What is ZED Certification: A Complete Guide for MSMEs

In the last few years, India’s MSME sector has witnessed unprecedented growth. There has been a significant increase in the number of businesses that fall under the category of micro, small, or medium enterprises. Together, these businesses are making a huge contribution to the country’s economy and generating employment. To encourage such businesses, the government is introducing several new initiatives and schemes. ZED certification is one such scheme that is becoming popular in the MSME sector.

Table of Content

• What is ZED Certification?
• ZED Certification Levels
• Financial Assistance & Subsidies
• Benefits
• Eligibility Criteria
• Documentation
• How to Apply?

Here is a detailed explanation of ZED certification for MSMEs, its benefits and procedure:

What is ZED Certification?

The full form of ZED is Zero Defect Zero Effect. This is a scheme launched by the Ministry of Micro, Small & Medium Enterprises to encourage businesses to embrace sustainability. In today’s time, almost every business is on the constant lookout for ways to maximise productivity with a minimum carbon footprint. For this, they are enhancing their manufacturing process using the latest tools and technologies. This results in better quality and maximised productivity with the least possible effect on the environment.

To encourage such MSMEs and incentivise them, the government is offering ZED certification. Businesses that have this certification definitely have a competitive advantage and are eligible for several other benefits.

ZED Certification Levels

There are three different levels of ZED certification based on MSME maturity: Bronze, Silver, and Gold. Before applying for any of these three certification levels, every MSME has to take a ZED pledge. This is a solemn promise made by the MSME to uphold the values of Zero Defect Zero Effect in its manufacturing practices.

Financial Assistance & Subsidies

The Indian government offers subsidies and various other incentives to MSMEs for obtaining a ZED certification. These are:

• Certification Subsidy: Micro enterprises get up to 80% subsidy on certification fees. While small enterprises get up to 60% and medium enterprises get up to 50% subsidies.
• Additional Subsidies: Women-owned, SC/ST-owned, and NER (Northeast Region) MSMEs get an additional subsidy of 10%. Similarly, DPIIT-recognised startups get an additional 5% subsidy.
• Reimbursement for Industry Certifications: ZED-certified MSMEs are eligible for reimbursement of up to ₹50,000 for ISO, BIS, and CE certifications and ₹1 lakh for energy and environmental certifications.

Benefits

Here are a few major benefits of ZED certification for MSMEs:

• Enhanced Quality: Since this scheme encourages businesses to use the latest manufacturing practices, it results in better product quality with minimised defects.
• Cost-efficiency: When a business shifts to modern technology and tools, it leads to less production wastage and helps with cost savings.
• Environmental Sustainability: Another important benefit of ZED certification is that businesses implement eco-friendly practices. This reduces overall pollution and helps in minimising carbon footprint.
• Government Incentives: ZED-certified MSMEs often get priority while applying for government tenders. Apart from this, they also become eligible for subsidised loans and financial support under various government schemes.
• Better Market Access: Products manufactured by ZED-certified businesses are able to meet international quality standards. So it increases their acceptance in global markets.

Eligibility Criteria

Any businesses registered under the MSMED Act, 2006, or with a valid Udhyam registration can apply for ZED certification. Other than this, businesses that have approval from the Additional Secretary & Development Commissioner (MSME) also qualify for ZED certification registration.

Suggested Read: Documents Required For MSME Loans in India

Documentation

Here is a list of documents required while applying for a ZED certification:

• Business Registration
• Self-Assessment Report
• Financial Statements
• Quality Management System (QMS) Documentation
• Environmental Management System (EMS) Documentation
• Energy Management System (EnMS) Documentation
• Safety Management Documentation
• Human Resource Management Documentation
• Intellectual Property Rights (IPR) Documentation
• Design Management Documentation
• Udyam Registration Number of the Enterprise

How to Apply?

The procedure to apply for a ZED certification is quick and straightforward. It includes the following steps:

• Visit the official ZED portal (https://zed.msme.gov.in/). To initiate the ZED registration, you’ll be required to enter your Udyam Registration Number (URN), PAN, and GST details.
• Select the type of certification (Bronze/Silver/Gold).
• The next step is to complete the ZED self-assessment questionnaire on quality, efficiency, and sustainability.
• Now, submit the required business documents and bank details for the subsidy.

For Silver & Gold levels, an on-site inspection will be conducted. A team of certified ZED auditors will visit the manufacturing facility for the same. Once approved, ZED certification will be granted to the business.

Are you also in the process of starting your own business and have been struggling with a lack of funds? If yes, you can consider obtaining an MSME loan. Among all the options available these days, this one definitely stands out as a popular choice. At Muthoot Finance, we offer quick and hassle-free MSME loans at highly competitive interest rates. You can explore all the schemes and apply online for an MSME loan. Or, you can also visit your nearest Muthoot Finance branch for more information.