MSME - onboarding on TReDS

 As per Ministry of MSME notification dated 7th November, 2024 all companies having turnover of Rs.250 crores or more are required to get themselves onboarded on the TReDS platforms as per notification of RBI. This needs to be completed by 31st March, 2025. 

MSME - Udyam Registration

All MSME units as per the new definition of MSME (including those who are already registered in the Udyog Aadhar portal) are required to register/ re-register in the Udyam Registration portal (https://udyogaadhaar.gov.in/)

The classification of MSME units are as follows:

(i) a micro enterprise, where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;
(ii) a small enterprise, where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; and
(iii) a medium enterprise, where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.

REGISTRATION PROCESS:

(1) Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online in the Udyam Registration portal, based on self-declaration with no requirement to upload documents, papers, certificates or proof.
(2) On registration, an enterprise (referred to as ―Udyam‖ in the Udyam Registration portal) will be assigned a permanent identity number to be known as ―Udyam Registration Number‖.
(3) An e-certificate, namely, ―Udyam Registration Certificate‖ shall be issued on completion of the registration process.

(4) Aadhaar number shall be required for Udyam Registration.
(5) The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).
(6) In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.
(7) In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on self-declaration basis.
(8) No enterprise shall file more than one Udyam Registration:
Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.

(9) All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal on or after the 1
st day of July, 2020.
(10) All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification.
(11) The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31stday of March, 2021.
(12) An enterprise registered with any other organisation under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration.

Copy of MSME notification in this regard can be found here

https://msme.gov.in/sites/default/files/IndianGazzate_0.pdf 

MSME sector

RBI circular dated 5th February, 2020 regarding interest subvention scheme for MSMEs.

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11803&Mode=0

As Government of India, on November 2, 2018, has announced ‘Interest Subvention Scheme for MSMEs 2018’.

Key points of the Scheme:

-          Prime Minister announced 2% interest subvention for all GST registered MSMEs, on fresh or incremental loans.

-          Eligibility

1.      All MSMEs who meet the following criteria shall be eligible as beneficiaries under the Scheme :

                               a. Valid Udyog Aadhar Number [UAN]

                          b. Valid GSTN Number

2.      Incremental term loan or fresh term loan or incremental or fresh working capital extended during the current FY viz. from 2nd November 2018 and next FY would be eligible for coverage.

3.      The term loan or working capital should have been extended by Scheduled Commercial Banks.

4.      In order to ensure maximum coverage and outreach, all working capital or term loan would be eligible for coverage to the extent of ₹100 lakh only during the period of the Scheme.

5.      Wherever both the facilities working capital and term loan are extended to a MSME by an eligible institution, interest subvention would be made available for a maximum financial assistance of ₹100 lakh.

6.      MSME exporters availing interest subvention for pre-shipment or post-shipment credit under Department of Commerce will not be eligible for assistance under Interest Subvention Scheme for Incremental credit to MSMEs 2018.

7.      MSMEs already availing interest subvention under any of the Schemes of the State / Central Govt. will not be eligible under the proposed Scheme.

Based on this Scheme RBI has vide its notification dated 5^th February, 2020, modified the operational guidelines:

1.      Submission of statutory auditor certificate by 30^th June, 2020 and in the meantime, settle claims based on internal / concurrent auditor certificate.

2.      Acceptance of claims in multiple lots for a given half year by eligible institutions.

3.      Requirement of Udyog Aadhar Number (UAN) may be dispensed with for units eligible for GST. Unit not required to obtain GST, may either submit Income Tax Permanent Account Number (PAN) or their loan account must be categorized as MSME by the concerned bank.

4.      Allow trading activities also without Udyog Aadhar Number (UAN)

5.      There is Revised Format of Certificate for claiming Subsidy i.e. Annex I, where Banks are advised to submit claims to SIDBI as per the revised format.

MSME - interest subvention

RBI circular dated 22nd February, 2019

The Micro, Small and Medium Enterprises [MSME] sector is a significant contributor towards building up of a strong and stable national economy. Hon’ble Prime Minister while launching outreach initiative for MSME sector on November 2nd, 2018 highlighted that access to credit, access to market, technology upgradation, ease of doing business and a sense of security for employees are five key aspects for facilitating MSME sector. Twelve announcements have been made to address each of these five categories. As part of access to credit, Prime Minister announced 2% interest subvention for all GST registered MSMEs, on fresh or incremental loans.

