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SSI STEPS & REGISTRATION

FORMALITIES
Steps For Setting Up MSME Unit
in India
1. Decide on-
– A Manufacturing Enterprise   may be :
• Micro - Investment in Plant & Machinery
Rs. 25 lakhs
• Small - Investment in Plant & Machinery
Rs. 5 Crore.
• Medium - Investment in Plant &
Machinery Rs. 10 Crore.
◦ Small Scale Service & Business Enterprises
(SSSBE), the categorization is as per:
Micro - Investment in Plant & Machinery
Rs. 10 lakhs
Small - Investment in Plant & Machinery
Rs. 2 Crore.
Medium - Investment in Plant &
Machinery Rs. 5 crore.
2.Selection of the product based on
market survey

3.Form of ownership can be - Proprietary


concern, - Partnership, - Limited
company, or   - Cooperative society
4. Location of the enterprise-
Factor determining the Location are:-
 Nearness to market and nearness to raw
materials.
 Early availability of transport facility at
cheaper rates.
 Availability of skilled workers at cheaper
rates.
 Incentives/concessions for industrially
backward areas
5. Land & Building :- Availability industrial
sheds and with minimum investment

6. Preparation of the project report :-


- Technical feasibility.
- Economic viability.
- Total cost of the project-fixed as well as
working capital.
7. Registration :-
- Whom to approach-depending upon the
location of the factory.
- Permanent and temporary registration.

8. Financing :- (for fixed assets & working


capital)
- Whom to approach - Bank, private financial
Institution, Govt. agencies, UPFC, etc.
- Types of scheme.
9. Statutory Licenses/clearances :-
e.g.:-
- Manufacture of drugs Cosmetics
- State Drug controller/Drug Control Administration.
- Manufacture of fruits and vegetable based
products (FPO)
- D.D Food, Vegetable Preservation, Ministry of
Agriculture
- Power connection
- State Electricity Board
- Pollution Control
- State Pollution Control Board and so on.
10. Purchasing of Machinery :-
- NSIC provides indigenous and imported
machinery to MSMEs on hire purchase basis.
The rate of earnest to be paid varies from 15
to 30%.

11. Recruitment of personnel


12. Installation of machinery.

13. Power connection / water supply

14. Procurement of raw materials


15. Production

16. Marketing :-
- Advertisement and publicity
- Channel of distribution
- After sales service, if required
- Feed back from customer.
17. Repayment of loans

18. Profit generation

19. Avoiding sickness


- Modernization and technology up gradation
Registration of Small Enterprises:
Registration of an existing or proposed small
scale enterprise is voluntary and not compulsory.
It has no statutory basis.
But, registration is beneficial for the enterprise
itself because it makes the unit eligible for
availing the benefits given by the Central or
State Governments.
The State Directorate or Commissioner of
Industries or District Industries Centers (DICs)
are the concerned authorities for registration of
small scale units.
This registration is both location specific
and product specific.
The registration is done in two steps:-
◦ Provisional registration and
◦ Permanent registration
Provisional registration
Initially,a provisional registration is
granted for the proposed enterprise.
It is granted for a specified period of time
during which the unit is expected to be
setup.
application forms for provisional
registration will be filled in duplicate.
◦ One copy, duly endorsed, will be given to the
applicant.
◦ The other copy will be retained by the District
Industries Centre/Registering Authority for
record.
A Provisional Registration Certificate (PRC)
enables the unit to obtain :-
(i) Term loans and working capital from
financial institutions, banks under priority
sector lending;
(ii) facilities for accommodation, land and other
approvals;
(iii) No objection certificates (NOCs) and
clearances from regulatory bodies such as
pollution control board, labor regulations, etc.
Permanent registration
Once the unit has commenced
commercial production, it is granted
permanent registration.

 It is a life time registration given after


physical inspection of the enterprise and
scrutiny of certain documents.
Some of the formalities required to be completed for
seeking permanent registration are:-
◦ Clearance from the municipal corporation

◦ State pollution control board clearance

◦ Sanction from the electricity board

◦ Ownership/tenancy rights of the premises where unit is


located

◦ Copy of partnership deed/Memorandum of articles of


association in case of a private limited company
◦ Sale bill of product manufactured

◦ Sale bill of each end product

◦ Purchase bill of each raw material

◦ Purchase bill of machinery installed

◦ BIS/QC certificate if applicable

◦ An affidavit giving status of the unit, machinery


installed, power requirement, etc.
Approvals

Exemption from Compulsory License


◦ No industrial license is required except in case of
6 product groups included in compulsory
licensing

◦ But if a small-scale unit employs less than


50/100 workers with/without power then it
would not require a license from the Govt. of
India even for the 6 product groups covered in
licensing under Schedule II of the notification.
Clearances
An entrepreneur has to obtain several
clearances or permissions depending upon the
nature of his unit and products manufactured
 Regulatory or Taxation Clearances
◦ Registration under Sales Tax Act - Commercial Tax
officer of area concerned
◦ Registration under Central Excise Act - Collector of
Central Excise or his nominee for area
◦ Payment of Income Tax - ITO of the area concerned
◦ Registration of Partnership deed - Inspector General
of area concerned
◦ Calibration of weights & measures - Weights and
Measures Inspector of State
◦ Power Connection - Designated Officer of State
Electricity Board
◦ Employee strength exceeding 10 with power connection
or 20 without power - Chief Inspector of Factories
 Environment & Pollution Related Clearances:
Except for 17 critically polluting sectors given
below, in all other cases MSMEs will merely have
to file an application and obtain an
acknowledgement
o Sugar
o Fertilizer (Nitrogen/Phosphate)
o Cement
o Fermentation & Distillery
o Aluminum
o Petrochemicals
o Thermal Power
o Oil refinery
o Sulphuric Acid
o Tanneries
o Copper smelter
o Zinc smelter
o Iron & Steel
o Pulp & Paper
o Dye and Dye intermediates
o Pesticides manufacturing and formulation
o Basic Drugs and Pharmaceuticals
 Product Specific Clearances
o Establishing a Printing Press - District Magistrate
o License for Cold Storage Construction - Designated
Official in State
o Pesticides - Central/State Agricultural Department -
Ministry of Agriculture
o Drugs and Pharmaceuticals - Drug license from State
Drug Controller
o Safety Matches/ Fireworks - License under Explosives
Act from Directorate of Explosives, Nagpur
o Household Electrical Appliances - License from
Bureau of Indian Standards
o Wood Working Industry within 8 km from forest -
District Forest Officer

o Milk Processing & Milk products manufacturing


units - Approval under Milk and Milk Products
Order from State Agricultural/ Food Processing
Industries Department above a designated
capacity.

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