SSI stands for Small Scale Industries. The SSI Registration initiated by the government, run by the Ministry of Small and Micro Industries has proven to be a boon for many MSMEs. It was reiterated into Udyog Aadhar from 2015.
- 1 Why are only MSMEs targeted in this scheme and no other businesses?
- 2 What are the SSI eligibility criteria?
- 3 What is the concept of small-scale industries registration and how does it help Businesses?
- 4 The SSI registration process and its clauses
- 5 Can one directly apply for Permanent Registration Certificate or is Provisional Registration necessary?
- 6 How is government benefited through the registration?
- 7 SSI Registration Documents Required
- 8 Conclusion
- 9 Need Help? Please fill below form to Get in touch
Why are only MSMEs targeted in this scheme and no other businesses?
Micro, Small and Medium Enterprises make the backbone of the economy. They are the main torchbearers of a developing economy, who push it towards development. They contribute in a myriad of ways from the generation of employment, thinning the disparity of wealth, increasing contribution in the manufacturing sector and much more. Studies state that MSME in total contributes up to 8% of GDP in India.
MSME industries have successfully survived the competition arising from the domestic and international market. Irrespective of improper infrastructure, cash crunch, no market linkages, etc. nothing has hindered in its growth. Pertaining to all the above reasons, MSMEs have been the prime target of the government.
Online SSI registration is a voluntary provision, although the individuals who register themselves for the same have nurtured innumerable benefits. It is a way of government to thank the MSMEs and lend them support so as to boom the economy of the country.
[SSI can also be called as MSME and Udyog Aadhar. If you want to know more about it and wondering why should one register for it, refer to our article “What is Udyog Aadhar and why should you register?”]
What are the SSI eligibility criteria?
Following are the conditions for industries that are into manufacturing business (goods, food products, etc.) to avail for SSI registration.
- Micro industries – Total Investment in Plant and Machinery must not exceed INR 25 lakhs
- Small Scale Enterprises – Must be more than Rs 25 lakhs and less than Rs 5 crores.
- Medium Enterprise – Must fall under the bracket of Rs 5 to 10 crores.
Following is the slab for businesses that concentrate on rendering Services
- Micro industries – Total Investment in Equipments less than 10 lakhs
- Small Scale Enterprises – Between 10 lakhs to 2 crores.
- Medium Enterprise – Between 2 to 5 crores.
What is the concept of small-scale industries registration and how does it help Businesses?
With the lieu of understanding the topic in detail, let’s study it through the below-given example.
Mr. Mehra runs a small-scale pickle manufacturing industry. He needs a loan of 40 lakhs for instilling further plant and machinery and thus visits the bank. The bank asks for collateral and lends him a loan at 3% interest rate. The repayment period is 10 years. In addition, late repayment will be charged credit interest. He purchases the resources and commences his business.
However, pertaining to the tough competition from the market, he is unable to incur the required profits and sell his goods in the market at a profitable rate. In addition, due to resource crunch, he is unable to upgrade his technology. Due to flux in business, his credit on loan goes on mounting. With no other option, Mr. Mehra sells his plant and machinery for loan repayment and shuts his business.
Mr. Goyal runs small-scale industry of Pickles manufacture. The total investment is between 30 lakhs and needs an additional 40 lakhs for its upgradation. He has registered himself under SSI and is thus liable for a loan up to 50 lakhs without any collateral required. He is also offered the provision of credit loan when needed in future at low-interest rates. Using the amount, Mr.Goyal purchases the necessary resources and commences his business.
After the commencement, he is offered a Permanent Registration Certificate in place of Provisional Registration Certificate which is no more necessary. His loan payback period is extended and he is charged no extra interest for late repayment. His industry is unaffected by market competition having his product listed under the reserved category of government and can sell the same to big markets. The SSI registration has made it easier and less cumbersome for Mr. Goyal to run his business smoothly.
Now, looking at both the situation let’s elucidate the benefits that SSI registration granted Mr. Goyal.
- Easy sanction of loans – Mr.Goyal’s Pickle business being in inception stages, he is offered a provisional registration certificate in the start. This makes availing loans easier through priority sector lending and other financial institutions.
