Empowering MSMEs: Unveiling Government Schemes and Support through MSME Registration

Empowering MSMEs: Unveiling Government Schemes and Support through MSME Registration. What is called Udyam Registration or MSME ?
Udyam Registration, formerly known as MSME Registration, is a government-initiated online process in India that allows small and medium-sized enterprises (SMEs) to register themselves as Micro, Small, or Medium Enterprises (MSMEs). The registration process is based on the definition and criteria provided by the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. Under the Udyam Registration, businesses can obtain a unique identification number called the Udyam Registration Number (URN), registration is essential for availing various benefits and support provided by the government to MSMEs, such as financial assistance, credit facilities, subsidies, schemes, and preferences in government procurement.

The MSME sector plays a vital role in the Indian economy, contributing significantly to employment generation, industrial output, and export earnings. The Udyam Registration initiative aims to streamline and support the growth of MSMEs by providing them with legal recognition and access to various government schemes and incentives and It's worth noting that the name and process of MSME registration were changed to Udyam Registration on July 1, 2020, as part of the government's efforts to simplify the registration process and align it with emerging digital platforms.
Key features of Udyam Registration or MSME Registration in India-
»Udyam Registration is a permanent and paperless registration process for enterprises, serving as a basic identification number.
»There is no need for renewal of registration once obtained.
»Enterprises can specify or add any number of activities, including manufacturing or services, under one registration.
»Along with Udyam Registration, enterprises can register on platforms like GeM (Government e-Marketplace) and SAMADHAAN Portal to address payment delay issues. They can also onboard on TReDS (Trade Receivables Discounting System) platforms.
»Udyam Registration enables MSMEs to avail benefits from various schemes of the Ministry of MSMEs, such as the Credit Guarantee Scheme and Public Procurement Policy. It may provide an additional edge in government tenders and protection against delayed payments.
»MSMEs with Udyam Registration become eligible for priority sector lending from banks. The Reserve Bank of India (RBI) has issued guidelines on priority sector lending, which includes the MSME sector.
»Having PAN (Permanent Account Number) and GST (Goods and Services Tax) numbers is mandatory for Udyam Registration since April 1, 2021.
Who can not apply for Udyam Registration ?
Following entities or individuals may not be eligible to apply for Udyam Registration:
» Enterprises that are not classified as Micro, Small, or Medium Enterprises (MSMEs) based on the criteria specified in the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The Act defines the eligibility criteria based on investment in plant and machinery or equipment for manufacturing enterprises, and investment in equipment for service enterprises.
» Enterprises engaged in activities or sectors that are excluded or restricted by the government from MSME registration. These exclusions or restrictions may be based on certain industries, environmental considerations, national security concerns, or other regulatory requirements.
» Enterprises that do not meet the age criteria. The Udyam Registration is generally open to enterprises that have been in operation for more than a specified period. The specific duration may vary based on the regulations and policies set by the government or relevant authorities.
» Enterprises that have already registered as Limited Liability Partnerships (LLPs) or companies under the Companies Act, 2013, may not be eligible for Udyam Registration.
As per the revised guidelines issued by the Ministry of Micro, Small and Medium Enterprises (MSME) in 2020, entities engaged in retail and wholesale trade are not eligible to apply for Udyam Registration, that businesses primarily involved in activities classified under the NIC codes related to retail and wholesale trade are excluded from registering under the MSME sector.
The intention behind excluding retail and wholesale trade from Udyam Registration is to focus on promoting and supporting manufacturing and service-based enterprises within the MSME sector. Retail and wholesale trade activities are not considered manufacturing or service-oriented activities but rather fall under the category of trading.
» Certain activities under NIC codes 45, 46, and 47 were excluded from registration on the Udyog Aadhaar Memorandum (UAM) portal as per Ministry's a.M.No.UAM/MC/01/2017-SME dated 27.06.2017.
» This exclusion was further validated for Udyam Registration through Ministry's a.M.no. 5/2(1)/2020-P&G/Policy dated 17.07.2020. It clarified that the NIC codes 45, 46, and 47 and the activities mentioned against these codes are not permitted for registration on the Udyam Registration portal (https://udyamregistration.gov.in).
» The government has received representations and decided to include retail and wholesale trades as MSMEs, allowing them to be registered on the Udyam Registration portal through issue of OFFICE MEMORANDUM dated 02.07.2021.
chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://udyamregistration.gov.in/docs/OM_regarding_inclusion_of_Traders02072021.pdf
»The benefits for retail and wholesale trade MSMEs are restricted to Priority Sector Lending. This means that these MSMEs in the retail and wholesale trade sector will be eligible for financial assistance and credit facilities under the Priority Sector Lending framework.
Now, enterprises that have Udyog Aadhaar Memorandum (UAM) under the NIC codes 45, 46, and 47 are now allowed to migrate to the Udyam Registration portal. Alternatively, they also have the option to file Udyam Registration afresh.
The Udyam Registration portal facilitates the registration of MSMEs, including those in retail and wholesale trades. Therefore, enterprises previously registered under UAM with the mentioned NIC codes can choose to migrate their registration to the Udyam Registration portal or file a fresh Udyam Registration, depending on their preference and requirements.
Criteria for MSME
As per the criteria specified in the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, an enterprise can be classified as a micro, small, or medium enterprise based on the following criteria:-
1. Micro Enterprise:
» Investment in plant and machinery or equipment does not exceed one crore rupees (INR 1,00,00,000).
» Turnover does not exceed five crore rupees (INR 5,00,00,000).
2. Small Enterprise:
» Investment in plant and machinery or equipment does not exceed ten crore rupees (INR 10,00,00,000).
» Turnover does not exceed fifty crore rupees (INR 50,00,00,000).
3. Medium Enterprise:
» Investment in plant and machinery or equipment does not exceed fifty crore rupees (INR 50,00,00,000).
» Turnover does not exceed two hundred and fifty crore rupees (INR 250,00,00,000).
These investment and turnover limits determine the classification of an enterprise as micro, small, or medium. 
The classification is essential for availing the benefits and support provided by the government to MSMEs, such as access to schemes, subsidies, credit facilities, and preferences in government procurement.
Requirement for Registration:
Aadhaar number is one of the key requirements for Udyam Registration. Aadhaar is used for identity verification and authentication purposes during the registration process. However, it's important to note that additional documents and information may be required depending on the specific registration requirements and guidelines set by the government.
Regarding the Aadhaar being linked with a mobile number, to have your Aadhaar linked with a mobile number to facilitate the registration process smoothly. Linking Aadhaar with a mobile number helps in receiving OTPs (One-Time Passwords) and other communication during the registration process-
» Aadhaar number shall be required for Udyam Registration.
» The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).
» In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN(As per applicablity of CGST Act 2017 and as notified by the ministry of MSME vide S.O. 1055(E) dated 05th March 2021) and PAN along with its Aadhaar number.
Data of MSME (Udyam) Registration as on-

