What Legal Rights Do You Get After MSME Registration?
Registering your business as an MSME (Micro, Small, or Medium Enterprise) through the Udyam Registration portal gives you legal recognition and several important legal rights. These rights protect your business, offer financial security, and help you grow in a competitive market. If you’re wondering whether it’s worth registering for MSME (especially through udyam registration online in India), the legal advantages alone make it highly valuable.
10 key legal rights you gain after MSME registration
Here are the key legal rights you gain after MSME registration:
1. Right Against Delayed Payments
Under the MSMED Act, 2006, once your business is registered as an MSME, you get a legal right to timely payment for the goods or services you supply.
Buyers (including large companies or government bodies) must pay within 45 days of receiving the goods/services.
If payment is delayed, you are entitled to compound interest on the outstanding amount at three times the bank rate.
You can also approach the Micro and Small Enterprises Facilitation Council (MSEFC) for dispute resolution without expensive legal battles.
2. Right to File Cases in Specialized MSME Courts
After MSME registration, you get the right to take payment disputes to MSEFC, which is a quasi-judicial authority designed to resolve cases quickly and efficiently.
This reduces the burden of going to civil courts and ensures faster justice for MSMEs.
3. Priority in Government Tenders
Registered MSMEs have the legal right to priority access in public procurement processes under the Public Procurement Policy.
A minimum of 25% of total annual purchases by Central Government ministries and PSUs is reserved for MSMEs.
Of this, 4% is reserved for SC/ST entrepreneurs, and 3% for women-led MSMEs.
You also get exemption from EMD (Earnest Money Deposit) and tender fee, which can otherwise be a financial burden for small businesses.
4. Right to Collateral-Free Loans
Thanks to schemes like Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), MSME-registered units can get collateral-free loans from banks and NBFCs.
This is a major legal and financial right, especially for first-time entrepreneurs who don’t have property or assets to pledge.
5. Protection Under Various Industrial Laws
With MSME registration, your business is eligible for legal protection under multiple labor and industrial laws, including:
Payment of Wages Act
Employees Provident Fund Act
Gratuity Act
Maternity Benefit Act
This helps you run your business legally, while protecting your workers and your compliance reputation.
6. Right to Apply for Government Schemes and Subsidies
Once your MSME is registered via Udyam Aadhar Registration, you are legally eligible for several central and state government schemes such as:
CLCSS (Credit Linked Capital Subsidy Scheme)
Technology Upgradation Schemes
Skill development and quality improvement schemes
Export promotion programs
Many of these are only available to officially registered MSMEs.
7. Right to Tax and Subsidy Benefits
Your MSME registration gives you the legal right to claim:
Income tax exemptions under specific MSME categories
Subsidies on patent and trademark registration
Electricity bill concessions
Reimbursement of ISO certification expenses
These benefits help reduce your operational costs legally and improve business efficiency.
8. Right to Preference in Licensing and Approvals
MSME-registered businesses get easier access to government licenses and clearances, especially related to:
Environmental approvals
Factory licenses
Import/export licenses
This legal preference can reduce red tape and allow your business to start operations faster.
9. Right to Global Trade Support
If you’re planning to export your products or services, MSME registration gives you the right to:
Market development assistance (MDA)
Participation in global trade fairs at subsidized rates
Export credit insurance schemes
These rights legally support your journey to international markets.
10. Right to Business Continuity in Crisis
MSMEs are given legal priority for relief packages during crises, such as the COVID-19 pandemic. This includes:
Emergency credit lines
Debt restructuring
Extended loan moratoriums
These legal provisions are extended only to Udyam-registered MSMEs.
Final Words
MSME registration is not just a formality — it is your legal shield and business booster. From protecting your payments to getting priority in government schemes and tenders, the rights you gain are powerful.
If you haven’t registered yet, you can do it easily through udyam registration online. For professional help, platforms like udyamregisteration.org guide you through the entire process—making sure you claim all your legal rights as an MSME owner in India.