How to Start a New SME Business in India? Complete Guide to Launching SME Business in India.
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To start a new SME business in India, we must know about the SMEs. SME stands for small and medium-sized enterprises. These businesses come with Investment, turnover and workforce below a certain threshold in India. SMEs comprise both the manufacturing and service industries.


SME business in India plays a major role in most economics; particularly in developing countries in the world. SMEs contribute a major role play in employment creation to the country as well as global economic development.


SMEs are essential to the world economy. SME in India plays a very important role ineconomic development .It provides products and services.SMEs create value addition to the economy of a country. It drives industrialization and develops the skills of man’s powers. It creates wealth for the nations. Above all, it creates employment opportunities for the nations.


The number of SMEs in India estimated till 2021 is nearly 42.50 Million registered and unregistered together.


Definition of MSMEs:-The new definition created by the The Union Ministry of Micro, Small & Medium enterprises has been issued 


Gazette notifications with effect from 1st July 2020, that:-


1. The definition of Micro Manufacturing services units increased to Rs. 1Crore of Investment and Rs. 5Crore of turnover.


2. The limit of Small units was increased to Rs. 10 crores of Investment and Rs. 50 Crore of Turnover.


3. Similarly, the limit of Medium units was increased to Rs.50 Crore of Investment and Rs. 250crore of turnovers.

How to Start a New SME Business in India? Complete Guide to Launching SME Business in India.

Here I describe in this Blog 10 important steps to start a New SME Business in India.

1. Decide on a Business Idea by Conducting Market Research


2. Write your Business Plan in Project Report


3. Finalize the source of Funds for your new business.


4. Decide on your Business Location


5. Choose a business structure


6. Choose your New Business Name


7. Registration of your New your Business


8. Apply for License & Tax permits


9. Open a new business bank account


10. Publicize your new small business.


1. Decide on a business idea through Conduct Market Research:-

 Good market research will help for the opportunity to turn your idea into a successful business. It is a way to gather information about potential customers and old businesses, those already operating in your area. 


Use that information, which will help with the competitive advantages of your business. A large number of business ideas are available on the website. To start a new business in India, you may click here to learn more.


MSME & Make in India websites.

There are a lot of different ways to conduct market research and collect customer data. The four most common types of market research techniques include surveys, interviews, focus groups and customer observations.


2. Write your Business Plan in Project Report:-


Your new business is the plan that is the foundation of your business. Here is a roadmap for how to structure and grow your new business. Either you will convince the people that are working with you or investing the money in your company. One of the major parts of the  start of a new business in India is good Project report.


The first step is business begins with a feasibility project report. The project report of the new business should be done by the professional person or expertise person based on nature of business and funds contribution on new business.


 The project report must contain details including owner, partner, name, age, and qualifications. Attach an experience certificate relevant to the trade. This will help you get financing from Financial Instructions/Banks.


The project report must include specific details of the sale price, delivery charges, taxes and other expenses. Project expected revenue in the next 2-3 years.


It is a Business plan with a project report which describes the nature of the business, sales and marketing strategy, and financial background and contains the projected profit and loss account for the next 2-3 years.

3. Finalize the source of Funds for your new business:-

How to Start a New SME Business in India? Complete Guide to Launching SME Business in India.

Your business plan will help you figure out how much money you will need to start your business. If you do not have the amount on hand, you can raise or borrow the capital from different sources.


You will calculate the financial help needed to keep the business floating until it becomes profitable. New entrepreneurs launching micro small & medium are seeking funding from various places.


1. From: Financial Institutions / Banks


2. Co-operative credit societies


3. Community Development funds

4. Crowd funding


5. Venture Capitalist/Angel Investors


6. Funding from Personal savings


7. Loans from Family & Friends


Business funding is requiring for new business to help them lift from the ground up and run smoothly the business. This can cover costs like finding locations, building a website, hiring staff or purchasing stocks, buying machinery etc.


4. Decide on your Business Location:-


Your business location is one of the important decisions for starting your new business. Registering your small business, local municipality, and village administration is mandatory under Indian law.


Gram Panchayat will permit your small home business from the area under its jurisdiction. Utility providers will ask for municipal/village penchant registration before giving electricity and water connection to the premises.


Your location will serve as address proof for your business. Location plays an important role in attracting and retaining the best employees. Setting up a new business in a good location always significantly boost the company’s long term performance.


The location advantages you should consider are trade access, market proximity, and adjacent to the business community. If your address is located close to your target audience, you will find prospects are more inclined to buy from you, not just for convenience, and deliver your products or services to them in an easy way. Business location is  play a important role  to start and growth of the new business in India.


5. Choose a business structure:-


The legal structure of your business will impact your business registration requirements. Registering your business is lengthy and complicated in India. 

But nowadays, by the grace of our PM Narendra Modi with direct instructions to the ministry of corporate affairs of (MCA), we now register the new companies within 24-48 hours.