Ministry of MSME (MoMSME) has decided that a new scheme viz. “Interest Subvention Scheme for Incremental credit to MSMEs 2018” will be implemented over 2018-19 and 2019-20.

2. Salient Features of the Scheme

2.1 Purpose, Scope and Duration

The Scheme aims at encouraging both manufacturing and service enterprises to increase productivity and provides incentives to MSMEs for onboarding on GST platform which helps in formalization of economy, while reducing the cost of credit. The Scheme will be in operation for a period of two financial years FY 2019 and FY 2020.

2.2 Eligibility for Coverage

(i) All MSMEs who meet the following criteria shall be eligible as beneficiaries under the Scheme:

a. Valid Udyog Aadhar Number [UAN]

b. Valid GSTN Number

(ii) Incremental term loan or fresh term loan or incremental or fresh working capital extended during the current FY viz. from 2nd November 2018 and next FY would be eligible for coverage.

(iii) The term loan or working capital should have been extended by RBI registered systemically important Non-banking financial companies.

(iv) In order to ensure maximum coverage and outreach, all working capital or term loan would be eligible for coverage to the extent of ₹100 lakh only during the period of the Scheme.

(v) Wherever both the facilities working capital and term loan are extended to a MSME by an eligible institution, interest subvention would be made available for a maximum financial assistance of ₹100 lakh.

(vii) MSME exporters availing interest subvention for pre-shipment or post-shipment credit under Department of Commerce will not be eligible for assistance under Interest Subvention Scheme for Incremental credit to MSMEs 2018.

(viii) MSMEs already availing interest subvention under any of the Schemes of the State / Central Govt. will not be eligible under the proposed Scheme.

2.3 Operational formalities

1. The interest relief will be calculated at two percentage points per annum (2% p.a.), on outstanding balance from time to time from the date of disbursal / drawal or the date of notification of this scheme, whichever is later, on the incremental or fresh amount of working capital sanctioned or incremental or new term loan disbursed by eligible institutions.
2. The interest rates charged to MSMEs shall conform to Fair Practices Code as published by respective institutions (as per extant RBI guidelines) and linked to the respective internal / external rating of the MSME as per applicable interest rate guidelines of the institution.
3. The loan accounts on the date of filing claim should not have been declared as NPA as per extant guidelines in force. No interest subvention shall be admissible for any period during which the account remains NPA.

2.4 Claim Submission

1. Nodal office of eligible lending institutions should submit their half yearly claims to SIDBI as per the format given in Annex I. Information with respect to loans disbursed and interest relief claimed (branch-wise) shall be submitted in soft copy in excel in the format given in Annex II.
2. The format for compilation of data by branches of eligible institutions is given in Annex III. The same may be submitted by the branches to their Controlling Offices / Head Offices.
3. All claims have to be duly certified by the statutory auditors of the eligible institutions. The certificate shall include statement on verification of individual accounts with regard to amount, incremental / fresh lending, interest charged and amount claimed. Lending institutions shall ensure that total relief claimed as indicated in Annex I, II and III are matched.
4. The Half Yearly claims shall be submitted to the Chief General Manager, Institutional Finance Vertical, SIDBI, Mumbai.
5. Disbursement against each claim to individual institution shall be only after release of funds from MoMSME.

2.5 Other covenants

1. SIDBI shall act as a Nodal Agency for the purpose of channelizing of interest subvention to the various lending institutions through their Nodal office.
2. All lending institutions shall be responsible for submission of the accurate data and monitoring of the scheme.
3. The interest subvention would be released only on the basis of claim duly certified by the Statutory Auditors of the eligible institutions. SIDBI shall not be liable for any inaccurate submission of data by lending institutions.
4. Interest subvention amount shall be released by SIDBI subject to availability of funds from GOI. Also, MoMSME, GOI will be the final authority for all interest subvention related matters and their decision would be final and binding. Receipt of funds by the eligible institutions would be treated as Utilization Certificate of the Fund.

a copy of the said circular can be found here

MSME Return

The Ministry of Micro, Small & Medium Enterprises had vide its notification dated 2nd November, 2018 directed that all companies who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services shall submit a half yearly return to the Ministry of Corporate Affairs stating inter alia the amount of payments due and the reasons for the delay.

So this MSMED notification was to be regulated by the MCA.

Now MCA has vide its order dated 22nd January, 2019 effectuated this notification of MSMED. MCA has gazetted an order called Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers), Order, 2019.

