objectives 

To assure production of consumer goods is increased in the small scale sector. To enhance employment opportunities through setting up small-scale industries in remote areas.

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MSME Registration – Role of CA Community

#2.  Easy licensing and approvals

Those enterprises which produce the Certificate of MSME Registration while making applications for licenses, approvals, and registrations on any field for their business from the respective authorities then, they are given priority and the process has been more simplified for them.

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MSME Registration – Role of CA Community

#3.  Special consideration on international trade fairs


Under the International Cooperation Scheme, to provide financial assistance by reimbursement to the State/Central Government organizations, industries/enterprises Associations and registered societies/trusts and organizations associated with MSME for commissioning of MSME business delegations to other countries.

Their task is to explore new ideas and products that can be produced by the MSMEs, participation by Indian MSMEs in international exhibitions to gain exposure and learn about new technological advancements, trade fairs, the interaction between buyers and sellers, and for holding international conferences and seminars which are in the best interest of MSME sector.

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e Book of Schemes for Micro, Small and Medium Enterprises (MSMEs)

#4. Waiver of stamp duty and registration fees


All new industrial units having MSME Registration and expansions will be exempted from payment of Stamp Duty and Registration fees for procuring land in government-designated industrial areas for MSMEs.

#5.  Exemption on direct income tax laws


Enterprises that have MSME Registration can enjoy Direct Tax Exemption(Tax Holiday Schemes) in the initial year of business, as mentioned in the scheme by the Government and depending upon the business activity.

#6. Barcode registration subsidy


Enterprises that have MSME Registration can avail of Bar Code Registration subsidy according to the scheme.

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MSME Schemes: Challenges

#7.  Subsidy on NSIC performance and credit ratings


Enterprises having MSME Registration can avail Subsidy on NSIC (National Small Industries Corporation) Performance and Credit ratings as mentioned in the scheme.

#8. Eligibility of IPS subsidy


Enterprises that have MSME Registration are eligible for Industrial Promotion Subsidy (IPS) 

#9. Credit Guarantee from Government of India through CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises)


Enterprises that have MSME Registration are eligible for collateral-free loans from financial institutions through Counter Guarantee from the Government of India through CGTMSE.

#10. Protection against delay in payment


The MSME ministry has given protection to UDYAM Registered Businesses against delay in payments from Buyers and right of interest on delayed payment through mediation, arbitration, and settlement of disputes in the least possible time. If any UDYAM registered micro or small enterprise supplies any goods or services, then it is incumbent upon the buyer to make the payment on or before the agreed date. Where there is no agreement, then the buyer is required to make the payment within fifteen days of acceptance of goods or services. Further, a payment due to a micro or small enterprise has to be made within a maximum of forty-five days from the day of acceptance or the day of deemed acceptance. If a buyer fails to do so then, the buyer is liable to pay interest, compounded monthly from the agreed date of payment or fifteen days of acceptance of goods or services. The penal interest charged from the buyer for delayed payment to an MSME enterprise is three times the bank rate notified by the Reserve Bank of India.

According to the MSMED Act 2006, every state has to establish a Micro and Small Enterprise Facilitation Council (MSEFC) for settlement of disputes on getting references/filing on Delayed payments due to MSEs.

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#11. Reduction in rate of Interest from banks


The rate of Interest for an enterprise that has MSME registration is lower as compared to other enterprises. The MSME sector has been kept under the Priority lending list. Certain targets have been set for banks’ lending to the MSEs. The banks’ have to achieve a 20% growth in credit to micro and small enterprises. A 10% annual growth in the number of micro-enterprises accounts. Out of the total advances of the bank,  60% has to be directed towards the MSE sector. 

#12. CLCSS (Credit linked capital subsidy scheme) 15% to procure the latest technology in Plant and Machinery


The Ministry of MSME is operating a scheme namely “Credit Linked CGSTI Subsidy Scheme (CLCSS) for technology upgradation of MSEs.The scheme’s objective is to encourage the entrepreneur in procuring the latest technology in plant and machinery to produce goods and services of international standards.

