Your Guide to FSSAI Registration

The Food Safety and Standards Authority (FSSAI) is an autonomous body established under the Ministry of Health & Family Welfare, Government of India. The FSSAI is responsible for advocating and protecting public health by ensuring implementation of food safety standards on a state level.

FSSAI works with the aim to:

  • lay down the standard norms for food articles based on scientific facts
  • maintain and standardise the manufacturing processes, storage, distribution, import of food as per the framework of the Food Safety and Standard Act, 2006
  • ensure that the food distributed to the masses is safe and qualitative, and all eateries are certified by FSSAI

FSSAI Registration of Food Establishments

All food establishments must follow FSSAI standards in order to obtain FSSAI license, that is a proof and permission of being a legal distributor of cooked or processed foods sold commercially. In order to acquire the license, any food and culinary setup must apply for FSSAI registration.

Steps for FSSAI Registration

Step 1: Visit the FSSAI website – http://foodlicensing.fssai.gov.in. Check your eligibility criteria based on your business turnover.

If your turnover is:

  • up to 12 lakh – you are eligible for a basic license
  • up to 20 crore – you are eligible for a state license
  • over 20 crores – you are eligible for a central license

Step 2: Once you have identified which license you are eligible for, create an account by filling the required information along with a valid phone number and email address.

Step 3: You will receive an SMS or Email confirmation once your account has been created. Log in to start the registration process by clicking here: https://foodlicensing.fssai.gov.in/index.aspx.

Please note:

  • Your account will be valid for 30 days only, post which it will be automatically deactivated. You must register for the FSSAI license within 30 days of account creation.
  • Complete the registration in one go. If left incomplete, you will be required to start the process all over again.

Step 4: Save the form and take its print. Then, submit.

Step 5: Once submitted, you will receive a reference number. Save it, as it will come handy while tracking the progress of your FSSAI license registration.

Step 6: Submit the printed application form to the regional or state authority along with all the supportive documents within 15 days from the day of online submission.

Benefits of FSSAI Registration

  • Increased consumer trust: Customers have become more alert about the quality of food they consume and aware about their food choices. They have started taking food safety standards seriously. Having the FSSAI license can build trust among your customers and also help increase your customer base.
  • FSSAI logo advantage: The FSSAI logo is seen as a mark of validity and reassures customers that the food they are consuming is of superior quality. Once you receive the licence, you are free to display the FSSAI logo on your products. This gives your brand a better stand over food operators who don’t have accreditation from FSSAI, thereby helping you build your brand image.   
  • Assistance in business expansion: The FSSAI license can assist you in establishing your name and eligibility while heading in a new direction, thereby making it easier for you to apply for business expansion loans, whenever the need arises.

4 Ways to Optimise Working Capital of Your Small Business

Do you have plans to expand your business? To put those plans into action, you would need a steady flow of working capital. But what is working capital and how can it be optimised for smooth functioning of your business? Read on to know!

What is Working Capital?

Working Capital is the measure of a company’s liquidity, efficiency and overall health. It takes into account cash, assets, inventory, accounts receivable and payable, debts due within one year, cost of hiring and training new staff. Simply put, working capital is money available to a company for everyday operations at any given point of time in a year.

If a company is not able to maintain a steady flow of operating capital, the business is at risk. The business is likely to face hardships in attracting investors, ensuring smooth flow of day to day operations and consistent growth. On the other hand, if a company is financially healthy and operating capital flow is maintained, it is an indicator that the company is efficient and growing. Therefore, it becomes vital to closely monitor your working capital.

The primary aim of optimising a company’s working capital is to ascertain that enough cash is maintained for daily operations. Since working capital measures the efficiency and short-term financial health of a company, it is of utmost importance for small business owners to have positive working capital for operating successfully.

Here are some ways in which a small business can optimise its working capital:

1. Keep Your Inventory In-check: Inventory planning is a significant factor in avoiding negative effect on revenue. Maintain just the right amount of inventory as overstocking can shoot up your costs. Keep a close tab on your stock and optimise it so that it doesn’t become obsolete over time. It will ultimately assist you in building the running capital for your small business.

2. Speed-up Your Collection Process: Set clear terms of payments, offer multiple payment options and stay on top of your bills receivables. You can also incentivise customers who pay on time. Identifying defaulters early and taking action will prevent your receivables from turning into bad debts. Avoid transacting with customers who have a history of defaulting.

3. Choose Vendors Wisely: Discounts from vendors will help save money which can be utilised in your everyday operations. Additionally, maintain a good relationship with them as it helps in receiving some leniency when your company is going through a cash flow crunch.

