Banking Finance March 2023


This scheme is an extensive drive to create proper awareness in MSMEs about the Zero Defect Zero Effect (ZED) manufacturing and motivate the entrepreneur for assessment of their enterprises for ZED and support them. As part of this scheme, All MSMEs in India need to manufacture goods with zero defects and to ensure that the goods have zero effects on the environment. At present this ZED Certification Scheme covers all the existing MSME sectors belonging to manufacturing activity. It is not a mandatory but a voluntary scheme.

 Zero defect

  • The customer should get Zero defect product.
  • Zero non-conformance or non-compliance.
  • Zero waste.

 Zero effect

  • Zero air pollution, liquid discharge, solid waste
  • Zero wastage of natural resources


The objective for this certification is:


  • Develop an Ecosystem for Zero Defect Manufacturing in MSMEs.
  • Promote adaptation of Quality tools/systems and Energy Efficient manufacturing.
  • Enable MSMEs for manufacturing quality products.
  • Encourage MSMEs to constantly upgrade their quality standards in products and processes.
  • Drive manufacturing with adoption of Zero Defect production processes and without impacting the environment.
  • Support ‘Make in India’ campaign.
  • Develop professionals in the area of ZED manufacturing and certification.


  • There are 50 parameters on which the MSMEs will be assessed and rated.
  • The MSME applicant is required to comply with identified 20 essential parameters & at least 10 other parameters (as per the MSMEs domain competency, i.e. sector of operation and type of industry). Hence, the MSMEs will be rated on a minimum of 30 parameters.
  • MSMEs may seek ZED rating on more than 30 parameters as per the processes and systems available at the MSME.
  • Each parameter has 5 maturity levels. Each level corresponds to the existing state of systems and processes in the manufacturing unit that is being assessed. These levels range from struggler which is level 1, to beginner, organized and achiever that corresponds to level 2, 3 & 4 respectively. The topmost level is world-class at level 5.
  • The rating is based on a weighted average level.
  • The company is encouraged, handheld and trained to achieve a higher level for each parameter and thus elevate itself in the maturity model.



The journey of an MSME encompasses the following steps of for assessment. An MSME’s journey of Zero Defect Zero Effect to get ZED certified is explained in the following 7 steps:

Step 1 (Online registration): The MSME has to first register online on On right hand side of the web page, MSME has to click on tab “Online Registration” to register his details. An applicant can also directly log on to link given below to register his details. This simple step expresses an MSME’s intent to participate in the ZED scheme. The MSME must have a working email ID & Udyog Aadhar number to start the registration process. A ZED ID will be allotted to MSME after completing the registration.

Step 2 (Online Self-assessment): The next step is a self-assessment which an MSME will take using the ZED ID provided after registration. This is an online activity where the MSME will be assisted on the ZED parameters through simple questions and a choice of answers. It may be noted that the MSME may be asked to upload relevant documents as evidence to the answers chosen.

Step 3 (Desktop sssessment): After the online self-assessment, Quality Council of India will assess and evaluate answers and documents submitted by the MSME and come out with a preliminary rating based on answers and evidences provided. This is known as Desktop assessment. The rating after the desktop assessment will determine whether the MSME proceeds further in the process.

Step 4 (Site-assessment): If the MSME is selected to proceed further after the desktop assessment, a ZED certified assessor from an accredited rating agency will be appointed to conduct a physical assessment of the manufacturing unit of the MSME. This site-assessment will be done on the parameters selected by the MSME during the online self-assessment stage. The site assessment process typically takes 4 man-days.

Step 5 (ZED rating and certifications): Once the site-assessment is completed and the final report is submitted by the assessor, a ZED rating and a certificate is issued to successful MSMEs. If the MSME’s score is above 2.2 and up to 2.5, then the rating is Bronze If the MSME’s score is above 2.5 and up to 3.0, then the rating is Silver If the MSME’s score is above 3.0 and up to 3.5, then the rating is Gold If the MSME’s score is above 3.5 and up to 4.0, then the rating is Diamond If the MSME’s score is above 4.0 and up to 5.0, then the rating is Platinum In case an MSME scores 2.2 or lower, then no rating is provided.