The Order states that every "specified company" shall file in MSME Form 1 details of all outstanding dues to micro or small enterprise suppliers existing on the date of notification of this order i.e. on 22nd January, 2019 within 30 days from the date of publication of this notification i.e. within 21st February, 2019. 

The Order further states that every "specified company" shall file a half yearly return for the period April to September by 31st October and for the period October to March by 30th April, every year. 

So ONE immediate compliance of outstanding micro and small suppliers within 30 days and TWO half yearly returns every year.

What is "Specified company" is not clarified in any of the notification but it is safe to assume that it means that all companies who supplies of goods or services from micro or small enterprises.  

Interest Equalisation Scheme for exporters

RBI circular dated 11th January, 2019 wherein they have now included merchant exporters also in the category to be eligible for interest equalisation scheme on post and pre shipment export credit. The merchant exporters will be allowed interest equalisation @ 3% on credit for export of products covered under 416 identified tariff lines under the Scheme.

Basically the exporters will get a rebate on the interest on their borrowings for exports.

This notification is available here

The modus operandi of the interest equalisation scheme is as follows:

A. Procedure for passing on the benefit of interest equalisation to exporters:

1. For the period April 1, 2015 to November 30, 2015, banks shall identify the eligible exporters as per the Government of India scheme and credit their accounts with the eligible amount of interest equalisation.
2. From the month of December 2015 onwards, banks shall reduce the interest rate charged to the eligible exporters as per our extant guidelines on interest rates on advances by the rate of interest equalisation provided by Government of India.
3. The interest equalisation benefit will be available from the date of disbursement up to the date of repayment or up to the date beyond which the outstanding export credit becomes overdue. However, the interest equalisation will be available to the eligible exporters only during the period the scheme is in force.

B. Procedure for claiming reimbursement of interest equalisation benefit already passed on to eligible exporters

1. The sector-wise consolidated reimbursement claim for the period April 1, 2015 to November 30, 2015 for the amount of interest equalisation already passed on to eligible exporters should be submitted to RBI by December 15, 2015.
2. The sector-wise consolidated monthly reimbursement claim for interest equalisation for the period December 2015 onwards should be submitted in original within 15 days from the end of the respective month, with bank’s seal and signed by authorised person, in the prescribed format given in Annex I.
3. The claims should be accompanied by an External Auditor’s Certificate (with stamp and membership number) certifying that the claim for interest equalisation of Rupees…………….. for the month ended ………….. has been verified and found to be strictly in accordance with the provisions of the Government scheme enclosed with the circular DBR.Dir.BC.No.62/04.02.001/2015-16 dated December 4, 2015. Claims for reimbursement will be considered for settlement only after receipt of this certificate.
4. The claims may be submitted to the Chief General Manager, Department of Banking Regulation, Reserve Bank of India, Central Office, Shahid Bhagat Singh Marg, Fort Mumbai – 400 001.
5. The reimbursement of interest equalisation claim will be made as and when the funds are received from Government of India

Copy of this notification can be accessed from here

For urban co-operative banks, the procedure is as follows:

A. Procedure for passing on the benefit of interest equalisation to exporters:

(i) For the period April 1, 2015 to January 31, 2016 banks shall identify the eligible exporters as per the Government of India scheme and credit their accounts with the eligible amount of interest equalisation.

(ii) From the month of February 2016 onwards, banks shall reduce the interest rate charged to the eligible exporters as per our extant guidelines on interest rates on advances by the rate of interest equalisation provided by Government of India.

(iii) The interest equalisation benefit will be available from the date of disbursement up to the date of repayment or up to the date beyond which the outstanding export credit becomes overdue. However, the interest equalisation will be available to the eligible exporters only during the period the scheme is in force.

B. Procedure for claiming reimbursement of interest equalisation benefit already passed on to eligible exporters:

(i) The sector-wise consolidated reimbursement claim for the period April 1, 2015 to January 31, 2016 for the amount of interest equalisation already passed on to eligible exporters should be submitted to RBI by February 29, 2016.

(ii) The sector-wise consolidated monthly reimbursement claim for interest equalisation for the period February 2016 onwards should be submitted in original within 15 days from the end of the respective month, with bank's seal and signed by authorised person, in the prescribed format given in Annex I.