What is called Udyam Registration or MSME ?

Udyam Registration, formerly known as MSME Registration, is a government-initiated online process in India that allows small and medium-sized enterprises (SMEs) to register themselves as Micro, Small, or Medium Enterprises (MSMEs). The registration process is based on the definition and criteria provided by the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. Under the Udyam Registration, businesses can obtain a unique identification number called the Udyam Registration Number (URN), registration is essential for availing various benefits and support provided by the government to MSMEs, such as financial assistance, credit facilities, subsidies, schemes, and preferences in government procurement.

Key features of Udyam Registration or MSME Registration in India-

»Udyam Registration is a permanent and paperless registration process for enterprises, serving as a basic identification number.

»There is no need for renewal of registration once obtained.

»Enterprises can specify or add any number of activities, including manufacturing or services, under one registration.

»Along with Udyam Registration, enterprises can register on platforms like GeM (Government e-Marketplace) and SAMADHAAN Portal to address payment delay issues. They can also onboard on TReDS (Trade Receivables Discounting System) platforms.

»Udyam Registration enables MSMEs to avail benefits from various schemes of the Ministry of MSMEs, such as the Credit Guarantee Scheme and Public Procurement Policy. It may provide an additional edge in government tenders and protection against delayed payments.

»MSMEs with Udyam Registration become eligible for priority sector lending from banks. The Reserve Bank of India (RBI) has issued guidelines on priority sector lending, which includes the MSME sector.

»Having PAN (Permanent Account Number) and GST (Goods and Services Tax) numbers is mandatory for Udyam Registration since April 1, 2021.

Who can not apply for Udyam Registration ?

Following entities or individuals may not be eligible to apply for Udyam Registration:

» Enterprises that are not classified as Micro, Small, or Medium Enterprises (MSMEs) based on the criteria specified in the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The Act defines the eligibility criteria based on investment in plant and machinery or equipment for manufacturing enterprises, and investment in equipment for service enterprises.

