Unlocking ZED Certification: A Guide For MSMEs To Harness Benefits

To boost the competitiveness and productivity of micro, small, and medium enterprises (MSMEs), the government unveiled the Zero Defect, Zero Effect (ZED) certification scheme in October 2016. Recently revamped as the MSME Sustainable (ZED) Certification scheme, the initiative aims to assist MSMEs in minimizing wastage, promoting environmental consciousness, conserving energy, and broadening market horizons.

As of January 29, 2024, around 2,20,953 MSMEs have enlisted under the scheme. States and Union Territories have integrated ZED into their industrial policies, offering extra incentives to ZED-certified MSMEs. Seventeen banks have also rolled out incentives, such as reduced processing fees and interest rates, for these enterprises.

Functioning Of The Scheme

The certification process comprises three levels: bronze, silver, and gold, each evaluated based on specific parameters. These 20 parameters cover leadership, workplace safety, quality management, HR management, energy management, and corporate social responsibility.

Bronze certification involves the assessment of five parameters, covering aspects like leadership, a clean workplace, workplace safety, timely delivery measurement, and quality management.

Similarly, silver-level certification delves into 14 parameters, incorporating the five from the bronze level. These include HR management, daily works management, planned maintenance and calibration, process control, testing/certification of product quality and safety, material management, energy management, environment management, and measurement & analysis.

Gold certification comprehensively assesses all 20 parameters, including supply chain management, risk management, waste management, technology selection & upgradation, natural resource conservation, and corporate social responsibility, which also includes parameters from the silver certification level. This tiered approach ensures a thorough evaluation of MSMEs based on their commitment to various operational and environmental standards.

Support Provided Under The Scheme

Certification costs stand at INR 10,000 for bronze, INR 40,000 for silver, and INR 90,000 for gold. The government, however, extends substantial subsidies—covering 80 per cent for bronze, 60 per cent for silver, and 50 per cent for gold certifications. A joining reward of INR 10,000 is granted, essentially making bronze certification cost-free.

Furthermore, there are additional subsidies available for specific categories. Women/SC/ST-owned MSMEs or those located in the northeastern region, Himalayan, Island territories, or aspirational districts will receive an extra 10 per cent subsidy. MSMEs involved in the government's SFURTI scheme (Micro & Small Enterprises—Cluster Development Programme) will benefit from an additional 5 per cent subsidy.

In addition to certification cost subsidies, the scheme extends financial assistance amounting to 75 per cent of the total testing/certification expenses, with a maximum subsidy cap of INR 50,000. Moreover, MSMEs can avail themselves of support for handholding/consultancy, with a generous provision of up to INR 2 lakh to aid in achieving the next certification level.

For those seeking assistance in technology upgradation, the scheme goes a step further by offering financial support of up to INR 3 lakhs. This support is geared towards facilitating the adoption of zero-effect solutions, pollution control measures, and cleaner technology. These comprehensive financial incentives aim to encourage MSMEs to enhance their manufacturing processes and contribute to environmental sustainability.

Certificate Validity

The application process involves online registration, validation with Udyam registration, selection of the plant unit, and submission of necessary information. It's important to note that the joining reward is valid for one year after taking the ZED Pledge. The ZED certification itself holds a validity of three years, after which MSMEs must reapply in accordance with the scheme's validity.