This certification is valid for 4 years, after which the certification expires and the unit will have to apply again for renewal before the certification expires.

Step 6 (Gap analysis and hand holding): The MSMEs with a minimum Bronze rating will have the option to avail the services of a ZED certified consultant. The Gap analysis and handholding activity in the scheme will be carried out by accredited third-party consulting organizations & agencies and certified consultants. ZED Certified Consultants from these accredited agencies will conduct gap analysis on the site and assist the MSMEs in implementing suggested interventions that will improve their systems & processes and get them higher ZED rating once implemented in its true spirit. The handholding process will typically take 6 months.

Step 7 (Re-assessment): The MSME which has gone through the process of consulting by a ZED certified consultant will have the option to apply for a re-assessment if it feels that the Unit’s systems and processes have considerably improved. It may be noted that the subsidy applicable in the re-assessment process will only be provided if the rating improves by one level, i.e. from bronze to silver or silver to gold etc. An MSME can even opt for re-assessment without going through the process of consulting, provided there is a gap of minimum six months between the earlier site-assessment.


ZED Maturity Assessment Model is an integrated and holistic Certification System, which accounts for processes related to:

  • Production Management
  • Quality Management
  • Design Management
  • Safety Management
  • Environmental Management
  • Energy Management
  • Natural Resource Management
  • Human Resource Management
  • Intellectual Property Management
  • Performance Management

In the model, all along with the quality of products and services, equal emphasis is on the elimination of adverse impacts on the environment, through adequate planning at product and process design, pre-production, production and maintenance activities, post-production (disposal after use) and outcome of environment performance. The net result is sustainable development. Since each sector focuses on its unique operating conditions, QCI has developed sector-specific models that address these conditions.

In order to prepare the MSMEs to create a value chain for the new regime, it is important that quality and competitiveness of Indian MSME is enhanced over a period of time. It will also provide an opportunity to units to strive to continuously improve its processes thereby aiming to move up the maturity assessment model (Bronze-Silver-Gold-Diamond-Platinum).

The rating is a weightage average of the marks obtained on each parameter. Surveillance audit will be carried out by QCI.


Enterprise X is being rated on 35 parameters. Of these 35 parameters, on 18 parameters the MSME is at Level 5, on another 12 parameters it is at Level 4 and on remaining 5 parameters it is at Level 3. Hence the scores will be calculated as follows:

 Enterprise X Rating: Total points / Applicable levels: 153/35 = 4.37, hence the MSME X is a ZED Platinum Company.

Benefits for ZED rated MSMEs

The benefits for ZED rated MSMEs is explained in detail below:

  • The ZED rated MSME will get 0.5% interest rate on the concession on loans
  • The ZED rated MSME will also get 50% concession in processing fee
  • The Government provides Rs.25 lakhs for adopting technology
  • The Government provides Rs.25 lakhs for setting up of new ETP
  • Rs. 10 lakh for domestic patent and Rs.20 lakhs for international patent registration
  • Rs. 5 lakhs for purchase of testing equipment
  • Rs. 10 lakhs for ZED certification and handholding
  • Extra 80%, 60%, and 50% subsidy on the cost of ZED certification in addition to the subsidy provided by the Government of India

The above benefits are provided by the Government and different banks from time to time and subjected to change.

Typically an MSME can apply for re-certification after 6 months of initial certification. However, the subsidy on the cost of the re-certification component will be given to those MSMEs only which achieve a higher level in rating from the initial/previous rating. For example, if the previous rating of an MSME unit was Bronze, then subsidy will be extended only if re-certification rating of that MSME unit is minimum Silver.

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