A 15% capital subsidy (limited to a maximum of Rs.15 lakhs) for this purpose has been provided through this scheme. The maximum limit of eligible loans under the scheme is Rs.100 lakhs. Currently, more than 1500 latest, proven, and well-tested technologies under 51 sub-sectors have been approved under the Scheme.

#13. Waiver in Security Deposit in Government


The MSME registered  enterprises are provided the following assistance while making an application for Government Tenders: 

  1. Tender sets are issued free of cost.
  2. Exemption from payment of Earnest Money.
  3. Waiver of Security Deposit up to the Monetary Limit for which the unit is registered.

#14. Concession in electricity bills:


MSME registered Enterprises can get a concession on electricity bills by making an application to the electricity department along with an MSME Registration Certificate.

Related Topic:

Udyam Registration – Eligibility, Process, Documents Required, and Certificate

#15. Reimbursement of ISO Certification


MSME registered Enterprises can get their ISO Certificate Expenses reimbursed by making an application to the respective authority along with the MSME ministry.

16# Preference in procuring Government tenders


MSME registered Enterprises are given preference in procuring government tenders. Special treatment is given to MSME Registered organizations while making an application for government tenders.

#17. 15% weightage in price Preference


Under this scheme, price preference up to 15% is provided by the central government departments and PSUs to MSEs while buying certain selected items which are also produced by large-scale units.

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MSME Loans – Sailent Features

#18. 1% exemption on the interest rate on OD (bank overdraft)


MSME registered enterprises can avail of the benefit of a 1% exemption on the interest rate on OD as mentioned in the scheme.

#19. 50% subsidy for patent registration


MSME registered enterprises can avail 50%  subsidy for patent registration by making an application to the respective authority.

#20.  Collateral free loans


Availing of collateral-free loans from financial institutions up to a specific limit because of the counter-guarantee provided by the government.



Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength

This is a new, unified, integrated, technology-driven portal of the MSME. It has been developed as a single-window portal for any issues or inquiries related to MSMEs. It is just like an encyclopedia containing all the information and news which is concerned with the MSMEs. It is constantly upgraded with frequent changes happening in the schemes, laws, rules, and regulations. It also acts as a nodal portal to manage and provide updated information regarding the other important flagship schemes of the MSME ministry (SAMPARK, SAMBANDH, SAMADHAN, AND TReDS) It has a list of FAQs on various current and relevant topics which will answer most of your doubts.;


1 . Important Budget Announcements for the MSME sector (Union Budget 2021-22)

2 . General Questions

3 . Atma Nirbhar Bharat 3.0 Stimulus package

4 . Economic Package for MSME Sector announced by the prime minister

5 . Government E-Marketplace

6 . Income Tax

7 . Goods and Services Tax

8 . Labour and Employment

9 . Transport and Movement of Essential Goods

10 . Industrial Regulations

11 . Skill Development

12 . MSME Schemes

13 . Public Procurement Policy

14 . Delayed Payment

15 . Finance    and so on

Three basic objectives of the CHAMPIONS: 

  1. To provide assistance to the MSMEs in any hardships and bottlenecks faced by them in terms of finance, raw materials, labor, permissions, etc.
  2. To enable and expedite the process of capturing new opportunities in the manufacturing and services sectors by the MSMEs.
  3. To identify and nurture the sparks, i.e., the bright MSMEs who can withstand the external pressures at present and become national and international champions.

As the name suggests this scheme has been launched to integrate all the MSMEs to work in tandem. They should help each other by forging various types of alliances like self-help groups, industrial clusters, supply chains, logistics, marketplaces, etc. to create a harmonious atmosphere where everyone will grow simultaneously. Also to inculcate a habit of producing standard products that can compete in the global market. In order to achieve this, there should be a constant effort for technological upgradation. The government is ready to help those who want to achieve for themselves as well as for the country.

