ZED Scheme for MSMEs: Meaning, Features & Key Benefits

The Ministry of MSMEs launched the ZED (Zero Defect, Zero Effect) Certification Scheme to align with the government’s mission of boosting quality and competitiveness among MSMEs (Micro, Small, and Medium Enterprises). The comprehensive framework helps MSMEs achieve manufacturing excellence through zero-defect production while minimising environmental impact. This blog talks about the key features, benefits, certification process, and eligibility requirements of the ZED Scheme. Read on! 

What is the ZED Certification Scheme?

The ZED (Zero Defect Zero Effect) Scheme is a carefully curated government-driven scheme designed to improve quality, encourage sustainable business practices, and enhance competitiveness among Indian MSMEs. The certification aims to motivate Indian MSMEs to manufacture goods without defects (zero defect) and with minimal environmental harm (zero effect). This helps businesses upgrade their SOPs, channel innovation, and drive excellence. 

The scheme was launched in 2022. As of today, Gujarat leads the country in the adoption of the ZED certification initiative, with over 89,000 MSMEs in the state currently registered, and more than 59,000 achieving certification. 

Also Read: Top 6 Benefits of MSME Registration Every Indian Business Should Know 

Features and Benefits of ZED Certification

The ZED Scheme is tailored to address the challenges and aspirations of Indian MSMEs. Here are its primary features and benefits: 

Quality Assurance and Standardisation: By adopting ZED practices, MSMEs ensure they have quality management systems and process standardisation protocols. This leads to reduced defects and wastage, improved efficiency, and reliable output. 

Environmental Sustainability: The scheme emphasises environmentally responsible production by urging the use of eco-friendly materials, energy conservation, and pollution control. This not only contributes to a cleaner environment but also helps in regulatory compliance. 

Market Access and Recognition: ZED-certified businesses get an upper hand alongside credibility in both domestic and foreign markets. Many large buyers, including government departments, prefer to transact with certified suppliers, creating new business opportunities. 

Financial and Non-financial Incentives: As a means of encouragement, the government offers various incentives, such as a financial joining reward, priority in government procurement, and eligibility for concessional loans or credit ratings (as per the prevailing policies). 

Subsidies: MSMEs are eligible for subsidies on the cost of the ZED certification, depending on their structure. MSMEs owned by women, SC/ST entrepreneurs, and those located in certain geographical areas are also eligible for subsidies.  

Capacity Building and Training: The scheme provides training, consultancy, and handholding support for MSMEs to implement best practices, helping enterprises adopt a culture of continuous improvement. 

Also Read: How MSME Loans Empower Small Businesses to Scale and Innovate 

ZED Certification Process

Obtaining a ZED Certification is a structured and transparent process through which MSMEs can get certified as either bronze, silver, or gold. The general steps are: 

• Registration on the ZED Portal: MSMEs start by registering online through the official ZED portal (https://zed.msme.gov.in/), providing basic company details. 
• Taking the Pledge: MSMEs must first start by pledging to uphold the values of the ZED scheme as a pre-commitment. 
• Choosing a Level: The MSME can choose which level they would like to get certified for; they then need to meet all the requirements of that specific level to obtain their certification. 
• Self-Assessment: Enterprises undertake a self-assessment based on a set of ZED parameters, ranking themselves on quality, sustainability, and process maturity. 
• Application Submission: After self-assessment, MSMEs submit the completed application along with the prescribed fee, if any, and relevant documents. 
• Assessment by Accredited Agencies: An accredited agency conducts an on-site assessment and verification of the processes as per ZED standards. 
• Evaluation and Certification: Based on the evaluation report, certification is granted at the appropriate level (bronze, silver, or gold), valid for a defined period. 
• Surveillance: For MSMEs at the silver and gold level, a paid surveillance is conducted 18 months after achieving certification by Accredited Assessment Agencies. 

Eligibility Criteria for ZED Certification

The scheme is open to all MSMEs registered in India under the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006. Enterprises must have: 

• Valid Udyam Registration or a current MSME registration. 
• An operational manufacturing or service unit in India. 

There are no sector-specific restrictions, making ZED relevant for a wide range of industries. 

Also Read: How To Apply for MSME Loan Online? - A Detailed Guide 

Documents Required for ZED Certification

Based on the level of ZED Certification, the documents required for the MSMEs can differ. However, these are the documents generally required to submit: 

• Copy of Udyam Registration or MSME Registration Certificate. 
• PAN Card and GST Registration Certificate. 
• Bank statements of the last 2–3 years. 
• Proof of business address  
• List of machinery and equipment. 
• Record of Quality Audits 
• Any existing quality certifications (ISO, BIS, etc.), if applicable. 

It’s important to note that additional documents may be requested during the assessment based on specific industries or operational requirements. 

To Conclude

With benefits ranging from enhanced market access and government incentives to comprehensive support, ZED certification can catalyse MSME growth and competitiveness. By focusing on zero defects and zero environmental effect, it’s a path for enterprises to achieve excellence while embracing sustainability.  

Frequently Asked Questions

Is ZED Certification mandatory for all MSMEs?
No, ZED (Zero Defect Zero Effect) Certification is not mandatory for all MSMEs (Micro, Small, and Medium Enterprises) in India. It is a voluntary scheme designed to encourage MSMEs to improve their quality and sustainability. 

How long is the ZED Certification valid?
The ZED Certification is typically valid for 3 years. After this period, MSMEs need to reapply and undergo reassessment to maintain their certification. 

Are there any fees involved in the ZED Certification process?
Yes, there is a fee involved in the ZED Certification process, which covers the costs of self-assessment, application submission, and the assessment by accredited agencies. The fees vary based on the certification level (Bronze, Silver, Gold). However, the government offers reimbursement for some certification costs. 

Can MSMEs upgrade their ZED Certification level?  
Yes, MSMEs can upgrade their ZED Certification level. They can apply for a higher level (Bronze, Silver, or Gold) at any time before their current certification expires. The process involves a reassessment to ensure continued adherence to ZED standards and may include gap analysis. 

What happens if an MSME fails to qualify for certification after assessment?  
If an MSME fails to qualify for ZED certification after assessment, they’re given opportunities to address the identified non-conformities. MSMEs are allowed to close these non-conformities (NCs) within a defined timeframe, which is usually 60 days. If they’re able to close the NCs successfully, the certification process proceeds to the next step.