Udyam Registration, formerly MSME registration, is a process for India’s micro, small, and medium-sized enterprises (MSMEs). This process was introduced by the Ministry of Micro, Small, and Medium Enterprises in July 2020 to replace the old registration system under Udyog Aadhaar Memorandum (UAM). The main objective behind this registration is to promote and support the growth of small businesses in India by providing various benefits and concessions.
Definition of MSMEs
Before we move further, let’s first understand what MSMEs are. MSMEs are classified based on their investment in plant and machinery or equipment and their turnover. According to the revised definition, which came into effect on 1st July 2020, the following enterprises are classified as MSMEs:
- Micro-enterprises: Those with an investment of less than Rs.1 crore and a turnover of less than Rs.5 crores.
- Small enterprises: Those with an investment of less than Rs.10 crores and a turnover of less than Rs.50 crores.
- Medium enterprises: Those with an investment of less than Rs.50 crores and a turnover of less than Rs.250 crores.
Importance of Udyam Registration for Small Businesses
Avail various benefits and concessions
One of the main reasons why Udyam Registration is essential for small businesses is that it provides various benefits and concessions. These benefits include:
- Collateral-free loans: Under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme, small businesses with Udyam registration can avail of collateral-free loans up to Rs.2 crores. This makes it easier for them to access credit and expand their businesses.
- Subsidies: Many state and central government schemes subsidize small businesses with Udyam registration. For example, the Ministry of MSME provides a subsidy of 50% of the cost of patent registration and reimbursement of expenses incurred for ISO certification.
- Priority sector lending: Banks must lend a certain percentage of their total lending to the priority sector, which includes small businesses. Small businesses with Udyam registration are considered part of the priority sector, making it easier for them to access bank loans.
- Exemptions from certain taxes: Small businesses with Udyam registration are eligible for various exemptions from taxes such as GST, income tax, and excise duty.
Boosts the credibility of the business
Udyam registration also helps small businesses to boost their credibility. This is because the registration process involves verifying the details of the business, such as its PAN, Aadhaar number, bank account details, etc. This ensures that the business is legitimate and can be trusted by customers, suppliers, and other stakeholders. Additionally, Udyam registration provides the business with a unique identification number (UIN), which can be used as proof of its existence and legitimacy.
Access to various government schemes and programs
Small businesses with Udyam registration can also access various government schemes and programs to promote their growth and development. For example, the Ministry of MSME has launched several programs, including the National Manufacturing Competitiveness Programme, the Credit Linked Capital Subsidy Scheme, and the Technology Upgradation Fund Scheme. Small businesses with Udyam registration can participate in these programs and avail themselves of their benefits.
Promotes competitiveness
Udyam registration also promotes competitiveness among small businesses. This is because it gives them access to various resources and benefits to help them compete with large businesses. For example, small businesses with Udyam registration can access technology upgradation funds, which can help them invest in new technologies and equipment, thereby improving their productivity and competitiveness.
Facilitates access to international markets
Udyam registration also facilitates access to international markets for small businesses. This is because many international buyers and suppliers require businesses to be registered and compliant with local regulations. Udyam registration ensures that the business is compliant with Indian laws, which can help it to enter into international markets and compete with other businesses in the same sector.
Enables access to tenders and contracts
Small businesses with Udyam registration can also participate in various tenders and contracts issued by government agencies and public sector undertakings. This can help them to secure large contracts and expand their business operations.
Easy renewal process
Udyam registration has a simple renewal process, which makes it easier for small businesses to maintain their registration status. The registration is valid for 10 years and needs to be renewed. The renewal process is simple and can be done online through the Udyam Registration portal.
Udyam registration is an essential process for small businesses in India, providing various benefits and concessions. It helps them to boost their credibility, access government schemes and programs, promote competitiveness, and facilitate access to international markets. Additionally, Udyam registration is a simple process with easy renewal, making it easier for small businesses to maintain their registration status. Therefore, small businesses in India should consider registering for Udyam to avail these benefits and grow their businesses.
Apart from the benefits mentioned above, Udyam registration also helps small businesses to establish their brand identity. The registration process requires businesses to provide details such as their name, address, and contact details, which can help them to create a brand identity and establish themselves in the market.
Moreover, Udyam registration has made the registration process much simpler and faster compared to the previous Udyog Aadhaar Memorandum (UAM) registration process. Registration can be done online through the Udyam Registration portal with just a few clicks, saving time and effort for small business owners.
In addition, Udyam registration has also helped the government to collect accurate data on small businesses in India. This data can be used to formulate policies and programs to promote the growth and development of small businesses in the country.
Udyam registration is an essential process for small businesses in India as it provides various benefits and helps them establish themselves in the market. Small businesses should consider registering for Udyam to avail these benefits and contribute to the growth of the Indian economy.
Small business owners need to note that Udyam registration is not mandatory but highly recommended. By registering, small businesses can avail of various benefits and concessions provided by the government, including:
- Access to credit: Small businesses registered under Udyam can avail of collateral-free loans from various financial institutions under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme.
- Subsidies and incentives: The government provides various subsidies and incentives to small businesses registered under Udyam, such as subsidies for technology upgradation, quality certification, and marketing assistance.
- Priority sector lending: Banks and financial institutions are mandated to give priority sector lending to registered Udyam enterprises, providing easier credit access for small businesses.
- Protection against delayed payments: Udyam registered businesses can file complaints against buyers who delay payments under the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006.
- Reservation in government tenders: Udyam registered businesses are eligible for reservation under the Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012.
In addition to these benefits, Udyam registration can also provide credibility and recognition to small businesses, which can help them attract new customers and business opportunities.
Udyam registration is a simple and easy process that provides numerous benefits and concessions to small businesses in India. Small business owners should consider registering to avail these benefits and promote the growth and development of their businesses.