Why Indian businesses want to remain small
Units falling under SME and MSME are eligible for various tax sops and there are various government-run schemes that help them find business opportunities.
Owning a small business enterprise is a boon from various perspectives. First and foremost, these business entities are eligible for various tax sops and there are various government-run schemes that help them find new business. To handle the affairs of small and medium-sized enterprises, there is a dedicated ministry. Schemes like Udyog Aadgar memorandum, zero defect for zero effect schemes for exporters in SME and MSME segment, credit-linked capital subsidy schemes, etc. have been designed only for the small business'.
Therefore, when an SME's business flourishes and started going beyond the given upper threshold of their size, they split their company and float another company. According to the SME and MSME experts, they do this to avoid excise duty, which is exempted from the units falling under the small business category. The small unit owners do this to continue the subsidy and tax sops they are getting as a small business unit.
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Zero Defect Zero Effect
For SMEs dealing in export business, the Government of India has introduced Zero Defect Zero Effect scheme in which, goods that are manufactured for export have to adhere to a certain standard so that they are not rejected or sent back to India. To achieve this the government has launched this scheme. In this, if the goods are exported these are eligible for some rebates and concessions.
Having an Aadhaar number can be beneficial for units falling under SME or MSME category because there is Udyog Aadhaar scheme that aims to benefit small enterprises. Aadhaar card is a 12 digit number given to all individuals by the government. In this, the Aadhaar card is a mandatory requirement. The benefit of registering in this scheme is ease in availing credit, loans, and subsidies from the government. Registration can be done both ways in the online mode or offline mode.
Credit Linked Capital Subsidy Scheme
There is Credit Linked Capital Subsidy Scheme for SMEs and MSMEs. Under this scheme, new technology is provided to the business owners to replace their old and obsolete technology. The capital subsidy is given to the business to upgrade and have better means to do their business. These small, micro and medium enterprises can directly approach the banks for these subsidies.
There are schemes for Women Entrepreneurship also. This scheme is especially started for women who want to start their own business. The government provides capital, counseling, training and delivery techniques to these women so that they manage their business and expand it. The government has launched a number of more schemes and support system for these enterprises, to know more about the MSME schemes the following link of the government can be checked.
So, being a small business is beneficial in India and owners of the small units are well aware of this.
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