(iii) The claims should be accompanied by an External Auditor's Certificate (with stamp and membership number) certifying that the claim for interest equalisation of Rupees…………….. for the month ended ………….. has been verified and found to be strictly in accordance with the provisions of the Government scheme enclosed with the circular DCBR.CO.SCB.Cir. No.1/13.05.000/2015-16 dated February 11, 2016. Claims for reimbursement will be considered for settlement only after receipt of this certificate.

(iv) The claims may be submitted to the Principal Chief General Manager, Department of Cooperative Bank Regulation, Reserve Bank of India, Central Office, C-7 Bandra Kurla Complex, 1st and 2nd Floor, Bandra (East), Mumbai – 400051.

(v) The reimbursement of interest equalisation claim will be made as and when the funds are received from Government of India.

This notification is available here

Earlier vide its notification dated 29th November, 2018 the interest equalisation rate was increased from 3% to 5% to units belonging to the MSME sector in respect of pre and post shipment rupee export credit.

This notification is available here

MSME - trade receivables

Vide a notification issued by the Govt. of India on 2nd November, 2018, all companies with a turnover of more than Rs.500 crores, and all Central Public Sector Enterprises shall get themselves registered at the Trade Receivables Discounting System Platform set up by the RBI. The Registrar of Companies in each state shall be the competent authority to monitor the compliance of these instructions in respect of companies under its respective jurisdiction and Department of Public Enterprises is the authority for the public sector enterprises.

The RBI guidelines in respect of the Trade Receivables Discounting Sytem (TReDS) is given here

So this is another set of compliances to be done by these big companies. 

Interest equalisation scheme

Gist of RBI notification dated 29th November, 2018 

Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit

Please refer to the operational instructions for the captioned scheme contained in RBI circular on Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit issued vide DBR.Dir.BC.No.62/04.02.001/2015-16 dated December 4, 2015 and DCBR.CO.SCB.Cir.No.1/13.05.000/2015-16 dated February 11, 2016.

2. In this regard, it has been decided by the Government of India to increase w.e.f. November 02, 2018 Interest Equalisation rate from 3% to 5% in respect of exports by the Micro, Small & Medium Enterprises (MSME) sector manufacturers under the Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit.

3. In terms of para 2(c) of the Annex to the aforesaid RBI circulars, the Scheme is available to all exports under 416 tariff lines [at ITC (HS) code of 4 digits] and exports made by MSMEs across all ITC(HS) codes. It is therefore, advised that the benefit of the scheme be provided to all eligible MSME Exporters.

Insolvency and Bankruptcy Amendment Ordinance 2018

The President today gave assent to promulgate the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018.

The Ordinance provides significant relief to home buyers by recognizing their status as financial creditors.  This would give them due representation in the Committee of Creditors and make them an integral part of the decision making process.  It will also enable home buyers to invoke Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016 against errant developers.   Another major beneficiary would be Micro, Small and Medium Sector Enterprises (MSME), which form the backbone of the Indian economy as the biggest employer, next only to the agriculture sector.  Recognizing the importance of MSME Sector in terms of employment generation and economic growth, the Ordinance empowers the Government to provide them with a special dispensation under the Code.  The immediate benefit it provides is that, it does not disqualify the promoter to bid for his enterprise undergoing Corporate Insolvency Resolution Process (CIRP) provided he is not a willful defaulter and does not attract other disqualifications not related to default.  It also empowers the Central Government to allow further exemptions or modifications with respect to the MSME Sector, if required, in public interest.

In order to protect the sanctity of the CIRP, the Ordinance lays down a strict procedure if an applicant wants to withdraw a case after its admission under IBC 2016.  Henceforth, such withdrawal would be permissible only with the approval of the Committee of Creditors with 90 percent of the voting share.  Furthermore, such withdrawal will only be permissible before publication of notice inviting Expressions of Interest (EoI).  In other words, there can be no withdrawal once the commercial process of EoIs and bids commences. Separately, the Regulations will bring in further clarity by laying down mandatory timelines, processes and procedures for corporate insolvency resolution process.  Some of the specific issues that would be addressed include non-entertainment of late bids, no negotiation with the late bidders and a well laid down procedure for maximizing value  of assets. 

With a view to encouraging resolution as opposed to liquidation, the voting threshold has been brought down to 66 percent from 75 percent for all major decisions such as approval of resolution plan, extension of CIRP period, etc.  Further, in order to facilitate the corporate debtor to continue as a going concern during the CIRP, the voting threshold for routine decisions has been reduced to 51%.

