The blog provides a detailed overview of Udyam Registration, a unique identification system by the Government of India to streamline the registration and recognition process for MSMEs. It covers the eligibility criteria based on investment and turnover, the simplified registration process with required documents, and the numerous financial and operational benefits.
What is Udyam Registration for Indian MSMEs?
Udyam Registration is a unique identification system implemented by the Government of India to simplify the registration and recognition process for micro, small, and medium enterprises (MSMEs).
Udyam Registration, also known as MSME Registration registration, comes with a certificate and a unique number, aimed at certifying and recognizing these enterprises. The primary objective of this registration is to offer maximum benefits to medium and small-scale businesses or industries in India, which are registered using their Aadhar Card Number.
Formerly known as Udyog Aadhaar registration, this digital process under the MSMED Act, 2006, replaces traditional paperwork, making it easier for MSMEs to get officially recognized and avail government benefits.
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Eligibility Criteria for Udyam Registration
The eligibility criteria for Udyam Registration are primarily based on the investment in plant and machinery for manufacturing enterprises and turnover for service enterprises.
Here’s an overview:
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How to register for Udyam Registration?
The Udyam portal has made the registration process simple for all eligible businesses.
Following documents are required for the registeration:
• PAN of the enterprise
• GST Certificate
• Copy of the entrepreneur’s Aadhaar
• Social Category of entrepreneur
• Phone number
• E-mail address
• Business Commencement Date
• A/C No. and IFSC Code (or a copy of the passbook)
• Number of employees (with male and female divisions)
It is a great opportunity for small businesses to access government benefits and support. Businesses must register on the Portal, if they wish to take advantage of the myriad benefits offered by the Government.
Let us discuss what all benefits these businesses would get to avail on registration with Udyam Portal.
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Financial Benefits of Udyam Registration
Collateral-Free Loans
Udyam Registration makes businesses eligible for various government loan schemes that offer collateral-free loans, such as the Pradhan Mantri MUDRA Yojana (PMMY) and the Prime Minister’s Employment Generation Programme (PMEGP). These schemes are specifically designed to support the growth and expansion efforts of small and medium enterprises, reducing the financial barriers they often face.
Priority Sector Lending
Banks are required to allocate a certain percentage of their lending portfolio to the priority sector, which includes MSMEs. With the Udyam Registration certificate, your business becomes eligible for priority sector lending, potentially gaining access to more favorable interest rates and better loan terms. This provision ensures that MSMEs have improved access to financial resources, which can be crucial for their growth and sustainability.
Trademark Registration Discounts
For businesses such as private companies, LLPs, or partnership firms, trademark registration typically incurs a government fee of ₹9,000. However, with the Udyam Registration certificate, businesses can avail a 50% discount, reducing the fee to ₹4,500. This discount makes it more affordable for MSMEs to protect their brand identity and intellectual property, which is vital for establishing a unique market presence and preventing unauthorized use of their trademarks.
Credit Rating and Security Deposit Exemptions
For government tenders, the fees for credit rating assessments are reimbursed, and security deposits on the GeM portal are waived for Udyam-registered businesses. These benefits reduce the upfront costs of tender participation, making it easier for MSMEs to compete.
Subsidy on Patent Registration and Industrial Promotion
MSMEs can receive a 50% subsidy on patent registration fees and access government subsidies for industrial promotion activities. These subsidies reduce the financial burden of innovation and expansion, encouraging technological advancements.
Invoice Discounting through TReDS
The Trade Receivables Discounting System (TReDS) is a government-backed platform that facilitates invoice discounting. Small businesses can upload their invoices on this platform, and various banks and non-banking financial companies (NBFCs) can provide them with working capital against these invoices.
The Udyam Registration number is a prerequisite for accessing this service, helping businesses manage their cash flow effectively.
Reduced Cost of ISO Certification
Obtaining ISO certification can be expensive, but Udyam-registered MSMEs can get reimbursement for these expenses.The authorities will not charge MSME-registered businesses any ISO certificate fees if they submit an application to the appropriate authority with their registration certificate. ISO certification is required to increase the standards of MSMEs’ efficiency throughout the bidding process.
Protection against Delayed Payments
The MSME Development Act ensures that buyers must pay for goods and services within 45 days. If payments are delayed, MSMEs can claim interest on the delayed amount. This protection helps maintain a healthy cash flow and minimises the financial impact of delayed payments, which can be detrimental to small businesses.
