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INSURANCE FOR THE MSME SECTOR

If we carefully observe the Social dynamics today there is a lot of change in the thought process of the people in the lower strata of society .90% are willing to work hard and have the drive and enthusiasm to achieve. Even with a little of formal education one can establish a Micro, Small, Medium Enterprise.

One such sector is the MSME Sector which also benefits from various SOPs.

The Ministry of MSME runs various schemes aimed at financial assistance, technology assistance and up gradation, infrastructure development, skill development and training, enhancing competitiveness and market assistance of MSMEs.

Annual report 2022-23 provides the definition of Micro, Small and Medium enterprises and as per the   Micro, Small & Medium Enterprises Development (MSMED) Act, and 2006 the Micro, Small and Medium Enterprises (MSME) are classified as below:

·                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;

·                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;

·                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.

 

The new classification came into effect from 1st July, 2020.

Micro, Small and Medium Enterprises (MSME) sector accounts for almost one third of India's economy MSMEs are producing a range of products and services to meet demands of the markets. Annual Report 2022-23 figures confirm that the Micro sector is leading in rural areas and have a market share of 51% as against the Urban Sector. Details below:

Sector

Micro

Small

Medium

Total

Share%

 

 

 

 

 

 

Rural

324.09

0.78

0.01

324.88

51

Urban

306.43

2.53

0.04

309

49

All

630.52

3.31

0.05

633.88

100

 

 

 

 

 

 

 

 List of businesses that come under MSME:

  1. Leather products
  2. Moulding of products like combs, umbrella frames, plastic toys, etc.
  3. Natural fragrance and flavours
  4. Training and educational institute
  5. Energy efficient pumps
  6. Xeroxing
  7. Beauty parlour and crèches.
  8. Auto repair services, and garages.
  9. X-ray clinics
  10. Equipment rental and leasing
  11. Photographic lab
  12. Servicing of agricultural farm equipment including tractor, pump repairing, ring boring machine
  13. Back-office operation relating to computerised data
  14. STD/ISD booths
  15. Multi channels dish cable TV With dish antenna
  16. Laundry and dry cleaning
  17. Automotive electronic component products
  18. Electronic surveillance and security
  19. Mechanical engineering like steel almirahs, cocks, and valves, wire cutters, etc.
  20. Engineering and fabrication
  21. Active pharmaceutical ingredients and ayurvedic products
  22. Khadi products and hosiery products
  23. Handicraft activities like spinning, weaving, artisans
  24. Coir industry
  25. Furniture and wood products
  26. Poultry farm 

The list is exhaustive and can be accessed in the Udyam portal website for more information on the businesses considered as MSME.

Insurance cover for enterprises is essential for the growth and safety of the business.

Insurance policies for the MSME sector include:

      i.         Bharat Sookshma Udyam Suraksha is meant for enterprises with a risk value of up to Rs. 5 crores.

     ii.         Bharat Laghu Udyam Suraksha is meant for enterprises where the total value at risk is more than Rs. 5 crores and up to Rs 50 crores

   iii.         For policies exceeding 50 crores regular Fire policies may be taken.


Coverage under the Policies:

1. Fire, including due to its own fermentation, or natural heating, or spontaneous combustion.

2. Explosion or Implosion

·       Caused to boilers, economizers or other vessels, machinery or apparatus

in which steam is generated, or their contents, resulting from their own explosion or implosion,

·       Caused by centrifugal forces.

3. Lightning

4. Earthquake, volcanic eruption, or other convulsions of nature

5. Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Tsunami, Flood and Inundation –

6. Subsidence of the land on which Your Premises stand, Landslide, Rockslide

7. Bush fire, Forest fire and Jungle fire

8. Impact damage of any kind, i.e., damage caused by impact

9. Missile testing operations 

10. Riot, Strikes, Malicious Damages

11. Acts of terrorism

12. Bursting or overflowing of water tanks, apparatus and pipes, -

13. Leakage from automatic sprinkler installations.

14. Theft within 7 days from the occurrence of and caused by any of the above Insured perils.

 

Income Tax Exemption:

 

MSMEs with a turnover of up to Rs. 250 crores are eligible for an income tax exemption under Section 80J of the Income Tax Act. Proper Insurance cover is available to combat unforeseen loss and damage as detailed above.

We at Zen Insurance assist in choosing the right Insurance cover to suit your needs and budget. Plan your Insurance Program wisely and contact us for assistance.

 Disclaimer:   

Zen Insurance is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products

 

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