- Loans at low-interest rates – SSI Registration gives an opportunity for Entrepreneurs to avail loans from financial institutions, priority sector lending, government banks at much lower interest rates. Thus, Mr. Goyal was at a profit in comparison to Mr. Mehra. Since Mr. Mehra had not registered himself under SSI, he had to pay a higher rate of interest with credit benefits.
- Exempted from keeping collateral for credit funding – Small and Micro-sized industries can avail loans up to 50 lakhs without any collateral and this is one of the best benefits industries run by poor people are offered post-Small Scale Industry registration.
- Credit facility for technology upgradation – The paramount reason for small and micro-sized industries to shut soon like in the case of Mr. Mehra in the example is due to lack of funds for upgrading technology. Businesses registered under SSI, are offered capital aid for upgrading their resources charged at lowest interest rates in comparison to rate of interest without SSI registration.
- Competition from the International market is relegated – Stiff competition from international and domestic markets put the MSMEs in the back burner. Selling their product in the market turns difficult thereby leading to huge losses and shut down. The government to negating this have conceptualized the Reservation policy. Under this policy, more than 300 products are exclusively reserved for purchase from this sector.
- Tax Exemptions – This includes Direct Tax and Excise Duty Exemption.
The SSI registration process and its clauses
The registration process is carried on in two ways i.e. Provisional Registration and Permanent Registration.
Companies that are in the budding stage or beginning stages are rendered provisional registration certificate. On the commencement of business, when the operation of the plant begins, they are provided with a Permanent Registration Certificate. However, business in operation is not exempted from registration. In such cases, they can directly apply for Permanent SSI Certificate online.
The validity of both the Certificates is 5 years, after the completion of which, the applicant will have to apply for a fresh one.
There are few clauses attached to the registration. Failing which the entrepreneur’s registration will stand for cancellation.
- Businesses that deal on products listed under Schedule III alone are eligible for registration.
- Businesses involved in the production of items that require industrial licensing will not be registered under SSI/MSME.
- The value of plant and machinery must not exceed the prescribed slab mentioned under eligibility section.
- The Entrepreneur should have obtained all necessary clearances at the time of application.
Can one directly apply for Permanent Registration Certificate or is Provisional Registration necessary?
Industries that are already functional can directly apply for Permanent Registration Certificate. A Provisional certificate is allocated to industries at the commencement stage. As the word suggests, it assists the individual in provisioning their business through availing loans, and necessary permits. After all the necessary pre-production work is completed, the individual can go about starting their business. However, when the industry is already in the running stage, there is no need for Provisional Registration Certificate and the business person can directly apply for Permanent Registration Certificate.
How is government benefited through the registration?
The motto of Central and State government by bringing as many MSME registration inside the SSI online registration bracket is to render them maximum incentives, tax benefits, and excise exemptions. Accordingly, the government has mandated large corporates to purchase certain products exclusively from this sector in order to push forward their growth. As many of the small and micro-scaled industries are run by poor people deprived of financial aid and resources, the SSI registration proves to be a blessing in disguise.
As many industries get online SSI registration, it helps the government build statistics throwing light on the condition of the industries, what measures must be taken for their growth and what new amenities can they start for proper running and operation of the industry.
Lastly, starting businesses and entrepreneurship is beneficial for the economy of the state and country too. It raises employment opportunities, boosts the economy rendering huge support for central and state government.
SSI Registration Documents Required
The applicant will be required to submit the following list of documents at the time applying:
- Aadhar Card
- Pan Card
- Address proof
- Ownership documents or Agreement of Rent
- Clearance certificate from:
- Electricity Board
- State Pollution Board
- The applicant must produce an affidavit wherein the complete status of plant and machinery is declared.
Entrepreneurs/ businesses and industries can get themselves registered under SSI through our website. Once all the documents are submitted and the required criteria are met, the process will get done within a short duration. The sooner you register the better. Afleo offers SSI Registration facilities rendering assistance for industries and businesses in getting themselves registered soon and avail the benefits faster.
To know more details about the SSI Registration, fees and procedure, please click here or fill the below-given form to get in touch with us.