India's Micro, Small, and Medium Enterprises (MSMEs) sector plays a pivotal role in the country's economy by contributing significantly to employment and industrial production. To bolster the growth and formalization of MSMEs, the Government of India introduced the Udyam Registration process, effective from July 1, 2020. This registration simplifies the procedures for MSMEs to avail various benefits and subsidies. This article delves into the eligibility criteria for Udyam Registration, the registration process, and the associated benefits.
What is Udyam Registration?
Udyam Registration is a government registration provided along with a recognition certificate and a unique number. This registration is primarily aimed at facilitating the ease of doing business for MSMEs in India and bringing them into the formal sector. The term 'Udyam' is synonymous with enterprise and represents the innovative and entrepreneurial spirit of Indian businesses.
Eligibility Criteria for Udyam Registration
To be eligible for Udyam Registration, businesses must fall under the revised definition of MSMEs as per the notification issued by the Ministry of Micro, Small and Medium Enterprises on June 26, 2020. The classification is based on the investment in plant and machinery or equipment and turnover of the enterprise.
Micro Enterprises
Manufacturing and Service Enterprises: Enterprises with investment in plant and machinery or equipment not exceeding ₹1 crore and turnover not exceeding ₹5 crore.
Small Enterprises
Manufacturing and Service Enterprises: Enterprises with investment in plant and machinery or equipment not exceeding ₹10 crore and turnover not exceeding ₹50 crore.
Medium Enterprises
Manufacturing and Service Enterprises: Enterprises with investment in plant and machinery or equipment not exceeding ₹50 crore and turnover not exceeding ₹250 crore.
Additional Eligibility Considerations
Existing Enterprises: Enterprises already registered under EM-Part-II or UAM (Udyog Aadhaar Memorandum) are required to re-register under Udyam Registration. The re-registration process ensures that all MSMEs comply with the new definition and criteria.
Multiple Registrations: An enterprise can file only one Udyam Registration using its Permanent Account Number (PAN). However, any number of activities including manufacturing, services, or both can be specified or added in one registration.
Non-Profit Organizations: Trusts, societies, and non-profit organizations are not eligible for Udyam Registration. The registration is strictly for profit-oriented enterprises.
PAN and GSTIN: From April 1, 2021, PAN and GSTIN are mandatory for registration. This step integrates the enterprise with tax compliance, enhancing credibility and transparency.
Registration Process for Udyam
The Udyam Registration process is entirely online and can be completed in a few simple steps:
Visit the Official Portal: The official Udyam Registration portal is.
Enter Aadhaar Details: The registration process begins with the entrepreneur’s Aadhaar number. For proprietorship firms, the Aadhaar number of the proprietor is required. For partnership firms, the Aadhaar number of the managing partner, and for Hindu Undivided Families (HUF), the Aadhaar number of the Karta is required.
Fill in the Details: After entering the Aadhaar details, the entrepreneur needs to fill in basic details about the enterprise including name, type, PAN, location, address, bank details, and activity details (manufacturing or service).
Verification: Post submission, the details are verified through OTP sent to the registered mobile number. For enterprises with a PAN, the details of investment and turnover are fetched automatically from the government databases.
Udyam Registration Number: Upon successful verification, a Udyam Registration Number (URN) is generated. The registration certificate can be downloaded from the portal, which does not require any renewal.
Benefits of Udyam Registration
Update Udyam Registration offers a plethora of benefits to MSMEs, driving their growth and development.
Subsidies and Schemes: Registered MSMEs can avail various government subsidies and schemes, including Credit Linked Capital Subsidy Scheme (CLCSS), technology upgradation, and quality certification subsidies.
Ease of Credit: Udyam-registered enterprises are eligible for priority sector lending from banks and financial institutions, ensuring easy access to credit and loans at concessional rates. The government also facilitates collateral-free loans under various schemes.
Protection Against Delayed Payments: The MSMED Act, 2006 provides protection against delayed payments from buyers, ensuring that registered enterprises receive their dues promptly and can charge interest on delayed payments.
Market Access: Udyam Registration helps MSMEs gain better market access, including access to e-commerce platforms and government procurement tenders. The Government e-Marketplace (GeM) is an example where registered MSMEs can sell their products directly to government departments.
Reimbursement and Tax Benefits: Registered MSMEs are eligible for reimbursements on ISO certification expenses, reduced patent and trademark registration fees, and various tax benefits and exemptions.
Enhanced Competitiveness: Through support in research, innovation, and technology adoption, Udyam-registered enterprises can improve their competitiveness in both domestic and global markets.
Export Promotion: MSMEs can benefit from various export promotion schemes, subsidies on export freight, and participation in international trade fairs, which are facilitated by the registration.
Conclusion
Udyam Registration marks a significant step towards formalizing the MSME sector in India. By defining clear eligibility criteria and streamlining the udyam re- registration process, the government ensures that micro, small, and medium enterprises can leverage the benefits and grow sustainably.
The myriad advantages ranging from financial support to market access and protection mechanisms foster a conducive environment for the MSMEs to thrive, contributing to economic development and employment generation.
Entrepreneurs and business owners must understand the eligibility requirements and promptly register their enterprises to unlock the potential benefits of Udyam Registration.
