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Supporting MSMEs can have a far-reaching impact on the overall economic progress of a country as they create employment opportunities, drive industrial growth, and increase exports. The Udyam registration launched in July 2020 is an initiative by the Government of India. It seeks to provide MSMEs with various benefits that they can use to grow and thrive.
What is Udyam registration?
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In simple terms, the Udyam registration is a mandatory certification from the Ministry of Micro, Small and Medium Enterprises that MSMEs receive upon signing up on the official government portal. With an MSME Udyam Aadhaar registration, the enterprise receives a unique twelve-digit Udyam registration number (URN) that they can use to avail of various government subsidies, schemes, and incentives.
Eligibility criteria
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In order to be eligible for the Udyam Aadhaar, enterprises must fit into the classification outlined by the Ministry of Micro, Small and Medium Enterprises. This is on the basis of their investment (in plant and machinery or equipment) and turnover. The criteria are in the table below:
Enterprise Investment Turnover Micro Up to Rs. 1 crore Up to Rs. 5 crore Small Up to Rs. 10 crore Up to Rs. 50 crore Medium Up to Rs. 50 crore Up to Rs. 250 crore
Furthermore, the enterprise must be a legal entity operating as an MSME in the manufacturing or service sectors. Although in an effort to offer government benefits to a wider category of enterprises, wholesalers and retailers are eligible to apply as well.
Documents required
The Udyam Aadhaar registration process is fully online and paperless. Since the process is based on self-declaration, there is also no need to furnish any documents or proof at the time of registering an MSME.
The only detail required is the Aadhaar number of the enterprise’s owner or authorised signatory. It is also mandatory to have PAN and GSTIN to register for the Udyam Aadhaar certificate.
Other basic details that you will need at the time of registration include:
- Business address proof in the form of property tax receipts or utility (telephone, electricity, etc.) bills
- Bank account details
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Steps to Register an MSME for Udyam registration
Registering an MSME to receive benefits of udyam aadhar is an easy process that is completely free of cost thanks to the user-friendly government portal and its ‘single window’ system. Below are the steps to follow if you wish to register a new enterprise that is yet unregistered as an MSME:
- On the official Udyam registration website (https://udyamregistration.gov.in/), select the ‘For new entrepreneurs who are not registered yet as MSME or those with EM-II’ button.
- Provide the Aadhaar number and enterprise owner’s name on the next page.
- Use the OTP received on the linked mobile number to validate the Aadhaar number.
- Provide the required enterprise details as prompted, including its name, type, location, and PAN.
- Fill in the bank account details, such as the account number and IFSC code.
- Enter the NIC code, and other necessary details pertaining to the main business activity of the enterprise.
- Verify the details and submit the application.
You will receive the e-certificate with the twelve-digit URN and a unique QR code that you can use to verify the Udyam registration and access enterprise details. Keep in mind that this certification is permanent, meaning you will never have to apply for Udyam Aadhaar renewal or re registration.
Udyam Aadhaar benefits
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Udyam registration is now mandatory for all MSMEs. It provides multiple benefits to help MSMEs succeed, some of which are:
- Collateral-free loans from banks and financial institutions and subsidised interest rates
- Simplified process of obtaining licences, permits, registrations, and approvals
- Discounts of up to 50% on trademark and patent registration fees
- Reimbursement of ISO certification fees
- Waiver of government security deposits when attempting to procure tenders
- Tax exemptions
- Concessions on water and electricity bills
- Protection against delayed payments against provided goods or services
Additional Read: Difference between Udyog Aadhaar and Udyam Aadhaar
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How does Udyam registration help MSMEs in India?
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Udyam registration helps MSMEs in India by providing official government recognition, improving access to finance, enabling participation in government schemes and strengthening business credibility. It also simplifies the process of availing benefits available under the Ministry of Micro, Small and Medium Enterprises.
Benefit How it helps MSMEs Easier access to finance Improves eligibility for MSME loans, collateral-free credit schemes and priority sector lending from eligible financial institutions Government schemes Enables access to various Central and State Government incentives, subsidies, reimbursement schemes and procurement benefits, subject to scheme-specific eligibility Delayed payment protection Provides protection under the MSMED Act, 2006, allowing eligible MSMEs to seek redress for delayed payments from buyers Public procurement opportunities Helps eligible businesses participate in government tenders and procurement programmes that reserve opportunities for MSMEs Business credibility Demonstrates that the enterprise is officially recognised as an MSME, enhancing trust with customers, suppliers and lenders Udyam registration is free of cost and remains valid for the lifetime of the enterprise, provided the business continues to satisfy the applicable MSME classification criteria.
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Frequently Asked Questions
Overview
What is the disadvantage of Udyam registration?
The disadvantage of Udyam registration is that it requires regular updates and compliance with the Ministry of MSME guidelines. If there is any change in the business details, such as turnover or ownership, it must be updated within a specified time, or the registration can be cancelled. Additionally, businesses with a lower turnover may not gain significant financial support or benefits.
What are the tax benefits of Udyam?
Udyam registration offers several tax benefits. Registered MSMEs can avail of tax exemptions like income tax exemptions on profits for the first few years. They also get reduced rates on excise duty, and can take advantage of schemes related to GST, making it easier to get credit and loans.
Can I register Udyam without GST?
Yes, you can register for Udyam without GST registration, provided your turnover does not exceed the threshold limit that mandates GST registration. However, if your business is required to be GST-registered based on turnover or nature of business, then GST registration is mandatory.
Who is not eligible for Udyam?
Businesses that do not meet the criteria for MSME classification, such as those that do not fit within the prescribed turnover or investment limits, are not eligible for Udyam registration. Additionally, some businesses like non-manufacturing or non-service sectors and certain large-scale enterprises that exceed the prescribed limits cannot apply for Udyam registration.
What are the benefits of Udyam registration for your business?
Udyam registration helps businesses access government schemes, improve credit opportunities, and enhance credibility with lenders and customers. It may also support eligibility for MSME benefits and simplify access to business finance. If you are planning to expand, a Bajaj Finance Business Loan can provide additional funding, subject to eligibility.
Why is Udyam registration important for MSME growth in India?
Yes, Udyam registration is important for MSME growth in India because it enables eligible businesses to access government schemes, formal credit, and other MSME-specific benefits. MSMEs employ more than 110 million people, contribute around 30% of India's GDP, and account for approximately 45% of the country's exports, making them a key driver of economic growth. Udyam registration helps formalise eligible enterprises, improve access to institutional finance, and strengthen their long-term growth prospects.
Should I register my MSME for Udyam certification?
Yes, you should register your MSME for Udyam certification because it is free, provides a permanent certificate with no renewal requirement, and helps eligible businesses access MSME-related benefits. Udyam registration can improve access to government schemes, institutional credit, and procurement opportunities available to eligible enterprises. It also establishes your business as a recognised MSME, making it easier to avail yourself of various support programmes. If you need funding to grow your business, you can also explore a Bajaj Finance Business Loan, subject to the applicable eligibility criteria.
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