After the Startup India Scheme of the government, India is flooded with startups. Startups are those businesses that are new original entities and are not older than ten years since their incorporation. All startups directly or indirectly fall under one category of MSME. MSME is the abbreviation of Micro, Small and Medium Enterprises. These startups can get MSME registration for better government support. This registration of MSME is also popular by the name of Udyam registration, given to those entities that either fall under micro enterprises, small enterprises or medium enterprises. There are multiple advantages and benefits the government is providing to startups and MSMEs.Hence, one must take MSME registration for better government support.
What are Startups and MSMEs?
Startups and MSMEs are two different categories of businesses in India. It is not necessary that every newly started business falls under the category of startups and MSMEs. There are certain criteria to be called a startup and MSME in India. Entities that fall under this criteria will be able to take the government benefits provided to both of them. All the startups are supposed to take Startup India registration to get benefits as startups in India. Similarly, all the MSMEs are supposed to take MSME registration for better government support. To get recognised as a startup and MSME, one needs to fit in the following criteria.
Startups Criteria
To get the benefits and support of a startup in India, one must fall under the category of startups. The criteria to be called a startup in India are given below in tabular form:
| Entity Requirement | Startup Criteria |
| Entity Age | To be considered a startup entity, it must not be older than ten years since its incorporation date. It must be in existence and in operation for not more than ten years from its incorporation date. |
| Entity Type | Only three types of entities can get Startup India registration. These three types include private limited company, partnership firms and LLP |
| Entity Turnover | Turnover must not be more than Rs. 100 crores |
| Original Entity | It must be an original entity. Original entity means an entity that is newly incorporated and has not come into existence through splitting, merger, accusation, etc., of two companies or entities. |
| Innovative and Scalable Entity | Must have the capacity to generate wealth and new opportunities which can help in the growth of the nation |
MSMEs Criteria
There are three types of MSME, which have been divided into three categories: Micro, Small and Medium Enterprises. To determine the category of an MSME, the following factors given in the table play a great role:
| Type of Enterprise | Turnover | Investment |
| Micro Enterprises | Up to or less than Rs. 5 Crores | Up to or less than Rs. 1 Crore |
| Small Enterprises | Up to or less than Rs. 10 Crores | Up to or less than Rs. 50 Crores |
| Medium Enterprises | Up to or less than Rs. 50 Crores | Up to or less than Rs. 250 Crores |
Startups to get MSME Registration for Better Government Support
From the above criteria, it is clear that some startups can fall under the category of MSMEs in India. Hence, it is advisable for those startups to get MSME registration for better government support. After getting registered as an MSME in India, one can get the following support from the government:
Various Subsidies
- Barcode Registration subsidy
- Approximately 75% of the actual expenditure subsidy has been granted while getting a license for the products to National or International Standards.
- Government of India assistance up to Rs.1.5 lakh for obtaining product licensing or marking to National Standards
- Government of India assistance up to Rs. 2.0 lakh for obtaining product licensing or marking to International standards.
- Various government subsidies for industrial promotion are allowed
- Reimbursement of the changes in ISO certification
- Discount on electricity bill will be given
Easy IPR Protection
- 50% subsidy for the patent registration
- Subsidy in trademark registration for selected categories.
- Free government facilitation while getting Intellectual Property Rights protection
- Comparatively, it takes less time to get Intellectual Property Rights protection
- Easy and hassle-free Intellectual Property Rights protection
Easy Credit Facility
- MSMEs get easy bank loans at lower interest rates
- Collateral-free loans have been given to such kind of entities
- Provides funds to the startups who got registered as MSMEs
- Various government schemes provide credit to such entities. One such scheme is the Credit Guarantee Scheme.
- Up to a 1% discount will be given to such entities on their overdraft. It can vary from bank to bank.
Easy Recovery Process
Startups that got MSME registration for better government support will have access to the MSME Samadhan Scheme. As Startups and MSMEs are running on a daily business basis, recovery of money plays a crucial or an important role in the growth and development of startups and MSMEs. Through the MSME Samadhan portal, one can file complaints against those who have pending payments to MSME. And after that, an intimation of the complaint will be sent to the other party. Within 15 days of such animation, one needs to pay the amount of the MSMEs.
Legal and Financial Compliance
- Tax exemption under section 80 IAC under the Income Tax Act
- Tax exemption under section 56 of the Income Tax Act
- Self-certify compliance with six labor laws is allowed
- Self-certify compliance with three environmental laws is allowed
- No inspection for labor laws for five years until a written complaint has been filed against the startup
- Easy winding up process in case a startup fails to survive under the Insolvency and Bankruptcy Code of India
Is it necessary for startups to get MSME Registration?
Although it is not necessary to get registration as an MSME, it is suggested that all the startups fall under the criteria of MSMEs to get MSME registration for better government support. The government is a great support system for startups and MSMEs. But to get that support from the government, an entity must get prescribed registration. Without getting this registration, one cannot get the various benefits offered by the government to the startup and MSMEs.
Startups and MSMEs are not the same. All the startups may fall under the category of MSMEs, but all the MSMEs are not considered startups in India. Mostly, startups can get MSME registration for better government support and get access to various government resources that have been provided to the MSMEs. However, all the MSMEs cannot take the benefits of the registration of the startups.
Conclusion
MSME registration for better government support is highly recommended for startups that meet the criteria of MSMEs. The government offers a range of substantial benefits and support to both startups and MSMEs and obtaining MSME registration is the key to unlocking these advantages. For startups that qualify as MSMEs, this registration opens the door to various subsidies, including those for product licensing and international standards compliance. It also provides opportunities for easy credit facilities, lower interest rates, and collateral-free loans, making it easier for these entities to secure the necessary funding for growth.
Obtaining MSME registration for better government support can significantly enhance a startup’s access to government resources. It aligns with the government’s efforts to promote innovation, economic growth, and entrepreneurship, making it a wise choice for eligible startups seeking to thrive in India’s dynamic business landscape.