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Subsidized Rates for Electricity
All businesses with an MSME registration certificate are qualified for electric bill discounts. because of this, firms may increase output and accept more orders without worrying about incurring operational costs for things like electricity and maintenance. micro, small, and medium-sized businesses can apply for the concession by sending a certificate of registration and an application to the electricity department.
Concession in Stamp Duty and Registration Fees
Certain states provide concessions in stamp duty and registration fees for MSME enterprises. These concessions reduce the initial setup and expansion costs, making it more affordable for businesses to establish and grow their operations.
Overdraft Interest Rate Exemption
MSMEs registered under Udyam can benefit from a 1% interest rate exemption on overdraft facilities, depending on specific bank schemes. This financial benefit helps businesses manage short-term cash flow needs more affordably, providing crucial support during financial crunches.
Eligibility for Industrial Promotion Subsidy
Registered MSMEs can avail subsidies aimed at promoting industrial growth. These subsidies reduce financial constraints, enabling investment in new technologies and expansion of production capacities.
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Operational Benefits of Udyam Restration
Lifetime Validity
Udyam Registration offers a certificate that remains valid for the entire lifespan of the business, eliminating the need for periodic renewals. This feature saves businesses from the recurring costs and administrative burden of renewals, allowing them to focus more on growth and development.
Business Recognition and Credibility
Udyam Registration enhances a business’s credibility, offering a mark of authenticity valued by customers, suppliers, and investors. Displaying the certificate can also serve as a strategic marketing tool, differentiating your business from competitors and fostering greater customer trust.
(If you are planning to start an export business, then this blog Capacity Building of First Time Exporters (CBFTE) Scheme: A Government Scheme for Entry-Level Exporters is for you)
Technology upgradation support to MSME
The government reimburses project costs for these objectives for MSME sector units and expenses incurred for implementing clean technology, preparing audit reports, and providing subsidies for licensing products per national and international standards. it is done to increase cost-effectiveness and promote the use of clean energy in manufacturing.
Access to Government Schemes and Subsidies
Registered MSMEs can leverage a wide range of government schemes and subsidies designed to support growth, including financial assistance for technology upgrades, marketing, and skill development. These resources can provide a significant financial boost, driving innovation and expansion.
Participation in Government Exhibitions and Trade Fairs
Udyam Registration allows businesses to participate in government-organized exhibitions and trade fairs at no cost. These events offer valuable platforms for showcasing products, networking, and exploring new market opportunities, enhancing visibility and market reach.
Access to Government Tenders
Registered MSMEs can access a wide range of government tenders through platforms like the GeM portal, allowing them to bid on lucrative government contracts. Securing these contracts can significantly boost a business’s revenue and market presence.
MSME Samadhan Portal
The MSME Samadhan portal helps expedite the payment process for suppliers. If buyers delay payments beyond 45 days, MSMEs can file a complaint, ensuring timely payments and imposing penalties on defaulters, thus protecting the financial interests of small businesses.
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Statistics about Udyam registrations
India now has 4.5 crore registered MSMEs of which 98% are micro enterprises.
As of the latest data,(June 2024), the total number of micro, small, and medium enterprises (MSMEs) registered with the MSME Ministry in India has surpassed 4.5 crore. This figure includes 4.4 crore micro enterprises, which constitute 98.1% of the total, along with 7.04 lakh small enterprises and 67,266 medium enterprises. The micro enterprise count also included 1.86 crore micro enterprises outside the ambit of the Goods and Services Tax (GST) such as street vendors, registered via the Udyam Assist Platform launched in January 2023.
Before the introduction of Udyam Registration, MSMEs used the Udyog Aadhaar Memorandum (UAM) and previously, the Entrepreneurs Memorandum (EM-II) for registration.
The Udyam registration portal, launched on July 1, 2020, has significantly eased the registration process for small businesses nationwide, resulting in a substantial number of registrations. Notably, the count of micro enterprises also encompasses 1.86 crore units outside the purview of the Goods and Services Tax (GST), such as street vendors, registered through the Udyam Assist Platform introduced in January 2023.
-Financial express (https://www.financialexpress.com/money/income-tax/)
{Learn how the government’s Lean Manufacturing Competitiveness Scheme (LMCS) is driving significant improvements in productivity, efficiency, and competitiveness for MSMEs. Read the blog here )
Top 5 states contributing MSMEs Registrations on Udyam portal
Top 5 states contributing half of the Total Number of MSMEs Registrations on Udyam portal as in Jan 2024
Conclusion
By registering on the Udyam portal,MSMEs not only gain official recognition but also pave the way for easier participation in government tenders and access to international trade opportunities. This registration is a pivotal step towards formalising your business, enhancing credibility, and unlocking growth opportunities in today’s competitive market. Don’t miss out on the chance to streamline your operations and access the support you need to thrive—register for Udyam and propel your business forward.
