MSME Udyam Registration
Introduction
The Ministry of Micro, Small and Medium Enterprises introduced the Udyam Registration Portal on 1st July 2020 to simplify the registration process for micro, small, and medium enterprises. Since its launch, the portal has demonstrated efficiency and user-friendly features. Currently, more than 11 lakh MSMEs have successfully registered themselves through a self-declaration system. This initiative was announced by the Finance Minister as part of the Prime Minister’s economic relief package during the COVID-19 pandemic.
Most business owners are aware that Udyam registration helps in availing government benefits and schemes. However, many still face confusion regarding the distinction between MSME Registration and Udyam Registration, and whether they are the same or different systems.
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Difference Between MSME Registration and Udyam Registration
The Ministry of MSME has renamed the earlier MSME registration system as Udyam Registration and introduced a new certificate known as the Udyam Registration Certificate, which contains a unique identification number called the Udyam Registration Number (URN), earlier referred to as UAN.
In essence, MSME Registration and Udyam Registration refer to the same recognition for micro, small, and medium enterprises, with the primary difference being the updated registration process and certificate format. Udyam Registration has replaced the old MSME registration system and is now the simplified and streamlined method for obtaining MSME recognition.
Through Udyam Registration, businesses receive a unique 12-digit identification number, making the process more transparent and easier to apply. Therefore, Udyam Registration is simply the modern and more efficient way to secure MSME registration benefits from the government.
What is MSME Registration?
What is MSME Registration?
MSME Registration was introduced on 2nd October 2006 with the objective of supporting and strengthening the growth and competitiveness of Micro, Small, and Medium Enterprises. MSMEs play a vital role in the economic development of a country like India, contributing significantly to employment generation, industrial output, and overall economic progress.
Recognizing their importance, the government initiated MSME registration to encourage the establishment and expansion of such enterprises. Through this registration, eligible businesses can avail various benefits, subsidies, and schemes offered by the government to promote their development and sustainability.
What is a Micro, Small, and Medium Enterprise (MSME)?
Under the Micro, Small and Medium Enterprises Development Act, 2006, MSMEs were established to promote and strengthen the small-scale sector in India. Earlier, manufacturing and service enterprises were treated as separate categories, each with different prescribed investment limits for classification.
However, as per the revised definition announced by Nirmala Sitharaman on 13 May 2020, the distinction between manufacturing and service sectors was removed. The updated criteria introduced uniform investment limits and added a turnover-based classification system.
With this amendment, enterprises are now categorized as Micro, Small, or Medium based on a combination of their investment in plant and machinery or equipment and their annual turnover, thereby simplifying and modernizing the MSME classification framework under the Act.
Classification of Enterprises
An enterprise is categorized as Micro, Small, or Medium based on specific eligibility parameters laid down under the applicable MSME guidelines. The classification depends primarily on the level of investment made in plant, machinery, or equipment, along with the annual turnover of the business.
According to these prescribed criteria, businesses are grouped into different categories to determine their status as micro, small, or medium enterprises. This structured classification system helps the government extend appropriate benefits, schemes, and support measures to enterprises based on their size and scale of operations.
Criteria for Classification of MSMEs
MSMEs are classified based on the level of investment made in the business, irrespective of whether the enterprise operates in the manufacturing or service sector. Earlier, separate investment limits were prescribed for manufacturing and service units, which created a distinction between the two sectors.
Under the revised framework introduced as part of the Atmanirbhar Bharat Abhiyan, the government removed the difference between manufacturing and service enterprises and enhanced the investment thresholds. Additionally, a turnover-based criterion was introduced to provide a more comprehensive classification system.
As per the updated limits:
Micro Enterprise: Investment in plant and machinery or equipment should not exceed ₹1 crore, and annual turnover should not exceed ₹5 crore.
Small Enterprise: Investment should not exceed ₹10 crore, and annual turnover should not exceed ₹50 crore.
Medium Enterprise: Investment should not exceed ₹50 crore, and annual turnover should not exceed ₹250 crore.
This revised classification enables businesses to expand more freely while continuing to avail MSME benefits.
Advantages of MSME/Udyam Registration in India
Enterprises in India that obtain MSME or Udyam Registration can avail several valuable benefits provided by the government. These advantages help businesses grow, reduce operational costs, and gain better market opportunities.
Exclusive Government Tenders: Registered MSMEs can participate in special government tenders that are reserved specifically for the MSME sector.
Lower Interest Loans: Businesses can access bank loans and credit facilities at comparatively reduced interest rates under various priority sector lending schemes.
Tax Benefits: Registered enterprises may enjoy certain tax exemptions and rebates as per applicable government policies.
Reduced Patent Fees: MSMEs are eligible for concessions on patent registration and other intellectual property filings.
Priority in Licenses and Approvals: Preference is often given to MSMEs while granting government licenses, approvals, and certifications.
Access to Government Schemes: Registered units can take advantage of multiple state and central government schemes designed to support and promote small and medium businesses.
These benefits collectively strengthen the growth prospects of MSMEs in India.
Documents Required for MSME/Udyam Registration in India
For businesses operating in India, the following documents and details are generally required for online MSME/Udyam Registration:
PAN details of the proprietor, partners, or directors, as applicable.
Aadhaar details of the proprietor, partners, or directors.
Registered office proof, such as an allotment letter, lease deed, possession letter, or property tax receipt.
If the premises are rented, a rent agreement, along with a No Objection Certificate (NOC) from the landlord and a utility bill.
Copies of purchase invoices for raw materials and sale invoices for finished goods.
In case of a partnership firm, a copy of the Partnership Deed.
For a private limited company, copies of the MOA, AOA, Certificate of Incorporation, and a Board Resolution authorizing the signatory.
Industrial License, if applicable.
An affidavit on ₹10 non-judicial stamp paper declaring power usage and machinery details.
Machinery purchase and installation bills.
Latest bank account statement of the business.
Proper documentation ensures smooth and hassle-free registration.
Process for MSME/Udyam Registration
The procedure to obtain MSME/Udyam Registration is simple and completely online. The following steps are generally followed:
Step 1:
Visit the official Udyam Registration Portal at udyamregistration.gov.in.
Step 2:
On the homepage, choose the appropriate category:
Select “For New Entrepreneurs who are not Registered yet as MSME or those with EM-II” if you are applying for fresh registration.
Select the migration option if you already have UAM registration and wish to re-register under the Udyam system.
Step 3:
For new applicants, enter the Aadhaar number and the name exactly as mentioned on the Aadhaar card. The details must be verified through an OTP sent to the mobile number linked with Aadhaar.
Step 4:
After verification, the application form will appear. Fill in all the required business details carefully. Enter the captcha code and click on the submit button to complete the registration process.
Step 5:
For applicants migrating from UAM registration, enter the UAM number and verify it through an OTP sent to the registered mobile number or email. Once validated, the registration is successfully completed.
The entire process is paperless, self-declaration based, and designed to make registration quick and convenient for entrepreneurs.