4. Take Advantage of Tax Incentives: Tax incentives from the government, such as a 3-year tax holiday in a block of 7 years, can help you save money which can then be routed into the working capital fund.

For your business to thrive, use the techniques above, along with timely analysis of your fixed and variable costs to cut down unnecessary expenses, and have a clear picture of your company’s financial position at all times. Doing so will provide you with opportunities for improving your cash flow.

6 Government of India Initiatives that Every Textile Entrepreneur Should Know About

Textile is one of India’s largest industries and the second largest in terms of employment – generating jobs for more than 45 million people in the country1. To enhance employment, exports, and to open doors to foreign investments, the Government of India is working towards improving machines and facilities for skill enhancement.

6 such initiatives to support the steady growth of the textile sector are:

1. Amended Technology Upgradation Funds Scheme (ATUFS)

Under this scheme, the government is providing credit linked capital investment subsidy to facilitate technology upgradation in micro and small enterprises. This is expected to lead to enhanced productivity, quality, employment, exports and import substitution in the textile industry.

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2. PowerTex India Scheme

Launched for the development of the power loom sector with an emphasis on knitting and knitwear, this scheme focuses on improving the existing infrastructure and encouraging modernisation in the power loom sector. Additionally, it aims to improve the quality and productivity of fabrics to survive competition in domestic and international markets.

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3. SAMARTH – Scheme for Capacity Building in the Textile Sector

There are many opportunities in the textile sector but there is a shortage of skilled workers. To address this, the Central government of India has launched a scheme for capacity building. The objective of this is to provide demand-driven, placement-oriented training to create opportunities in the organised textile sector and to promote skill upgradation in the traditional sectors.

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4. Silk Samagra – Integrated Silk Development Scheme

Initiated by The Central Silk Board, this scheme aims to maintain and strengthen Sericulture activities in India. This board carries out commercial seed production, certification and capacity building apart from implementing developmental programs in coordination with State Sericulture Departments. The emphasis is on enhancing the Silk industry in India by focusing on improving the quality and productivity of domestic silk and to reduce the country’s reliance on imported silk.

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5. North Eastern Region Textile Promotion Scheme (NERTPS)

This scheme aims to promote and enhance the textile sector, horticulture, handlooms, small-scale power loom and handicrafts among the North Eastern states (Assam, Manipur, Tripura, Sikkim, Nagaland, Meghalaya and Arunachal Pradesh). The scheme is designed to help the textile industry produce better quality at large scale, contribute to India’s GDP, boost exports and preserve the region’s cultural heritage. Under this scheme, financial, infrastructure and technical support is provided for all types of materials, including jute, silk, cotton, wool.

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6. Comprehensive Handicrafts Cluster Development Scheme (CHCDS)

This scheme aims at benefitting poor artisans located in far flung areas of the country and raising their standard of living by generating employment opportunities. To make this happen, artisans and entrepreneurs are assisted in setting up improved units with modern infrastructure, latest technology and provided adequate training.

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Source: 1 Indian Textiles Industry Report 2019: https://www.ibef.org/industry/textiles.aspx

Budget 2020 Proposals: New IT slabs, Increased FPI limit, DDT gone

Budget FY 2020–21 was presented against the backdrop of consistent weak growth for the last 8 consecutive quarters wherein the GDP growth rate has persistently dipped. Concerns leading to subdued spirits in the economy have not been limited to a single sector. Moreover, the tax collections for FY 2019–20 from corporate tax, income tax, GST, etc. have been the weakest in a decade. So, the overarching pressure is to contain fiscal deficit, which is spiralling to 3.8% of GDP for FY21. Given this, the space for spending for FY21 is rather limited.

This year’s budget, therefore, focuses on opening up capital markets and making some changes to the tax structure. With regards to this, a few key proposals made by the Finance Minister are:

  • Increased FPI limit for corporate bonds: To promote greater participation by the Foreign Portfolio Investors (FPI), the Government proposed to increase the investment limit for them from 9% to 15% of outstanding stock of the corporate bonds.
  • Abolition of DDT in the hands of the company: Dividend Distribution Tax (DDT) has been removed from the companies and moved into the hands of recipients. Currently, as per section 115o of the Income Tax Act, an additional tax of 15% (plus surcharge and cess) is required to be paid on any amount declared, distributed or paid as a dividend by domestic companies. Such dividend income is exempt under section 10(34) of the Act in the hands of the shareholders.
  • Significant changes in the income tax structure: While tax rate has been cut in lower income slabs up to ₹15 lakh, standard deductions have been taken away in a bid to simplify the tax structure. As per the finance minister, this will result in ₹400bn of tax revenues being given up. Further, increasing the deposit insurance from ₹0.1mn to ₹0.5mn is a step towards protecting the small saver.
  • SWF investments in infrastructure: 100% tax exemption on income on investments (dividend, interest, capital gains) in the infrastructure sector by Sovereign Wealth Funds (SWF) was proposed in the Union Budget. This is likely to boost the infrastructure sector by facilitating the much-needed capital.

