Structure of the SIC Code
The SIC code is a four-digit system used for the standard industrial classification of businesses. It begins with general business characteristics and becomes more specific with each digit. The first two digits represent the main industry group, while the third and fourth digits provide more detailed industry information. The system divides the economy into 11 broad divisions, which break down into 83 two-digit groups, 416 three-digit industry groups, and finally 1005 four-digit industry sectors. The four-digit code gives the most precise classification of a business. While some organisations add extra levels to the SIC code, these are not part of the official classification. Understanding this system can help businesses, including those seeking start-up business loans, to classify themselves correctly for regulatory and financial purposes.
Changing from SIC code to NAICS
The transition from SIC to the North American Industry Classification System (NAICS) reflects an evolution in industry classification. NAICS, introduced in 1997, offers a more detailed and updated framework than SIC codes. This change aims to accommodate the modern economic landscape, incorporating new industries and technological advancements. Businesses and researchers shifting to NAICS will find that it provides a more precise classification, enhancing data accuracy and industry analysis. The shift requires updating databases and systems to align with NAICS, ensuring consistency and relevancy in industry classification.
How to find your SIC code?
- Check business documents: Look at your company’s registration documents or annual reports.
- Consult industry associations: Industry groups often provide SIC code directories.
- Online databases: Use online SIC code lookup tools available through government or industry websites.
- Company directory services: Business directories often list SIC codes alongside company information.
- Contact industry regulators: Regulatory bodies can assist in identifying the correct SIC code for your company.
How to read SIC codes?
- First digit: Represents the broad industry sector (e.g., manufacturing, retail).
- Second digit: Narrows down to a major industry group within the sector.
- Third digit: Specifies an industry sub-group.
- Fourth digit: Details the specific industry or business activity.
- Example: SIC code 4512 refers to 'Air Transportation, Scheduled', with each digit refining the category.
How to find my company's SIC code?
- Company records: Review your company's official documents for SIC codes.
- Industry associations: Contact industry associations for SIC code information.
- Online lookup tools: Use SIC code search tools on government or industry websites.
- Business directories: Check directories that list SIC codes for companies.
- Regulatory bodies: Reach out to regulatory agencies for assistance in finding the SIC code.
Why is a SIC code important?
A Standard Industrial Classification (SIC) code is crucial for several reasons. It standardises the classification of businesses, allowing for consistent economic analysis and comparison. SIC codes help businesses comply with regulatory requirements, streamline market research, and facilitate economic data collection. They also assist in identifying industry trends and benchmarking performance against industry peers. Despite the rise of NAICS, SIC codes remain important for historical data and specific regulatory contexts.
SIC code format
SIC codes follow a four-digit numerical format. Each digit provides specific information about the industry classification:
- First Digit: Major industry group (e.g., 2 for manufacturing).
- Second Digit: Industry sub-group within the major group.
- Third Digit: Specific industry segment.
- Fourth Digit: Detailed industry activity.
SIC codes range and division
Division |
SIC Code Range |
Description |
A |
01-09 |
Agriculture, Forestry, Fishing |
B |
10-14 |
Mining |
C |
15-17 |
Construction |
D |
20-39 |
Manufacturing |
E |
40-49 |
Transportation and Public Utilities |
F |
50-51 |
Wholesale Trade |
G |
52-59 |
Retail Trade |
H |
60-67 |
Finance, Insurance, Real Estate |
I |
70-89 |
Services |
J |
91-97 |
|
Difference between SIC codes and NAICS codes
In India, the Standard Industrial Classification (SIC) system is still commonly used for categorising businesses based on their main activities. While in countries like the United States, the SIC system was meant to be replaced in 1997 by a six-digit system called the North American Industry Classification System (NAICS), this change was specific to North America and not applicable in the Indian context.
In India, SIC codes continue to be used by various government departments and regulatory bodies for tracking and categorising businesses. The system remains popular due to its long history and ease of use. Even though more detailed classifications are available, many Indian companies, especially small and medium enterprises, continue using the traditional SIC codes for documentation, registration, and applying for things like start-up business loans or government schemes.
Conclusion
Understanding Standard Industrial Classification (SIC) codes is essential for businesses to navigate industry classifications, regulatory compliance, and market research. While SIC codes offer a historical perspective and remain in use for specific purposes, transitioning to NAICS codes can provide a more contemporary classification system. Companies should ensure their systems reflect the appropriate codes to maintain accurate industry data. For businesses seeking financial support or expansion, considering Bajaj Finserv Business Loan might be a viable option to facilitate growth and adapt to industry changes.