FAQs
- Why is the Udyam Registration Certificate required?
- Udyam registration is a general certification that enables micro, small, and medium enterprises to register themselves with the government. Upon completion of this registration, the MSME gets a commendation certificate and a unique identity number.
- What is the validity of the Udyam registration certificate?
- Currently, there is no expiry for Udyam Registration. The certificate should be obtained only once against every PAN.
- Who should register for Udyam? Udyam registration is beneficial for any business classified as a Micro, Small, and Medium Enterprise (MSME) in India. This includes:
- Proprietorships: Businesses owned and operated by a single individual.
- Partnerships: Businesses co-owned and managed by two or more individuals.
- Hindu Undivided Families (HUFs): Family businesses governed by Hindu law.
- Companies: Registered companies, including Limited Liability Partnerships (LLPs).
- Societies: Registered societies and trusts.
- Should we pay for Udyam registration?
- No, Udyam registration is completely free of charge. The official government portal, https://udyamregistration.gov.in, facilitates the process without any registration fees.
- Why are banks asking for Udyam registration? Banks often request Udyam registration as it plays a crucial role in:
- Identifying MSMEs: The registration helps banks clearly identify businesses eligible for benefits and schemes specifically designed for MSMEs.
- Loan approvals: Udyam registration can expedite loan approvals for MSMEs as it simplifies the verification process and demonstrates your business legitimacy.
- Government schemes:Many government business loan schemes and subsidies are exclusively available to registered MSMEs, making registration crucial to access these benefits.
- Who is not eligible for Udyam registration? While most businesses can benefit from Udyam registration, a few exceptions exist:
- Individuals or businesses not classified as MSMEs: Businesses exceeding the investment and turnover limits set for MSME categorization are not eligible.
- Foreign companies: Udyam registration is meant for Indian businesses only. Foreign companies operating in India might have alternative registration processes.
- What is the next step after Udyam registration? Once you’ve successfully completed your Udyam registration, you can explore various benefits:
- Access to government schemes and subsidies: Leverage financial assistance and support programs available for registered MSMEs.
- Priority sector lending: Benefit from easier loan approvals and potentially lower interest rates offered to MSMEs by banks.
- Participation in government tenders: Udyam registration opens doors to participate in government tenders reserved specifically for MSMEs.
- Enhanced credibility: The registration serves as an official recognition of your business, potentially improving your credibility in the market.
- Is MSME registration mandatory?
- No. It is not mandatory for small, medium and micro enterprises to apply for MSME registration.
- What is the MSME registration verification?
- Entrepreneurs can verify their Udyam registration number by following the below steps:
- Visit the Udyam registration portal.
- Click on the ‘Print/Verify’ option and click on the ‘Verify Udyam Registration Number’ option.
- Enter the ‘Udyam Registration/Reference Number’, enter the captcha code and click on the ‘Verify’ button.
- Can I get MSME registration for a partnership firm?
- Yes. A partnership firm that fulfills the MSME classification’s investment and turnover criteria can apply for MSME registration
- Is it mandatory to have an Aadhar card for obtaining Udyam registration?
- Yes. For obtaining Udyam registration, an Aadhaar card is compulsory. In case an applicant is other than the proprietor, the Aadhaar card of the partner and the director will be required.
- Is MSME registration for traders valid?
- Yes. Earlier, the MSME registration covered only manufacturing and service industries. However, in July 2021, the government announced that the wholesale and retail trade would come under the MSME classification. Thus, traders can apply for MSME registration for their wholesale/retail trade business except for motor vehicles and motorcycles.
- Is MSME registration and Udyog Aadhaar same?
- No. Udyog Aadhaar registration is an initiative of the government to provide a 12-digit registration number for SMEs. The MSME registration replaced the Udyog Aadhaar registration; thus, all MSMEs need to obtain the 19-digit MSME registration to obtain government benefits for MSMEs.
- How many days does it take for an MSME Registration Certificate?
- After completing the MSME registration, it usually takes 3-5 days to get the MSME Registration Certificate. The MSME Registration Certificate is sent to the mail of the entrepreneur.
(If you are a B2B service provider for MSMEs and startups, then create your impressive, compact profile on MSME TALK today and increase your visibility among them ! Reach us at connect@msmetalk.com to explore this opportunity)