NIC Code - National Industrial Classification, Meaning, Benefits, Importance, and Examples

The National Industrial Classification Code (NIC Code) is a system used to collect and organise data about different types of economic activities in India. It helps the government understand how each type of business activity contributes to the country’s economy.

The NIC code is a 5-digit number given to businesses based on what they do. This code helps the government identify and group businesses according to their main activities. The digits in the code represent the business sector and sub-sector.

On 26 June 2014, the Department of Policy and Promotion (DIPP), in its Press Note 4 (2014 series), announced the shift from NIC 1987 to NIC 2008. All Indian companies must now use the NIC 2008 classification. This updated version is more in line with international standards, making registration and compliance processes smoother.

Where is NIC code used?

NIC code is widely used across different sectors and applications to classify the nature of economic activities performed by businesses. It plays a crucial role in various administrative, statistical, and regulatory processes.

• Udyam registration: NIC code is essential for classifying businesses under the MSME Act, which helps in identifying and categorising the type of economic activities conducted by Micro, Small, and Medium Enterprises (MSMEs).
• Company registration/LLP registration: During the registration process of companies or Limited Liability Partnerships (LLPs), NIC code is used to specify the business activities.
• Statistical data: Government agencies and statistical bodies use NIC code for the collection, analysis, and dissemination of economic data.
• Taxation and compliance: Helps in identifying the business activities for various taxation and regulatory compliance requirements.

Udyam registration

NIC code plays a critical role in the Udyam Registration process, which is necessary for classifying businesses under the MSME Act.

• Business classification: Helps in categorising the type of economic activity the business is involved in, ensuring appropriate classification under the MSME Act.Many new enterprises often benefit from startup business loans designed to support early-stage business development.
• Regulatory compliance: Ensures that businesses comply with the necessary regulations and standards set for their specific type of economic activity.
• Government schemes: Facilitates access to various government schemes and benefits specifically designed for MSMEs based on their classification.
• Statistical data: Provides a basis for collecting and analysing data related to MSMEs, aiding in the formulation of policies and development programmes.
  

Company registration/LLP registration

The NIC code is crucial for the registration of companies and LLPs as it helps in categorising the business activities accurately.

• Business activity identification: NIC code specifies the nature of the business activity during the registration process, ensuring appropriate categorisation.
• Regulatory compliance: Helps in meeting the regulatory requirements specific to the business’s economic activity.
• Statistical analysis: Assists government bodies in collecting and analysing data for policy-making and economic studies.
• Industry classification: Ensures the business is classified correctly within its industry sector, aiding in regulatory and compliance processes.Many small business owners also explore MSME loan options to manage cash flow and operational expenses efficiently.

Read more about company registration and LLP registration.

What is the importance of the NIC code?

The NIC code is important for standardising the classification of business activities across various sectors. It ensures uniformity in the data collection process, aiding in effective policy formulation and economic analysis. Additionally, it facilitates regulatory compliance and helps businesses access government schemes and benefits.

• Standardisation: Provides a uniform classification system for economic activities.
• Data collection: Aids in systematic data collection and analysis.
• Policy formulation: Supports the development of informed policies and programmes.
• Regulatory compliance: Ensures businesses meet necessary regulatory requirements.

Examples of NIC Code Structure

Section C: Manufacturing – This is the broad category for all types of manufacturing businesses.
Division 20: Manufacture of Motor Vehicles, Trailers, and Semi-trailers – This includes businesses involved in making cars, trucks, trailers, and similar vehicles.
Group 291: Manufacture of Motor Vehicles – This group focuses specifically on the production of motor vehicles.
Class 2910: Manufacture of Motor Vehicles – This class includes all businesses that manufacture motor vehicles.
Subclass 29101: Manufacture of Motor Vehicles – This is the most detailed level and refers to a specific activity, like the actual making of cars or similar vehicles.

How to generate Udyog Aadhaar NIC code

Generating a Udyog Aadhaar NIC code involves a straightforward process through the official Udyam Registration portal.

• Visit portal: Access the Udyam Registration portal online.
• Enter details: Fill in business details, including PAN and Aadhaar information.
• Select NIC code: Choose the appropriate NIC code that matches the business activity.
• Submit application: Submit the form to generate the Udyog Aadhaar NIC code.
• Receive certificate: Obtain the registration certificate with the NIC code.

Once registered, businesses can proceed to apply for MSME benefits and financial products. If you're not sure where you stand, it's a good time to check your business loan eligibility before applying for credit.

Benefits of Udyog Aadhaar Registration

Here are some key benefits you get with Udyog Aadhaar Registration:

• Registered MSMEs can get financial help from the government to showcase their products at international trade fairs.
• It allows businesses to apply for small loans and take part in various government schemes.
• MSME registration helps in opening a current bank account in the company’s name.
• Udyog Aadhaar gives access to several government benefits, such as low-interest loans, secured loans, and loans without needing any security.
• Entrepreneurs with a Udyog Aadhaar card can also get government subsidies.

Steps to apply for NIC code for MSME registration

Applying for an NIC code for MSME registration involves several steps to ensure accurate classification and compliance.

• Access Udyam portal: Visit the Udyam Registration portal.
• Fill in business information: Provide necessary business details and owner’s Aadhaar number.
• Select NIC code: Choose the NIC code that best describes the business activity.
• Upload documents: Upload required documents, such as PAN card and business address proof.
• Submit and pay fee: Submit the application and pay the registration fee online.
• Verification: Await verification by the authorities.
• Receive registration: Once verified, receive the Udyam Registration certificate.

Correct classification not only helps in compliance but also in securing targeted support—especially when applying for business loans or when looking to check your pre-approved business loan offer online.

Important documents needed for MSME application

When applying for MSME registration, several key documents are required to complete the process.

• Aadhaar Card: Owner’s Aadhaar card for identity verification.
• PAN Card: Business PAN card for tax identification.
• Business address proof: Proof of the business’s physical address, such as a utility bill or lease agreement.
• Bank account details: Bank statement or cancelled cheque to verify the business bank account.
• NIC code: Appropriate NIC code to classify the business activity.

MSME NIC code list

The MSME NIC code List provides a comprehensive classification of business activities for Micro, Small, and Medium Enterprises. It includes various codes that businesses can use to identify their specific economic activities during the registration process.

List of 2-digit codes of National Industrial Classification of 1987 (NIC)

The list of 2-digit codes from the National Industrial Classification of 1987 (NIC) categorises various sectors and industries, providing a detailed classification system for economic activities.

NIC code is essential for classifying businesses across various sectors, aiding in data collection, regulatory compliance, and policy formulation. Accurate classification ensures businesses can access government benefits and meet regulatory standards, facilitating growth and development.

Exploring Bajaj Finance Business Loan

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