The Ordinance also provides for a mechanism to allow participation of security holders, deposit holders and all other classes of financial creditors that exceed a certain number, in meetings of the Committee of Creditors, through the authorized representation. 

The existing Section 29(A) of the IBC, 2016 has also been fine-tuned to exempt pure play financial entities from being disqualified on account of NPA.  Similarly, a resolution application holding an NPA by virtue of acquiring  it  in the past under the IBC, 2016, has been provided with a three-year cooling-off period, from the date of such acquisition.  In other words, such NPA shall not disqualify the resolution application during the currency of the three-year grace period.

Taking into account the wide range of disqualifications contained in Section 29(A) of the Code, the Ordinance provides that the Resolution Applicant shall submit an affidavit certifying its eligibility to bid.  This places the primary onus on the resolution applicant to certify its eligibility. 

The Ordinance provides for a minimum one-year grace period for the successful resolution applicant to fulfil various statutory obligations required under different laws.  This would go a long way in enabling the new management to successfully implement the resolution plan.

The other changes brought about by the Ordinance include non-applicability of moratorium period to enforcement of guarantee; introducing the requirement of special resolution for corporate debtors  to themselves trigger insolvency resolution under the Code; liberalizing terms and conditions of interim finance to facilitate financing of corporate debtor during CIRP period; and giving the IBBI a specific development role along with  powers to levy fee in respect of services rendered.

The above mentioned changes are expected to further strengthen the Insolvency Resolution Framework in the country and produce better outcomes in terms of resolution as opposed to liquidation, time taken, cost incurred and recovery rate.

http://pib.nic.in/PressReleseDetail.aspx?PRID=1534497

Indian intellectual property panorama

A single window interface for information on Intellectual Property and guidance on leveraging it for competitive advantage. That is what the Indian IP Panorama, released by the Government of India today, offers. The portal seeks to increase awareness and build sensitivity towards IP, among stakeholders in the SME sector, academia and researchers. The Indian IP Panorama can be accessed here: http://ict-ipr.in/index.php/ip-panorama

The Indian IP Panorama is a customized version of IP Panorama Multimedia toolkit, developed by World Intellectual Property Organization, Korean Intellectual Property Office and Korea Invention Promotion Association. The toolkit has been adapted to cater to SMEs and start-ups, especially in the ICTE sector of India, based on an agreement signed between WIPO and DeitY. The Indian IP Panorama is thus a customized version of WIPO’s original product and is in accordance with Indian IP laws, standards, challenges and needs of the Indian ICTE sector.

The following five modules of the Indian IP Panorama have been released today:

1.   “Importance of IP for SMEs”,

2.   “Trademark”,

3.   “Industrial design”,

4.   “Invention and Patent” and

5.   “Patent Information”

The Indian IP Panorama has been developed under the aegis of Department of Electronics and Information Technology (DeitY) and Department of Industrial Policy and Promotion (DIPP), Government of India by Centre for Development of Advanced Computing (C-DAC), in close coordination with the Indian IP office.

Besides Secretary, DIPP Mr. Ramesh Abhishek who released the Panorama, Mr. Francis Gurry, Director General, World Intellectual Property Organisation (WIPO) was also present on the occasion.

A survey of the Madrid Protocol usage by the Indian industry and a report on “Marketing Campaign in India for International Registration of Trade Marks”, was also released today. The survey was conducted and the report prepared by IIM Bangalore, in cooperation with DIPP, as part of a study funded by WIPO. The study will help the Indian industry to take advantage of the Madrid system.

Background

India is a member of WIPO and party to several treaties administered by WIPO. Recognizing that the strategic use of intellectual property could contribute significantly to the national development objectives of India, DIPP entered into an MoU with WIPO on 13^th November 2009. The Indian IP office has been recognised as an International Searching Authority and International Preliminary Examining Authority under the Patent Cooperation Treaty (as in force from October 15, 2013). It may be recalled that a leading Indian consumer electronics company, Micromax Informatics Limited was recognized with the 1.25 millionth international trademark under WIPO’s Madrid System for the International Registration of Marks.

India acceded to Madrid Protocol for the International Registration of Marks at WIPO on July 8, 2013. The Madrid System for the International Registration of Marks (Madrid system) offers trademark owners a cost effective, user friendly and streamlined means of protecting and managing their trademark portfolio internationally.

PIB press release dated 31st March, 2016