Benefits of MSME Registration

Benefits of MSME Registration

What are MSME Enterprises?

According to the provisions of Micro, Small & Medium Enterprises Development (MSMED)Act 2006, the Micro, Small and Medium Enterprises ( MSME) are categorized in both Manufacturing and Service as

Micro Small Medium
Manufacturing Enterprises The investment on plant and machinery is
Upto Rupees 25 Lakhs More than Rupees 25 Lakhs to 5 Crores More than Rupees 5 Crores to 10 Crores
Service Enterprises The investment on Equipment is
Upto Rupees 10 Lakhs More than Rupees 10 Lakhs to 2 Crores More than Rupees 2 Crores to 5 Crores

MSME Registration in India

As per Section 7 of MSMED Act, the image below (from shows the turnover threshold for micro, small and medium enterprises.

msme definition revised

Registering under the MSMED Act is not mandatory, but to get the support and benefits from the government it is necessary. The Business organisations with the above investment levels that register with the state government and Central Government under the MSME Enterprises Act will get the following benefits from the government as a support and encouragement to Entrepreneurship.


According to, the share of MSME sector in total GDP% is 37.54%. Individually manufacturing sector is 7.04% and Service sector is 30.50%.

Karnataka State Policy Framework Related to MSME:

1) The Karnataka State government has started allocating a sum of Rs. 60,000 per unit and an extra 50% to homeless SC/ST craftsperson for construction of their living-cum-work sheds. Government also increased the subsidy percentage to 90% from earlier 60% and free supplies of tool kits. This scheme is with effect from 2009-2010. This programme started by the karnataka government to benefit the village tribals.

2) An online system is created for tracking of collaboration or vendor opportunities for MSME’s. To support this information, Department of Industries will conduct annual vendor development programs / events at state level and district level with the goal of bringing together all the MSME’s and Large manufacturers / Public sectors.

3) Allocating 20-30% of land in KAIDB (Karnataka Area Industrial Development Board) industrial areas to MSME’s. Within the Allotable land to MSME’s it is further divided into 20%, 30% and 50% to micro, small and medium enterprises respectively.

4) An increased price of 15% will be paid  for the goods manufactured by the MSME manufacturing industrial enterprises located in the state by the government departments and the state owned PSUs in case of purchases.

5) Attractive incentive package will be offered for the units in the backward areas to provide competitive spirit.

6) Market development and promotion will be backed by the government to the MSME’s by setting up physical and virtual exhibition centres at the state level and district level.

7) Reducing inspections (say income tax, quality check, sales tax etc.,) by  government for first 3 years from business establishment, so that the organisation sustain in the market and grow.

The Government of Karnataka under its Industrial policy 2009-2014, has grouped its districts into four zones for providing the package of incentives, concessions to the enterprises.

Karnataka state Package of Incentives and Concessions

  1. Investment Promotion Subsidy
  2. Exemption from Stamp Duty
  3. Concessional Registration Charges
  4. Waiver of Conversion Fine
  5. Exemption from Entry Tax
  6. Incentives for Export Oriented Enterprises
  7. Exemption of APMC Cess/fees
  8. Interest Subsidy- Micro manufacturing enterprises:
  9. Exemption from Electricity Duty- Micro & Small manufacturing enterprises:
  10. Technology Upgradation Quality Certification and Patent Registration
  11. Refund of cost incurred for preparation Project Reports

For detail study about the concessions and incentives offered by Karnataka State Government and Central Government, you can see MSME’s development in different zones ( Most backward areas, more backward areas, industrial developed areas).

You can also refer to the links of industrial policy of Karnataka Government

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