MSMEs (Micro, Small and Medium Enterprises) are a significant contributor to the country’s socioeconomic development. In India, the sector has gained major importance due to its contribution to the Gross Domestic Product (GDP) of the country and exports. The sector has also contributed immensely with respect to entrepreneurship development, especially in semi-urban and rural areas of India.
Economic activity has intensified, leading to a 29% rise in commercial loan demand in the Jul-Sep 2023 quarter compared to the same period in 2022. MSME credit demand at NBFCs, making up 14% of total credit demand, experienced the most significant growth, increasing by 39% during this period. However, as per with a growth rate of 7.3% in FY23, India is positioned for robust expansion in FY24.
What is ZED Certification?
The Indian government introduced Zero Defect Zero Effect (ZED) Certification to ensure that the goods produced in the nation go through a seamless manufacturing process that yields products with “zero flaws” and a production method that has “zero impact” on the environment providing sustainable development. It helps MSME manufacturers scale up their businesses and maximise production output with reduced wastage.
ZED planning is mainly to promote two things that are “National Quality Mission ” and “Make in India” products and processes to ensure continuous improvement. More than 23,000 MSME businesses have already applied for ZED certification.
The Ministry of MSME launched the ZED scheme in 2016 for the manufacturing, and service sectors. The scheme includes a ZED maturity assessment model where the enterprises continuously strive to improve the business process in order to move up the model from Bronze, Silver, and Gold.
ZED mainly accounts for productivity, implementation of quality tools and manufacturing systems, increase in energy, financial efficiency, and improved human resource and technological depth including design and intellectual property rights in both products and processes. It also motivates MSMEs to upgrade their quality standards for products and processes on a regular basis.
ZED Certification Eligibility Criteria
All MSMEs registered with the UDYAM registration portal will be eligible to apply for ZED certification and avail of benefits related to it.
ZED Certification Ratings and their Parameters
ZED Certification scheme has 3 rating levels – Bronze, silver, and Gold. MSMEs can apply for the certification level after registering and taking the pledge, depending on the quality of their manufacturing process. The certification will be given on the basis of a rating between 1 to 5 in the following manner.
- Bronze: Rating of 2.2 to 2.5.
- Silver: Rating of 2.5 to 3.5.
- Gold: Rating of 3.0 to 3.5.
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Essential Parameters for Certification
Understanding what a ZED Certificate is crucial for businesses aiming to enhance their quality and sustainability standards. To learn how to get a ZED certificate not only strengthens their credibility but also streamlines operational efficiency, fostering sustainable business practices.
5 Parameters for Getting Bronze Certification
To obtain Bronze Certification, an MSME has to meet the following requirements:-
- Leadership
- Swachh Workplace
- Workplace (Occupational) Safety
- Measurement of Timely Delivery
- Quality Management
14 Parameters for Getting Silver Certification
To obtain Silver Certification, an MSME has to meet the following requirements:
- All the 5 above
- Human Resource Management
- Daily Works Management
- Planned Maintenance & Calibration
- Process Control
- Product Quality & Safety (Testing/Certification)
- Material Management
- Energy Management
- Environment Management
20 Parameters for Getting Gold Certification
To obtain Gold Certification, an MSME has to meet the following requirements:
- All the 14 above
- Supply Chain Management
- Risk Management
- Waste Management (Muda, Mura, Muri)
- Technology Selection & Upgradation
- Natural Resource Conservation
- Corporate Social Responsibility
Advantages of ZED Certification for MSMEs
The ZED certificate benefits MSMEs by enhancing their product quality, reducing defects, and promoting sustainable practices. With a ZED certificate, MSMEs can improve their market credibility, attract more customers, and access better financing options. The ZED certificate for MSMEs scheme helps to become more competitive both domestically and internationally by adhering to high standards of quality and environmental management.
These are the following advantages:
- ZED certification scheme helps in enhancing the quality of the product, resulting in the reduction of product rejection, especially for MSME exports.
- Promotes the upgradation of technology and tools, increasing the productivity of the business.
- MSMEs are provided with a chance to learn new methods of production and management.
- The Ministry of MSMEs conducts industry awareness programs and workshops to help small businesses understand this scheme.
- Helps to develop a Zero Defect manufacturing environment for the MSMEs.
- The Zero Effect vision protects the environment by creating awareness about sustainability.
- This initiative has increased the quality of products/processes and revenue for the MSME sector.
Government Subsidies for MSMEs in ZED Certification
The ZED certificate scheme promotes high-quality, sustainable manufacturing practices. To understand how to get a ZED certificate, MSMEs must apply through the ZED portal, undergo a detailed assessment, and meet the required standards. This process helps businesses improve their operations, reduce defects, and enhance environmental sustainability, boosting their market competitiveness.