Related Topic:

FAQ’s on Udyog Aadhar, MSME benefits, and registration

#22. MSME Sampark  Portal


This portal acts as an interlink between skilled people and the job market. MSMEs can post their requirements for the persons having a required skill set. The job seekers can post their experience and skillsets for the prospective employer to hire them. It is like a wish come true situation for both of them. It provides employment opportunities to the youth and a huge pool of talent for the MSMEs to choose from in the desired geographical area. It acts as an intertwining agent between job seekers and job providers.

#23. MSME Technology Centres (MSME TCs)


The Ministry of MSME, in its pursuit to provide the right stimulus, updated knowledge, required information, and latest technology for the growth of MSMEs in the country has established 18 Technology Centres (They were earlier known as Tool Rooms & Technology Development Centres). 

These TCs are providing multibranched services to the industry. They supply quality tools and machinery, trained personnel and consultancy services in tooling & related areas, up-gradation of technologies in design, manufacturing processes & products.

They cater to a wide range of industries like  Forging & Foundry, Electronics System Design & Manufacturing (ESDM), Electrical Measuring Instruments, Fragrance & Flavour, Glass, Sports Goods, and Footwear Designing.

The TCs adhere to the principles of Total Quality Management (TQM) and have accredited various international certifications applicable in different types of industries. The TCs conducts various courses/training programs and workshops to provide industry-ready workforce and skill enhancement for trainees ranging from school dropouts to M-Tech level. At present, 76 courses are being conducted by MSME TCs that are National Skill Qualification Framework (NSQF) compliant. These courses are well accepted by the industry across the country and abroad, for employment purposes. Many passed out trainees have also established their own enterprise.

#24. MSME Sambandh Portal


It is a public procurement policy monitoring portal. This portal is like forging a bridge between the government and the various types of MSMEs.The government has also started a new portal (Government e-market) for streamlining public purchases in a transparent manner and giving preference to the MSME sector. It is a G–B (Government to Business)  portal.  In 2012, a new  Procurement Policy was launched which mandated the Central Government Departments, CPSEs, to procure from MSMEs. Annual goals for procurement from the MSME sector have to be set at the beginning of the year by every Central Ministry, Department, PSU. 

Its objective is to achieve an overall procurement goal of a minimum of 25% of the total annual purchases, of the products or services, produced or rendered by MSMEs. Also, preference would be given to SC, ST, OBC, and women entrepreneurs. This portal monitors the degree of implementation of the Public Procurement from MSMEs by CPSEs. It will help MSMEs participating with more vigor and enthusiasm in the procurement process. It also helps in quantifying the number of purchases done by the CPSEs from various MSMEs. For e.g. 

The data for the F/Y 20-21 on the portal is as follows;

  1. Total purchases by CPSEs from MSMEs =143593 crores
  2. Total purchases from MSEs (174487,including SC/ST owned) =40273.33 crores (28.04% of total purchases).
  3. Purchases from only SC/ST owned MSMEs (6787) = 754.61 crores (0.53% of total purchases)
  4. Purchases from only women-owned MSMEs (4934) = 725.44 crores (0.51% of total purchases)

#25.  Msme Samadhan  Portal

MSMED Act, 2006

According to the MSMED Act, 2006 every state has to provide for the formation of Micro and Small Enterprise Facilitation Council (MSEFC) for settlement of disputes on getting references/filing on delayed payments. Section 15 to 24 of this act contains provisions for the problem of Delayed Payments being faced by the MSEs. 

MSME SAMADHAN is an online Delayed Payment Monitoring System, governed by the MSEFC for settlement of disputes on getting references or filing, on Delayed payments by aggrieved MSMEs. Filing can be done online through the MSME SAMADHAN portal ( and the status of filing can be checked online.

Assistance Provided

MSEFC of the State after examining the case filed by the MSE unit, and upon becoming satisfied of the bonafide of the MSE, will issue directions to the buyer unit for payment of due amount along with interest as per the provisions under the MSMED Act 2006.

