Setting up a Micro, Small, and Medium Enterprises
MSME stands for micro, small and medium enterprises, and these play an important role in the development of the country. To support and promote MSME, the government offers MSME loans, schemes and incentives promote MSME’s through the MSMED act. MSME is also known as the growth engine of the economy. It’s not only share a major portion in exporting, but also provides employment to the fresh graduates and uneducated citizens of India. So, if you are an entrepreneur and want to set up MSME, you need to follow the steps that are listed below;
Project Selection: Choosing a project to start can be a difficult undertaking, especially if you have a lot of ideas. But just cannot make up your mind. But, even if you have no idea about what project to start, you should consider some important things that are listed below;
First few questions that you should ask yourself:
- Is it a viable business proposition in your area?
- Does it match the needs of your clientele?
- Does the idea fire up your motivation?
- Is it a sunrise industry?
Following the factor keep in mind that:-
- Test it out at the market.
- Look out for competition in the field.
- Your business opportunity.
- Project conceptualization.
- Consult with the mentor.
- Check it out with basic market research.
- Technology and Machinery: Choosing and ordering the right machinery is also an important task. In many cases technology or process provides us with specifications which is not provided, then an extensive techno- economic survey of machinery and equipment available must be carried out. International trade fairs engineering fairs are good places to look at available options. The entrepreneur must also consult with the experts/ dealers/ suppliers, prior to making selection of the machines. The advice of DIC, MSMEI and NSIC can be sought.
While checking out a process technology, the following things needs to be considered with utmost care.
- Whether the process requires a very high technology machines?
- Whether the process requires high amount of water/ power?
- Whether any process or product patent needs to be honoured while utilising the selected process technology.
- Any special pollution or environmental regulations.
- Finally, the appropriateness to the Indian environment and conditions. Machinery and equipment.
- Arranging finance: Need of finance are following types;
- Long term and medium loans.
- Short term capital or working capital requirement,
- Risk capital.
- Seed capital/ Marginal money.
- Bridge loans.
Financial assistance for MSME in India is available form an variety of institutions. The important ones are listed below;
- Commercial/Regional Rural/Co-operativeBanks.
- SIDBI: Small Industries Development Bank of India (refinance and direct lending)
- SFCs/SIDCs: State Financial Corporations (e.g.Delhi Financial Corporation)/State IndustrialDevelopment Corporations.
For loans from the financial institutions and commercial banks a formal application need to be submitted. The documents are needed to filed the application form are listed below;
- Documentation for Loan Application
- Balance Sheet and Profit Loss Statement for last three
- consecutive years of firms owned by promoters
- Income Tax Assessment Certificates of Partners/Directors
- Proof of Possession of Land/Building
- Architect’s estimate for construction cost
- Partnership deed/Memorandum and Articles of Associations of Company
- Project Report
- Budgetary Quotations of Plant and Machinery.
An approval and rejection of the application is issued by the banks after the verification of the application. After receiving an approval letter, applicants need to indicate in writing the accepting terms and conditions of the bank.
Unit Development: Setting up an establishment is much more than putting signup board and waiting for customers to walk in. It requires negotiating a favourable plot, organising for proper construction of building, design and interiors, and finding good deals for equipment and machinery.
Construction building: Once an industrial plot is secured, then the next job is that finding a suitable architect. Design of industry building has to be in consonance with the type of industry and have an appropriate plant layout. An architect estimate the cost of the building construction which helps you in taking loan applications.
After hiring architect and getting loan, material procurement and planning are critical to success. Inventory management can lead to manageable flow; otherwise if too much is ordered to soon considerable amount of working capital get locked up.
UDyog Aadhar memorandum: Ministry of Micro, Small and Medium Enterprises (MSME) has notified the Udyog Aadhaar Memorandum (UAM) under the MSMED Act, 2006 vide gazette notification [SO No.2576(E)] dated 18-09-2015 in order to promote ease of doing business for MSMEs.
The salient features of udyog aadhar are:-
- Registration isonline and userfriendly UAM can be filed on self-declaratio basis
- No documentationrequired
- No Fee for filing
- File more than oneUdyog Aadhaarwith sameAadhaar Number
Clearances: An entrepreneur has to obtain several clearances or permissions depending upon the nature ofhis unit and products manufactured.
Regulatory or Taxation Clearances:-
1.Registration under Sales Tax Act - Commercial Tax officer of area concerned
2.Registration under Central Excise Act - Collector of Central Excise or his nominee for
3.Payment of Income Tax - ITO of the area concerned
4.Registration of Partnership deed - Inspector General of area concerned
5.Calibration of weights & measures - Weights and Measures Inspector of State
6.Power Connection - Designated Officer of State Electricity Board
7.Employee strength exceeding 10 with power connection or 20 without power – Chief Inspector of Factories
Product Specific Clearances:-
1.Establishing a Printing Press - District Magistrate
2.License for Cold Storage Construction - Designated Official in State
3.Pesticides - Central/State Agricultural Department - Ministry of Agriculture
4.Drugs and Pharmaceuticals - Drug license from State Drug Controller
5.Safety Matches/ Fireworks - License under Explosives Act from Directorate of Explosives Nagpur
6.Household Electrical Appliances - License from Bureau of Indian Standards
7.Wood Working Industry within 8 km from forest - District Forest Officer
8.Milk Processing & Milk products manufacturing units - Approval under Milk and Milk
Products Order from State Agricultural/ Food Processing Industries Department above a designated capacity.
Quality Certification: Quality certification has become extremely important in competitive market and especially gaining foothold in export. As per the industry nature you can avail ISO certification. It shows that you are following all the quality guidelines while manufacturing products and it is completely free from the error. To avail ISO certification you can take the help of consult. At, Unilex business consultant we help you regarding ISO certification and MSME certification. All you need is to do just share your documents via email ID and we will help you in obtaining MSME registration and ISO certification.