Almost all formalities of the new business registration are completed on the Internet. Licenses from various states and central governments are mandatory when launching small businesses or startups.


You will get all license registration of your business and startup from the MCA website; The Four ways of the Business structure are mainly followed in India. 


1. Sole proprietorship business Structure which involves one individual who is responsible for day-to-day operations of the business.


2. Partnership business-Minimum two individuals are required for partnership business.


3. Business Corporations


4. Limited Liability Companies (LLC)

How to Start a New SME Business in India? Complete Guide to Launching SME Business in India.

6. Choose your New Business Name:-

 The new business name should not be acquired by other business entities. Your business brand captures the spirit. Get a new business which will make your brand in the business world. A good business name is always important for starting a new business in India.


Always ensure that the Business Name is not copyrighted or Trademarked. Ensure that the Business Name should not be which is already taken by someone.


Here are six tips for choosing the Business Name:-


1. Follow our State Naming Guidelines.


2. Do not pick a name too similar to competitors’ names.


3. Choose a name that people can spell and pronounce.


4. Make your name web friendly


5. Be memorable but not too unique.


6. Pick a name that is consistent with your brand.


7. Registration of your New Business:-


Once you have picked the perfect name for your business, it is time to make it legal and protect your brand. You have to register the name of the business in the state government and the central government registration procedure.


The major steps are to register the name of your company or startup in INDIA.


1. Acquire Digital Signature Certificate.


2. Acquire Director Identification Number


3. Create a new registration on the MCA portal.


4. The new business should be incorporated into the Registered Company from the MCA site.


5. Filing for New user Registration


6. Acquire PAN & TAN of the company


7. Shop and Establish Licenses for Startup Registration or Trade License 

How to Start a New SME Business in India? Complete Guide to Launching SME Business in India.
Micro, Small & Medium Enterprises in India

8. Apply for License & Tax permits:-

Keep your business smoothly the Licenses are required to start your business in India. The following steps are required for the tax or license registration of your new business.



1. Company or LLP registration


2. GST Registration


3. Udyag Adhar Registration


4. FSSAI License Registration


5. Import Export code


6. Shop and Establishment Act License


7. Gumasta License


8. PF & ESI registration.


9. Open a business bank account:-


A small business checking account can help you handle the legal, tax and day-to-day working of the business. Before rushing to open a current account for your business, ask your bank for overdraft facilities to run your business smoothly. Opening a new business account is very essential for the running of a new business smoothly in India.


To open a new business bank account in India, you have the following documents with you to open a new business account at a Bank.


1. PAN card


2. Adhar Card.


3. Company Registration document


4. KYC details:-KYC is the process of verifying the identity of the customer.


5. The BEST Bank in India to open a new Bank account are State BANK OF India, Punjab National Bank, Bank of India, HDFC Bank, Axis Bank, ICICI Bank etc.



10. Publicize your new small business:-


You should publicize your business save from the cutthroat completion world. There are different steps where your business will be grown up.


1. Promote the small business using the product in the Exhibition.


2. Advertise Small Businesses with Bluetooth Beacon


3. Building a website to market small businesses


4. Set up social media profiles


5. Use Google Local Service Ads to promote Local Business


6. Upload posts and blogs related to your business.




1. Question:-How does small business help the economy?


1. Answer:-The small business brings many jobs and revenue to the local economy by offering jobs, and local products, paying sales tax and property tax and using local vendors and supporting services.


2. Question:-How much do SMEs contribute to GDP?


2. Answer:-Small businesses in India contribute almost $41.8billion to Gross Domestic Product (GDP) IN 2018-19. Small Business Accounts for 76% of value added in the agriculture, forestry and fishing sector and 74% of value added in the rental, hiring and real estate services sector.


3. Question: – What is the Growth of MSME in India?


3. Answer:-The number of MSMEs in India increased by a CAGR of 18.5% from 2019 to 2020.In FY(20-21) the loan disbursals to MSMEs stood at Rs.9.5trillion(US$128.06 BILLION) a 40% increase compared to Rs6.8 trillion ( US$91.66 billion ) in FY(19-20).



Conclusion: – SMEs provide employment and livelihood opportunities to around 80 million people in India which is 40% of all workforces. They strengthen India’s economy by contributing 45% of India’s manufacturing 



7% of SMEs are engaged in manufacturing 6000 products, and the remaining 68.2% involve in service deliveries in India. SMEs have a remarkable ability to fuel economic growth. They create many new job opportunities, drive the bandwagon of innovation and expand the tax base.


SMEs also play an important role in the political economy, helping to promote and strengthen reforms.


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I am Ajay Kumar Patra. ( & MBA-Finance) with 27years of Accounts & Taxation Experience in Large Manufacturing Units in India. In 2021 I started my own tax consultancy firm called “Ajay Tax consultant”. I started my Digital marketing on my website "".I have already published more than 100 Blogs on Business, Finance, startups, Digital marketing & Tours & Travel for my viewers.

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