India has the biggest MSMEs in the world after China (Micro, Small, and Medium Enterprises). The function of MSMEs in the economic and social development of the country is to encourage innovation, business, the creation of employment, exports, and inclusive growth.

In 2018-19, the MSME sector contributed 30,3% of the overall GDP of the country according to the National Statistical Office. The Indian government has long emphasized growth and development in the industry and recently introduced UDYAM Registration for MSMEs, effective July 1, 2020, to streamline the UAM and EM-II MSME registration process (old process).

This page will describe the Udyam registration procedures and requirements relevant to (new and existing) MSMEs and the updated MSME classification definition.

All companies shall be classed as MSMEs effective from 1 July 2020.

The Micro, Small, and Medium Enterprise Development Act (MSMED) notified in 2006 establishes the law governing the classification of a company as an MSME. This piece of legislation is intended to support the development of these companies and to improve their competitiveness by means of several plans, privileges, and other incentives from the Government of India.

Finance Minister Nirmala Sitaraman announced revisions of the Micro Small and Medium-sized Enterprises concept as part of Aatmanship Bharat Abhiyaan’s economic package (MSME). These modifications were announced formally in June 2020 and are due to take effect on 1 July 2020. Earlier, the amount of money invested was established primarily for MSMEs but now the company turnover also includes the new criterion. Furthermore, both manufacturing and service companies would be included in the new definition.

The benefits of Udyam Registration (Enterprise)

Although MSME registration is not compulsory under the governing statute, it has sometimes been required to comply with the requirements of other regulatory acts, such as the Company Law 2013, and to make them known. However, a company (Udyam) founded by this Act could benefit from the perks and privileges proclaimed by the Government at the time.

MSME companies can benefit from the auto-collateral free loans of the stimulus package, E-Market Linkages across the board to provide marketing opportunities, covering late payments on the materials/services provided, lower-interest-rate financial support, tax discounts, and privacy payments for GOS issuers through their registration on Udyam registration portal.

Process for Udyam Registration

The following actions must be taken to register an enterprise (Udyam):

Anyone who would like to form a micro, small or medium-sized company can apply for Udyam Registration online via the self-declaration Udyam Registration portal and does not need any documents, papers, certifications, or documents uploaded.

Anyone who would like to form a micro, small or medium-sized company can apply for Udyam Registration online via the self-declaration Udyam Registration portal and does not need any documents, papers, certifications, or documents uploaded.

  • The new Udyam Registry is a unique registration for an MSME, unlike UAM / EM-II which requires renewals.
  • There is a simplified registration form in the Udyam Registration portal. If a company acquires a GSTIN, it will obtain the company name, address, and bank information from the GST portal.
  • For Udyam registration, an Aadhaar number is necessary. The number of the holder Aadhaar in the case of an owner company is the number of Aadhaar the controlling partner for a partnership firm and the number of Aadhaar Karta in the case of Aadhaar Hindu Undivided Family If it is a firm, a limited liability partnership, a cooperative company, a company or An organization or its authorized signatory must submit a cooperative company, company or trust, the GSTIN, and PAN, as well as the Aadhar.

If an entity is registered as an Udyam with a PAN properly, any lapses in information from previous years when it has no PAN have to be filled out by itself. No company may file more than one Udyam registration, although there may be a listing or addition to a single Udyam registry of all activities, including the manufacture, service, or both. A single window system for streamlining registration would function as control rooms operating within various Minutes of Micro, Small and Medium Enterprises and Ministry offices including the MSME-DI Development Institutes and District Industry Centers (DICs).

Also read-  MSME registration process