MSMEs will get financial assistance/subsidy for obtaining a ZED Certification Level. The government has provided the following subsidies on the cost of certification under this scheme:
- Micro enterprises: 80%
- Small enterprises: 60%
- Medium enterprises: 50%
Additional Subsidy:
- Women-owned MSMEs/SC/ST Entrepreneurs or MSMEs in NER/Himalayan/LWE/Island territories/aspirational districts will get an additional subsidy of 10%.
- In addition to the above, there will be a 5% additional subsidy for MSMEs, which are also a part of the SFURTI OR Micro & Small Enterprises – Cluster Development Programme (MSE-CDP) of the Ministry.
MSMEs can upgrade their Certification Level at any time before the validity of their existing ZED Certification expires. The cost and subsidy will be the same for the applied Level.
A limited-purpose joining reward of Rs. 10,000/- will be provided to each MSME once they take the ZED Pledge. This needs to be used within a defined time period for the purpose as per the following modalities:
- MSME applicants can use this joining reward only once when applying for a ZED Certification (Bronze, Silver, Gold).
- If an MSME uses the joining reward for any of the three Certifications, the cost of the reward will be first deducted from the Certification cost, and then the Subsidy may apply if it is applicable.
- This joining reward will be valid only for 1 year after taking the ZED Pledge.
ZED Registration Process: A Step-by-Step Guide
The ZED certificate process involves several steps to ensure compliance with high-quality and sustainability standards. To understand how to get a ZED certificate, MSMEs must first apply through the official ZED portal, undergo a thorough assessment, and further steps. Achieving this certification enhances business credibility and competitiveness.
Here’s a step-by-step guide on the registration process as follows
- The registration can be done using either the web or mobile phone by entering zed.msme.gov.in
- MSMEs can register free of cost using a valid phone number and email
- Provide a valid UDYAM Registration number for verification purposes
- This is followed by the desktop assessment to choose the Plant Location and associated Plant activity
- Provide valid Email ID and confirm Email ID
- Further ZED pledge is taken and lastly, the ZED certificate will be sent to the registered Email ID. Also, this Email ID will be used for all future communication.
Why do you need to take a ZED pledge?
The intent of taking a pledge is to take a “pre-commitment” or a solemn promise by MSMEs to uphold the values of Zero Defect Zero Effect in their practices and to urge them to move ahead on the journey of ZED.
“We undertake to conform to the values of Zero Defect Zero Effect in our enterprise and ensure that our processes shall be environmentally sound and socially responsible with safe and high-quality products. We will give back, in every way we can, to our people, our community and to our plant.” – ZED Pledge
Key Components of the ZED Certification Scheme
A ZED certificate is awarded to companies committed to producing high-quality products with minimal environmental impact. The ZED certificate scheme promotes best practices in manufacturing and sustainability, making businesses more competitive. To get a ZED certificate, MSMEs must apply through the ZED certificate scheme portal, undergo an assessment, and meet the required quality and sustainability standards.
Let’s look into what are the major activities included in the ZED certification scheme as follows:
- Training and Awareness
- Under the ZED Certification scheme, eight activities have been planned.
- Programs related to industry awareness.
- Workshops at regional, state and national levels
- Onsite training for enterprise capacity building for industrially backward and remote areas
- Training of officials of MSME- DIs, MSME-Testing Centre, Technology Centres, IPFC, etc.
- Consultants training, assessors training & master trainers training.
- International benchmarking, foreign travels, international training relating to ZED, including QMS, QTT and productivity etc
Conclusion
MSMEs will get an opportunity to benchmark their systems and processes to learn the best practices across the globe. This also enhances global competitiveness giving visibility and brand recognition. ZED certification will encourage MSMEs to improve their performance and ease the business process with a reduction in defects and negative impact on the environment.
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FAQs
1. Are there case studies of MSMEs benefiting from ZED Certification?
Yes, many case studies show that MSMEs with ZED Certification have improved product quality, reduced defects, and enhanced their market competitiveness.
2. How does ZED Certification align with international standards?
ZED Certification aligns with international standards by promoting best practices in quality management and sustainability, making MSMEs globally competitive.
3. What sustainable practices can MSMEs implement for ZED Certification?
MSMEs can implement practices such as efficient energy use, waste reduction, eco-friendly materials, and sustainable manufacturing processes to qualify for ZED Certification.
4. How long does the ZED Certification process typically take?
The ZED Certification process typically takes a few months, depending on the company’s preparedness and adherence to required standards.
5. Is ZED Certification mandatory for MSMEs?
No, ZED Certification is not mandatory for MSMEs, but it is highly recommended for improving quality and sustainability.
6. How can ZED Certification contribute to the long-term success of an MSME?
ZED Certification contributes to long-term success by enhancing product quality, operational efficiency, and market credibility, leading to sustained growth.
7. Can ZED Certification help MSMEs attract investors or secure funding?
Yes, ZED Certification can help MSMEs attract investors and secure funding by demonstrating a commitment to quality and sustainable practices.
