MSME Sustainable ZED (Zero Defect Zero Effect) Certification Scheme

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. According to a report from IBEF (Indian Brand Equity Foundation). In FY21, the loan disbursals to MSMEs stood at Rs. 9.5 trillion (US$ 128.06 billion), a 40% increase compared with Rs. 6.8 trillion (US$ 91.66 billion) in FY20.

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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Parameters for Certification

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

How can ZED Certification Benefit MSMEs?

• 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.

Subsidies for the MSME sector in ZED certification

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:

1. Women-owned MSMEs/SC/ST Entrepreneurs or MSMEs in NER/Himalayan/LWE/Island territories/aspirational districts will get an additional subsidy of 10%.
2. 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:

1. MSME applicants can use this joining reward only once when applying for a ZED Certification (Bronze, Silver, Gold).
2. 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. 
3. This joining reward will be valid only for 1 year after taking the ZED Pledge.

Registration Process for ZED

The process of registration is 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

ZED Certification Scheme includes the following Major Activities

• 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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