Udyam Registration is a unique identification number provided to micro, small, and medium-sized enterprises (MSMEs) in India. It is a registration process that enables MSMEs to avail various benefits offered by the government, including access to finance, subsidies, and government schemes.
One of the significant benefits of the Udyam Registration is the promotion of exports for MSMEs. With the Udyam Registration, MSMEs can easily participate in international trade fairs and exhibitions, which can help them showcase their products and services to potential customers from different parts of the world. The certificate also provides access to government schemes that promote exports, such as the Export Promotion Capital Goods (EPCG) scheme.
Furthermore, the Udyam Registration also makes MSMEs eligible for various benefits, including duty exemptions and refunds, which can significantly reduce the cost of exports. MSMEs can also avail of the Export Credit Guarantee Corporation (ECGC) scheme, which provides credit insurance for exports, ensuring that MSMEs are protected against non-payment risks.
The Udyam Registration thus provides MSMEs with the necessary tools and resources to expand their business and venture into the global market. By promoting exports, the Udyam Registration helps MSMEs create more job opportunities and contributes to the growth of the Indian economy.
Market Access Initiative (MAI) Scheme: This scheme provides financial assistance to MSMEs to participate in international trade fairs, exhibitions, and buyer-seller meets.
Export Promotion Capital Goods (EPCG) Scheme
The Export Promotion Capital Goods (EPCG) Scheme is a government program aimed at promoting exports by allowing eligible businesses to import capital goods at a concessional rate of duty. Under the scheme, MSMEs registered under the Udyam Registration can import capital goods for pre-production, production, and post-production at a concessional rate of customs duty, subject to export obligations.
To be eligible for the EPCG scheme, MSMEs need to have a minimum of one year of experience in the respective sector and have a valid Udyam Registration. Additionally, the value of the capital goods to be imported should be at least three times the duty saved on the import.
The EPCG scheme provides various benefits to MSMEs, including the following:
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Cost Savings: MSMEs can import capital goods at a concessional rate of duty, which helps in reducing the cost of production.
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Improved Productivity: The scheme allows MSMEs to import the latest technology and machinery, which can help in improving productivity and quality.
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Access to New Markets: By improving their production capabilities, MSMEs can expand their product range and venture into new markets, both domestically and internationally.
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Export Promotion: The scheme requires MSMEs to fulfill export obligations, which encourages them to focus on exports and promote their products in the global market.
Duty Exemption and Remission Scheme (DEPB)
This scheme allows MSMEs to import raw materials, components, and finished goods without paying any duty.To be eligible for the DEPB scheme, MSMEs need to have a valid Udyam Registration and fulfill certain export obligations. The scheme provides various benefits to MSMEs, including the following:
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Cost Savings: MSMEs can import raw materials, components, and finished goods without paying any customs duty, which helps in reducing the cost of production.
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Access to Quality Inputs: The scheme allows MSMEs to access quality inputs, which can help in improving the quality of their products.
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Export Promotion: The scheme requires MSMEs to fulfill export obligations, which encourages them to focus on exports and promote their products in the global market.
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Increased Competitiveness: By reducing production costs and improving the quality of their products, MSMEs can enhance their competitiveness in the global market.
Export Development Fund (EDF)
This fund provides financial assistance to MSMEs for product development, technology upgradation, and market research.To be eligible for the EDF scheme, MSMEs need to have a valid Udyam Registration and fulfill certain criteria, including the following:
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Export Performance: MSMEs should have a proven export performance, or a strong potential for export.
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Viability: The proposed export-related activity should be viable and should have the potential to generate a reasonable return on investment.
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Innovation: The proposed export-related activity should be innovative and should help in improving the quality of the product or service.
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Technology Upgradation: The proposed export-related activity should involve technology upgradation, which can help in enhancing productivity and competitiveness.
Interest Subsidy Eligibility Certificate (ISEC) Scheme
The Interest Subsidy Eligibility Certificate (ISEC) Scheme is a government initiative aimed at providing financial assistance to MSMEs registered under the Udyam Registration by offering interest subsidies on loans availed by them for investment in plant and machinery.
Under the ISEC scheme, eligible MSMEs can avail of a 15% interest subsidy on loans up to Rs. 1 crore for investment in plant and machinery. The scheme is implemented through various financial institutions, such as public sector banks, regional rural banks, and scheduled co-operative banks.
To be eligible for the ISEC scheme, MSMEs need to have a valid Udyam Registration and fulfill certain criteria, including the following:
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Investment in Plant and Machinery: MSMEs should have made an investment in plant and machinery for the purpose of manufacturing or production of goods.
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Valid Loan: MSMEs should have availed of a valid loan from an eligible financial institution for investment in plant and machinery.
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Timely Repayment: MSMEs should have a track record of timely repayment of loans.
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Minimum Credit Rating: MSMEs should have a minimum credit rating of “C” as per the Credit Rating Scale of the Reserve Bank of India (RBI).
The ISEC scheme provides various benefits to MSMEs, including the following:
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Reduced Cost of Borrowing: MSMEs can avail of a 15% interest subsidy on loans for investment in plant and machinery, which can help in reducing the cost of borrowing.
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Improved Cash Flow: MSMEs can benefit from improved cash flow, as the interest subsidy will reduce the overall burden of loan repayment.
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Enhanced Competitiveness: By investing in plant and machinery, MSMEs can enhance their competitiveness in the market, which can help in boosting their business growth.
Incentives for MSMEs under Foreign Trade Policy (FTP)
The government provides various incentives to MSMEs under the FTP, including duty drawbacks, export incentives, and tax exemptions.The Foreign Trade Policy (FTP) of India provides various incentives and benefits to MSMEs registered under the Udyam Registration to boost their exports and enhance their competitiveness in the global market. Some of the incentives and benefits under FTP for MSMEs are as follows:
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Merchandise Exports from India Scheme (MEIS): The MEIS scheme provides export incentives to MSMEs by offering duty credit scrips of 2% to 5% on the FOB (Free on Board) value of their exports. These scrips can be used for payment of customs duty on imports or for the payment of various taxes and duties.
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Export Promotion Capital Goods (EPCG) Scheme: The EPCG scheme provides a duty exemption to MSMEs on the import of capital goods required for the production of goods for export. The scheme allows MSMEs to import capital goods at a concessional customs duty rate of 3%.
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Conclusion
MSMEs registered under the Udyam Registration can avail various incentives and benefits provided by the government under the Foreign Trade Policy of India to boost their exports and enhance their competitiveness in the global market. The incentives include duty credit scrips, duty exemptions on capital goods and inputs, financial assistance for market development, and insurance cover for export transactions.