Key Features

As per the provisions of Section 16 of the MSMED Act, 2006, a payment due to a micro or small enterprise has to be made within a maximum of forty-five days from the day of acceptance or the day of deemed acceptance of the goods or services. If a buyer fails to do so then, the buyer is liable to pay interest, compounded monthly from the agreed date of payment or fifteen days of acceptance of goods or services. The penal interest charged from the buyer for delayed payment to an MSME enterprise is three times the bank rate notified by the Reserve Bank of India.

According to this Act, every reference made to MSEFC shall be decided within a period of a maximum of ninety days from the date of making such a reference. 

If the Appellant (not being the supplier) wants to file an appeal against the decree or award by the MSEFC, he has to deposit at least 75% of the award amount before it is heard. (Section 19)

#26. Facilitation of Factoring and Registration on TReDS Portal


Factoring is a process that acts as a funding source for the MSME. A factor (financier) agrees to pay the enterprise the value of an invoice less a discount for commission and fees. Factoring can help enterprises to improve their short-term cash flows by selling their receivables in return for an immediate payment from the factoring company. 

Trade Receivables and Discounting System (TReDS)– It is an electronic platform where the seller, the buyer, and the financier, all register themselves. It facilitates the financing and discounting of trade receivables of the MSMEs through multiple financiers. An MSME registered enterprise can avail of the facilities provided by this platform. 

NBFCs, Banks, and other financial institutions are permitted by the Reserve Bank of India (RBI), to participate as financiers on TReDS. Some of the financiers which are providing the factoring service are;

Receivables Exchange of India Limited

M1xchange by Mynd Solutions Pvt Limited 

Working by TReds

The process of financing / discounting through TReDS is as follows;

    •  Factoring Unit (FU) – It is the standard nomenclature used in TReDS for the enterprise which uploads the invoice or bill of exchange. The invoice contains the details of the transaction (proof of the sale of goods/services by the MSME seller to the buyer). 
    • Uploading of invoice– The invoice is uploaded on the TReDS platform by either buyer or supplier depending on the method of discounting. It can be uploaded by the MSME seller (in the case of normal factoring) or the buyer (in the case of reverse factoring). 
    • Acceptance of the invoice by the counterparty – buyer or the seller, as the case may be.
    • Bidding– Once the invoice is approved, the financiers on the platform start to bid on the invoice. 
    • Selection of best bid by the seller or the buyer-The supplier/buyer accepts the bid.
    • Payment is made by the financier (of the selected bid) – The discounted amount is credited into the account of the MSME seller on T+1 day at the agreed rate of financing / discounting, where T is the day of acceptance of the bill.
  • Payment is made by the buyer to the financier on the due date of the bill.

It has been seen that some of the buyers are even reluctant to accept the invoice on the portal because then they have to pay the amount to the financier in a definite period.

If an MSME seller creates a FU the process is called receivables factoring; if the same is created by the corporates, other buyers, Government departments, PSUs it is called reverse factoring. The TReDS can deal with both receivables factoring well as reverse factoring.

 Benefits of TReDS:

TReDS helps an enterprise to avail funding against pending invoices. Some other benefits are:

  • A simplified method of obtaining working capital
  • Relatively cheaper rates of interest
  • Quick processing and speedy disbursement of funds
  • Collateral-free financing
  • One-time documentation process.
  • The amount received does not reflect as a loan on the balance sheet of the seller.
  • Improves cash flow of the seller enterprise.
  • It also gives more bargaining power to the buyer as it can regulate its cash flows through TReDS. The buyer can initiate reverse factoring and ask for a better deal from the seller.

As you can see, many incentives and credit facilities at a cheaper rate of interest are provided by the government to promote ease of doing business. If you are an entrepreneur then you should also try to reciprocate by availing them and make your business more ergonomic and prosperous.












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