» Enterprises engaged in activities or sectors that are excluded or restricted by the government from MSME registration. These exclusions or restrictions may be based on certain industries, environmental considerations, national security concerns, or other regulatory requirements.

» Enterprises that do not meet the age criteria. The Udyam Registration is generally open to enterprises that have been in operation for more than a specified period. The specific duration may vary based on the regulations and policies set by the government or relevant authorities.

» Enterprises that have already registered as Limited Liability Partnerships (LLPs) or companies under the Companies Act, 2013, may not be eligible for Udyam Registration.

As per the revised guidelines issued by the Ministry of Micro, Small and Medium Enterprises (MSME) in 2020, entities engaged in retail and wholesale trade are not eligible to apply for Udyam Registration, that businesses primarily involved in activities classified under the NIC codes related to retail and wholesale trade are excluded from registering under the MSME sector.

The intention behind excluding retail and wholesale trade from Udyam Registration is to focus on promoting and supporting manufacturing and service-based enterprises within the MSME sector. Retail and wholesale trade activities are not considered manufacturing or service-oriented activities but rather fall under the category of trading.

» Certain activities under NIC codes 45, 46, and 47 were excluded from registration on the Udyog Aadhaar Memorandum (UAM) portal as per Ministry's a.M.No.UAM/MC/01/2017-SME dated 27.06.2017.

» This exclusion was further validated for Udyam Registration through Ministry's a.M.no. 5/2(1)/2020-P&G/Policy dated 17.07.2020. It clarified that the NIC codes 45, 46, and 47 and the activities mentioned against these codes are not permitted for registration on the Udyam Registration portal (https://udyamregistration.gov.in).

» The government has received representations and decided to include retail and wholesale trades as MSMEs, allowing them to be registered on the Udyam Registration portal through issue of OFFICE MEMORANDUM dated 02.07.2021.

chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://udyamregistration.gov.in/docs/OM_regarding_inclusion_of_Traders02072021.pdf

»The benefits for retail and wholesale trade MSMEs are restricted to Priority Sector Lending. This means that these MSMEs in the retail and wholesale trade sector will be eligible for financial assistance and credit facilities under the Priority Sector Lending framework.

Now, enterprises that have Udyog Aadhaar Memorandum (UAM) under the NIC codes 45, 46, and 47 are now allowed to migrate to the Udyam Registration portal. Alternatively, they also have the option to file Udyam Registration afresh.

The Udyam Registration portal facilitates the registration of MSMEs, including those in retail and wholesale trades. Therefore, enterprises previously registered under UAM with the mentioned NIC codes can choose to migrate their registration to the Udyam Registration portal or file a fresh Udyam Registration, depending on their preference and requirements.

Criteria for MSME

As per the criteria specified in the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, an enterprise can be classified as a micro, small, or medium enterprise based on the following criteria:-

1. Micro Enterprise:

» Investment in plant and machinery or equipment does not exceed one crore rupees (INR 1,00,00,000).

» Turnover does not exceed five crore rupees (INR 5,00,00,000).

2. Small Enterprise:

» Investment in plant and machinery or equipment does not exceed ten crore rupees (INR 10,00,00,000).

» Turnover does not exceed fifty crore rupees (INR 50,00,00,000).

3. Medium Enterprise:

» Investment in plant and machinery or equipment does not exceed fifty crore rupees (INR 50,00,00,000).

» Turnover does not exceed two hundred and fifty crore rupees (INR 250,00,00,000).

These investment and turnover limits determine the classification of an enterprise as micro, small, or medium.

The classification is essential for availing the benefits and support provided by the government to MSMEs, such as access to schemes, subsidies, credit facilities, and preferences in government procurement.

Requirement for Registration:

Aadhaar number is one of the key requirements for Udyam Registration. Aadhaar is used for identity verification and authentication purposes during the registration process. However, it's important to note that additional documents and information may be required depending on the specific registration requirements and guidelines set by the government.

Regarding the Aadhaar being linked with a mobile number, to have your Aadhaar linked with a mobile number to facilitate the registration process smoothly. Linking Aadhaar with a mobile number helps in receiving OTPs (One-Time Passwords) and other communication during the registration process-

» Aadhaar number shall be required for Udyam Registration.

» The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).

» In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN(As per applicablity of CGST Act 2017 and as notified by the ministry of MSME vide S.O. 1055(E) dated 05th March 2021) and PAN along with its Aadhaar number.