Small medium enterprises (MSMEs) are the backbone of India’s economy, representing almost 30% of its Gross Domestic Product (GDP). To boost the growth of these enterprises and provide them with more benefits, the Government of India launched the Udyam registration portal on July 1, 2020. This dedicated online platform enables MSMEs to register their businesses and avail themselves of various government benefits. Udyam registration is a type of e-certification provided by the Indian government to certify these enterprises as MSMEs and to offer a range of benefits based on their annual turnover and investment. In this article, we’ll explore the benefits of Udyam registration for MSMEs and how to register online.
Explanation of Udyam registration and its significance for small and medium-sized businesses in India
Small and medium-sized businesses are the backbone of the Indian economy, and now more than ever, the Indian government has recognized their significance. To address the various challenges faced by SMEs such as lack of access to credit and delayed payments, the Ministry of Micro, Small and Medium Enterprises (MSME) has launched a simplified online registration process known as Udyam registration.
The new online system is hassle-free, easy-to-use, and paperless. It provides small and medium-sized businesses with a unique identification number, known as Udyam Registration Number (URN), which is critical in demonstrating their legality and operational status. When businesses obtain Udyam registration, they can also access various schemes and incentives offered by the Indian government, thereby facilitating their growth.
Moreover, registering for Udyam enables businesses to avail of credit facilities and loans from banks and financial institutions, protect themselves against delayed payments and resolve disputes quickly and efficiently. This registration mechanism also enhances the marketability and visibility of small and medium-sized businesses, making it easier for them to participate in trade fairs and showcase their products. Udyam registration is a crucial step for any SME in India wishing to succeed in today’s competitive business ecosystem.
II. Benefits of Udyam registration
Access to government schemes and incentives
Throughdyam registration, small and medium-sized businesses in India have access to various government schemes and incentives aimed at promoting their growth and development. These schemes include subsidies, tax exemptions, credit facilities, and other incentives essential for MSME growth. Registered MSMEs are also eligible for a variety of credit facilities, including priority sector financing and collateral-free loans at lower interest rates than MSMEs without registration. Moreover, Udyam registration provides businesses with a unique identification number called Udyam Registration Number (URN), which helps them establish their legitimacy and raise their exposure among prospective clients and suppliers.
The registration process is simple and conducted online, which lessens the administrative burden on MSMEs and frees them up to concentrate on expanding their operations. Registered MSMEs are granted preference in government procurement, which can be a significant source of income and aid in business growth. Participating in government procurement is easier for registered MSMEs as they can participate in various tenders, exhibitions, and other government procurement processes.
In summary, registering for Udyam provides MSMEs with access to a wide range of government schemes and incentives that can assist them in increasing their market share and profitability. With the benefits of Udyam registration, small and medium-sized businesses in India can expect to have a competitive edge and sustained growth.
Availability of loans and credit facilities
Udyam registration in India has brought a tremendous change in the world of small and medium-sized businesses. It has opened up huge opportunities for them, including access to government schemes and incentives. The MSMEs registered under the Udyam scheme can avail themselves of various credit facilities and loans from lending institutions.
The collateral-free loans from public and private banks are a great boon for small businesses, as they don’t need to put up any assets as security. The interest rates on these loans are also considerably lower, thus saving a lot of money for the businesses.
Furthermore, the Udyam registration provides a unique identity number to the business, making it easy for lenders to identify whether the business is eligible for loans or not. The turnover of such businesses is also linked with government databases, providing a sense of transparency to the lending institutions.
The businesses registered under the scheme are also protected against delayed payments, which is a common problem faced by small businesses. The concession on electricity bills is another advantage, which can help them save a substantial amount on their operational costs.
The Udyam registration scheme has made it easy for small and medium-sized businesses to avail themselves of loans and credit facilities from lending institutions. With the process being entirely online, the businesses can apply from the comfort of their home or office, thus making the entire process hassle-free.
Protection against delayed payments
Delayed payments are a significant concern for small and medium-sized businesses in India. The Udyam registration process can help protect against these delays by enabling businesses to file complaints against buyers who delay payment for goods and services delivered. Under the MSME Samadhaan portal, businesses can register cases about delayed payments against the buyer of goods/services before the Micro and Small Enterprise Facilitation Council (MSEFC). This portal enables micro and small enterprises to directly file their cases related to delays in payment, and these complaints will be visible to the central ministries, state governments, and department CPSEs for pro-active actions. Additionally, the portal will significantly facilitate the monitoring of delayed payments efficiently and enable businesses to access and monitor their cases easily.
The consequences of delayed payments can be severe for SMEs, and businesses are required to pay interest on the amount owed at three times the bank rate notified by the Reserve Bank of India. This penal interest payment made by the buyer is not allowed as a deduction under the Income Tax Act, making the burden even higher for small businesses. Consequently, it becomes imperative to raise concerns about delayed payments for micro and small enterprises, specifically related to the Ministries and Departments under the Union Government and Central Public Sector Enterprises, as well as all State governments and theirDelayed can be a major concern for small and medium-sized businesses in India. However, the Udyam registration offers protection against such delayed payments. According to the MSME Samadhaan – Delayed Payment Monitoring System, if a buyer fails to make payment to a micro or small enterprise within the agreed-upon time, then they must pay compound interest with monthly interest rests to the supplier. The penal interest chargeable for delayed payment to an MSME enterprise is three times the bank rate notified by the Reserve Bank of India. The buyer is also required to disclose the principal amount and interest due to a micro or small supplier at the end of the accounting year if they require auditing their annual accounts.