Union Budget 2020: What’s in it for MSMEs?

Finance Minister Nirmala Sitharaman presented the Union Budget 2020 in Parliament on Feb 1, 2020 and announced several schemes and measures for the benefit of micro, small and medium enterprises (MSMEs). She stated that the MSME sector is of utmost significance to keep the economy running smoothly.

Measures for MSMEs:

  • Audit turnover threshold increased to ₹5 Cr
  • National Logistics Policy to be implemented
  • ₹900 Cr debt-funding for MSMEs allocated
  • App-based invoice financing loans product to be launched
  • ₹2.83 lakh crores allocated for agro and allied sectors
  • Nirvik Scheme announced for higher insurance cover for exports and tax disbursement
  • Intellectual property creation and protection process to be streamlined

Increased audit threshold: The turnover threshold for audit has been increased from the ₹1 to ₹5 crores for small retailers and traders who form the majority of the MSME sector. This is applicable only to those businesses who carry out less than 5% of their transactions in cash in order to encourage a less cash economy.

National Logistics Policy: The soon-to-be-launched National Logistics Policy will aim to create a single window e-logistics market to make MSMEs more competitive. This scheme will have a four-year implementation period with a budget of ₹1480 crore.

Debt funding and GST: Sitharaman asked banks to extend restructuring MSME NPAs till March 2021. She mentioned that over five lakh MSMEs have benefitted from debt restructuring and allocated ₹900 crore debt-funding to the MSME sector in this Union Budget. With respect to GST, a simplified return format is being introduced from April 2020 onwards.

App-based invoice finance: To avoid issues of delay in payments and substantial cash flow mismatches for the MSMEs, amendments to the Factoring Regulation Act 2011 were proposed. As per this, NBFCs will be able to offer invoice financing to MSMEs through Trade Receivables Discounting System (TReDS) via an app.

Agro and allied sectors: ₹2.83 lakh crores were allocated for agro and allied sectors including irrigation, rural development, and Panchayati Raj in the Union Budget 2020. Close to 35 lakh farmers will be helped by setting up of solar pumps in order to make their barren lands productive. The finance minister also committed an additional 152 million metric tonnes of warehousing facilities.

Nirvik Scheme for exporters: The Nirvik Scheme is designed to provide higher insurance cover, reduce the premium for small exporters, and to simplify the procedure for claim settlements. This scheme will also facilitate export tax disbursement which will make loans easily accessible for exporters. Under this scheme, the insurance guaranteed could cover up to 90% of the principal and interest of loans, along with pre- and post-shipment credit.

Digital platform for Intellectual Property Rights (IPR): For seamless application and capture of Intellectual Property Rights (IPR), a digital platform will be setup. As per the Finance Minister, it will help solve the complexities, and contribute to modernisation in the field of intellectual property.

SOLV Dictionary #1: 5 Business Finance Terms You Need To Know

Running a business means being on a constant learning spree. Whether you are just starting out on your entrepreneurial journey or you are a seasoned small business owner looking to expand, the need for continuous learning is universal. No matter what stage you are at, there will be new tools to explore, problems to solve and vocabulary to understand.

The good part is that you don’t have to be a financial whiz to understand the world of business finance. Here are some key business finance terms and definitions, that you will find useful as a business owner. 

1. Goods & Service Taxpayer Identification Number (GSTIN)

Taxpayer Identification Number (TIN) is a unique 11-digit number assigned to any business for it to be easily identified by the commercial tax department of the state. TIN registration was mandatory for all manufacturers, traders, exporters, and dealers. After the implementation of GST on July 1, 2017, TIN is now replaced with a 15-digit GSTIN (Goods and Services Tax Identification Number).

2. Collateral

Any asset that is pledged as security while taking a loan is called collateral. Lenders often require it to be sure that they won’t lose their money in case the business defaults on the loan. If a business fails to meet the requirements of the loan, the pledged asset can be seized by the lender. The collateral can be a fixed asset (property), moveable (vehicle) or general charge (stocks & receivables). Based on the value of the loan, banks may ask for multiple types of collaterals (general charge + fixed assets). In the case of multiple lenders, banks or financial institutions may ask for Pari Pasu, that is, equitable charge over the same asset, or exclusive/first charge over a certain asset.

