Need and Importance of MSME Registration

Authors

  • Pradip H. Desai Practicing Cost Accountant, Ahmedabad

DOI:

https://doi.org/10.33516/maj.v56i1.61-63p

Keywords:

No Keywords.

Abstract

Opportunity-6

MSME stands for Micro, Small and Medium Enterprises. Providing various services to the MSMEs by CMAs is a great opportunity and it is a WIN-WIN situation to both MSMEs and CMAs. Most of the MSMEs are not having the basic knowledge of the benefits of MSME Registration i.e., lower rate of interest from institutional credit (Banks, SIDBI and other financial institutions), benefit of lower margins for the credit extended by financial institutions to MSMEs when compared to other Sectors, lower or ‘nil’ collateral security while financing to MSMEs by commercial banks/financial institutions etc. However, registration of the MSME is a pre-condition for enjoying these benefits.

Due to increase in threshold limits of investment and turnover of MSMEs recently by the Government of India, numbers of industrial sector and service sector units have come under the ambit of MSMEs. New MSMEs can therefore enjoy the various benefits offered by the Government of India, state Governments, banks, SIDBI and other financial institutions by getting themselves registered. To achieve this task, CMAs role is an important one in providing services like Registration of MSMEs, extending TReDS Registration simultaneously, support MSMEs in the preparation of project reports, credit proposals etc. For this, they have to closely monitor and also interact with MSME Departments of State Governments, MSME Cluster Associations, SIDBI Branches, MSME Specialized Branches of the Commercial Banks, KVIC, Coir Board, MSME Clinics (Established by the State Governments), MSME Associations, Chamber of Commerce etc.

Present Status: The number of registered MSMEs in FY20 increased by 18.49 per cent to 25.13 lakh units from 21.21 lakh in FY19 (According to Government Data). The growth rate, however, declined in the last financial year. Overall, the number of registered MSMEs in India during the past five years stood at 90.19 lakhs. According to the MSME Ministry’s Annual Report for the FY 2019-20, the MSME sector is dominated by Micro-enterprises. India has 6.33 crore MSMEs out of which 6.30 Crores — 99.4 per cent are micro-enterprises while 0.52 per cent — 3.31 lakh are Small and 0.007 per cent — 5,000 are medium enterprises.

Segment-wise as well micro-enterprises have been registered the most. The registered units increased from 18.70 lakh in FY19 to 22.06 lakh in FY20 while small units went up from 2.41 lakh to 2.95 lakh and medium-size businesses increased from 9,403 units to 10,981 units only during the said period.

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Published

2021-01-31

How to Cite

Desai, P. H. (2021). Need and Importance of MSME Registration. The Management Accountant Journal, 56(1), 61–63. https://doi.org/10.33516/maj.v56i1.61-63p

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