3. Unsecured Loans

Loans that are not backed by any asset/collateral are called unsecured loans. Since these loans present a greater risk for the lender in comparison to secured loans, there’s a higher interest rate involved. These loans are usually of lower ticket size or lower amount.

Banks, at times, provide larger loans without any security to large enterprises based on their repayment capacity and established cash flows.

Of late, partially secured loans have started making an impact in the market. Herein, the financial institutions ask for collateral of a value lower than the loan value. Such loans also need to be supported by the repayment capacity and established cash flows.

4. CIBIL Score/Bureau Score

A summary of an individual’s credit history derived using the Credit Information Report (repayment history of loans over a period) is called the CIBIL score.

CIBIL Score is a 3-digit number ranging from 300–900; a higher score signifies a stronger credit profile. This score is the primary screening filter used by financial institutions while reviewing a loan application. A lower score is usually a sign of delay or non-payment of obligations towards the lending institutions. A delay in credit card payment, non-payment of housing loan EMI for more than 90 days, default on loan by a borrower where you were a guarantor can also affect the CIBIL score adversely.

This score is enabled by RBI norms where all the financial institutions are mandated to share the credit history of all their customers with all the bureaus. While CIBIL is the oldest bureau in India, there are other bureaus as well, namely, Experian, CRIF, and Equifax.

5. Invoice Financing

A way for a business to borrow based on the transaction. Under this, the bank disburses the borrowing amount equal to the value of the invoice. In some cases, banks pay the invoice amount directly to the seller. The repayment period/tenure of this is usually linked to the working capital cycle of the business. This product works as a limit, wherein the limit gets reinstated to full with every repayment.

Invoice Financing

7 Government of India Schemes to Empower Women

The small and medium enterprise sector in India contributes to over 45% of India’s industrial output, forming 40% of the GDP output1. A small part of this output is also contributed by women entrepreneurs.

According to the Sixth Economic Census released by the Ministry of Statistics and Programme Implementation in July 2018, women constitute only 14% of total entrepreneurs in India – that is, 8.05 million out of the total 58.5 million. The reason for this low percentage is that women face a lot of social stigma when it comes to starting a business.

Also, at the lower end of the economic strata, women are raised with an expectation to pursue household duties and denied requisite educational and networking opportunities critical for starting a business. In addition, there are other challenges faced by women entrepreneurs in India, such as:

  • Safety and security: Entrepreneurship involves working odd hours and travelling to remote places women therefore tend to be more wary of pursuing opportunities in the face of risks to one’s personal safety and security.
  • Personal commitments: Women are often responsible for managing the household, in addition to running a business, and this puts them in a difficult position when it comes to devoting time for growing the business.
  • Assertive peer behaviour: Women entrepreneurs tend to face aggressive behaviour of peers and this proves detrimental to a woman trying to succeed as an entrepreneur.

Several of these challenges will take time and societal shifts to fix. However, the good news, is that there are areas like financial services and training initiatives that can provide much needed impetus to women entrepreneurs.

Business Loans for Women

Not so long ago, women entrepreneurs found it hard to get finance for their business due to prevailing social assumptions. But with the advent of fintech platforms, new doors to opportunities have opened for aspiring women entrepreneurs. These platforms have enabled self-employment for women in both urban and rural India.

Benefits of Business Loans for Women

Business loans help women entrepreneurs streamline business operations, production processes, eliminate cash-flow disruptions and expand to new markets. It also empowers Indian women to challenge social norms and become economically independent. And with economic independence comes social value and financial growth. 

Financial growth also tends to attract investors and partnerships for a business enterprise, thereby enabling a future full of exciting opportunities. This infuses confidence to interact with fellow business owners and work with big clients.

With the right kind of financial help women can:

  • Put their plans into action by grabbing opportunities that come their way
  • Be their own boss by retaining control of their enterprise and keeping the valuable assets protected
  • Reduce cash-flow risks by bringing order to the working capital fund
  • Build credibility and goodwill for business

Government Schemes for Developing Women Entrepreneurship

A big part of setting up a business is making capital available. And to help aspiring women entrepreneurs realise their dream, the Government of India offers several schemes. A brief summary of 7 such schemes is presented below:

1. Shringaar and Annapurna

Bhartiya Mahila Bank (now a part of the State Bank of India) offers several loans namely, Shringraar (for beauty salons, spas), Annapurna (for food catering business), Parvarish (for day care centres) and Kitchen Modernisation Loan (for maintaining and upgrading the kitchen). The more popular ones being Shringaar and Annapurna:

  • Women between the age of 20 to 60 years are eligible to apply for collateral-free loan under these schemes
  • For the Shringaar loan scheme, the maximum loan amount offered is up to Rs 10 Lakhs and for the Annapurna scheme it is up to Rs. 50,000.
  • For the Shringaar scheme, the loan tenure is 7 years and for the Annapurna scheme the tenure is 3 years
  • Shringaar scheme partners with Naturals, Cavin Kare and Lakme

2. Stree Shakti

Introduced by the State Bank of India during 2000-01, this scheme caters to women who own businesses. It offers collateral free loans of up to Rs. 5 lakhs.

  • To avail this loan, women need to own at least 51% of the business
  • Any woman can avail a loan of up to Rs. 50 lakhs
  • The tenure changes basis the loan amount

3. Orient Mahila Vikas Yojana Scheme

Launched by Oriental Bank of Commerce, Orient Mahila Vikas Yojana offers loans to women for starting a business on their property. This is a collateral-free loan ranging between Rs. 10 to 25 lakhs.

  • This loan is offered to women who hold a 51% share capital of their property
  • The loan has to be repaid within 7 years

4. Dena Shakti Scheme

Dena Bank’s Shakti Scheme is for women entrepreneurs who need financial assistance in the field of agriculture, manufacturing and other small businesses. Herein, loans of up to Rs. 20 Lakhs are sanctioned for education, housing or retail trading and loans of up to Rs 50,000 are offered under the category of micro credit.

  • Women entrepreneurs with more than 50% ownership of a business can apply for the Dena Shakti Scheme
  • The repayment tenure is flexible, lasting up to 10 years

5. Udyogini Scheme

This loan scheme launched by Punjab and Sindh Bank is for women in the field of agriculture and other small businesses. The maximum loan amount is Rs. 1 lakh depending upon the family income.

  • The loan is available to women between 18 to 45 years of age
  • For widowed, destitute or disabled women, and women belonging to the SC/ST category, a subsidy of 30% of the loan is provided; for women belonging to the general category, a subsidy of 20% of the loan is provided
  • Loan repayment tenure varies based on the loan amount

6. Cent Kalyani Scheme

Launched by Central Bank of India, this loan scheme is ideal for women managing SMEs, involved in agricultural work or engaged in retail trading. Under this scheme, loans of up to Rs. 1 crore are sanctioned so as to promote sustainable employment opportunities for Indian women.

  • No collateral or guarantors are required
  • Loan repayment tenure is up to 7 years

7. Mahila Udyam Nidhi Scheme

Launched by Punjab National Bank, this scheme helps women set up new projects. Under this scheme, different plans are offered for the purchase of auto-rickshaws, beauty parlours, day care centres, etc. Loans of up to Rs. 10 Lakhs are sanctioned.

  • Repayment tenure is up to 10 years

Source: 1 MSME Annual Report, 2017-18

What are Unsecured Business Loans?

An unsecured business loan may be used for various business purposes like business expansion, to meet working capital needs, buying land or property, purchasing plant or machinery, hiring staff, training employees, purchasing raw materials, enhancing stocks and inventory, etc.

It’s a fast and easy source of raising business finance and is a great alternative to traditional business loans/secured loans which are associated with:

  1. time-consuming processes
  2. collateral or security from the borrower

Most of the times, small business owners do not have assets to pledge as collateral, and such situations call for unsecured business loans or collateral-free loans. A business owner can procure funds without having to worry about pledging any asset.

Unsecured loans help businesses finance their growth over time. Such financing is especially valuable to small businesses as it can cater to sudden needs of the business without a long-term commitment to the Lender.

Business Loans vs Overdraft

Categories Business Loan Overdraft
DefinitionFixed loan amount borrowed for a definite period of time, against collateral (if secured loan) and to be repaid with interest rate in the form of EMIsAmount can be withdrawn even if the bank account balance of the borrower is zero or below
Loan TypeBorrowed CapitalCredit Line
Interest Rate ChargedOn sanctioned loan amountOn overdrawn amount
Availed AsLong-term LoanShort-term funds
Repayment TypeIn the form of EMIsFrom bank deposits
Interest Rate CalculationMonthly BasisDaily Basis
Loan Amount or Borrowed FundsDepends on business requirements, applicant’s profile, credit score, etc.Depends on the amount of money in current account, relationship with the bank
Does the applicant need to be an account holder of the bank?No, the applicant is not required to be the account holderYes, the borrower has to be an account holder to avail overdraft facility

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