However, withOne of the major benefits of Udyam registration for small and medium-sized businesses in India is its protection against delayed payments. With the launch of MSME Samadhaan, a delayed payment monitoring system by the Ministry of Micro, Small and Medium Enterprises (MSME), entrepreneurs can instantly register their cases against buyers who delay the payment for goods and services delivered. This will help businesses get their payments on time, without having to wait for months or even years.
In case the buyer fails to make the payment on time, they will have to pay compound interest to the supplier with monthly interest rests. The penal interest charged for delayed payment to an MSME enterprise is three times the bank rate notified by the Reserve Bank of India. Moreover, there is a requirement to disclose in the annual statement about the amount of delayed payment interest due to MSME suppliers.
By registering their cases on the MSME Samadhaan portal, small businesses can avail themselves of a quick and effective resolution of disputes related to delayed payment or non-payment. This will encourage timely payment and improve cash flow for SMEs, which is crucial for their survival and growth. Udyam registration not just offers protection against delayed payments, but also provides access to government schemes and incentives, availability of loans and credit facilities, quicker resolution of disputes, enhanced marketability and visibility.
Quicker resolution of disputes
In the business world, disputes are almost inevitable. However, resolving these disputes can be a long and costly process, particularly for small and medium-sized businesses. Fortunately, Udyam registration provides businesses with a quicker resolution of disputes mechanism. The conciliation and arbitration process is a cost-effective and efficient way to resolve disputes. It helps businesses avoid lengthy legal proceedings and reach a mutually acceptable solution.
Additionally, Udyam registration provides businesses with protection against delayed payments, ensuring that they receive their payments promptly. This is important as delayed payments can have a significant impact on a business’s cash flow and disrupt its operations.
With the help of Udyam registration, businesses can get back to focusing on what matters most – growing and expanding their organizations. They can participate in government tenders and exhibitions with ease, showcase their products and services, and enhance their marketability and visibility.
In conclusion, Udyam registration is a beneficial scheme for small and medium-sized businesses in India. It offers them a range of benefits, including quicker resolution of disputes, protection against delayed payments, and enhanced marketability and visibility. By registering for Udyam, businesses can access government schemes and incentives, avail themselves of credit facilities and loans from banks and financial institutions, and benefit from various tax breaks.
Enhanced marketability and visibility
Enhanced marketability and visibility is one of the major benefits that small and medium-sized businesses can gain through Udyam registration. By registering with Udyam, businesses can showcase their products and services on a common platform, easily participate in government tenders and exhibitions, and gain exposure to potential clients and suppliers. Below are some ways in which Udyam registration helps businesses enhance their marketability and visibility:
– Businesses get a unique identification number known as Udyam Registration Number (URN), which helps establish their authenticity and legitimacy among clients and suppliers.
– Udyam registration provides MSMEs access to various government schemes and incentives, which can help them invest in new technology, improve product quality, and expand their businesses. By availing of these schemes and incentives, businesses can improve their product offerings and make themselves more competitive in the market.
– Udyam registration also helps businesses gain access to credit facilities and loans easily, which can be used to invest in marketing and advertising. By investing in marketing, businesses can improve their brand image, attract more customers, and increase their overall revenue.
– By participating in government tenders and exhibitions under the Udyam registration scheme, businesses can showcase their products and services to a wider audience, gain recognition and credibility, and build long-term relationships with potential clients and suppliers.
In summary, Udyam registration enhances marketability and visibility for small and medium-sized businesses by providing them with a unique identification number, access to government schemes and incentives, credit facilities and loans, and the opportunity to showcase their products and services on a common platform.
III. Eligibility criteria for Udyam registration
Categories of businesses that can apply for Udyam registration
Udyam registration, formerly known as MSME registration, is open to various types of businesses in India. As per the Micro Small and Medium Enterprises Development (MSMED) Act of 2006, any enterprise that carries out manufacturing activities or provides services can register on Udyam as an MSME as long as it meets the criteria for turnover and investment in plant and machinery. Here are the categories of businesses that can apply for Udyam registration:
1. Proprietorship firms: Businesses that are owned and operated by a single person are eligible for Udyam registration. Proprietorship firms can avail government schemes, loans, protection against delayed payments, and other benefits by getting this registration done.
2. Partnership firms: Partnerships are businesses that have two or more owners and share the profits and losses. Any such partnership firms that fall within the turnover and investment criteria can apply for Udyam registration.
3. Limited liability partnerships (LLPs): LLPs are a hybrid of partnerships and companies. LLPs provide limited liability to their owners while maintaining the flexibility of partnerships. LLPs that meet the turnover and investment criteria can apply for Udyam registration.
4. Private and public limited companies: Companies that are registered under the Companies Act, 1956 or the Companies Act, 2013 can apply for Udyam registration if they meet the eligibility criteria.
5. One Person Companies (OPCs): OPCs are companies that have only one director and shareholder. OPCs meeting the eligibility criteria can register for Udyam.
It is important for businesses to check their eligibility before applying for Udyam registration and ensure they meet the criteria and providing the basic documents required. Udyam registration comes with various benefits, including access to government schemes and incentives, loans and credit facilities, protection against delayed payments, quicker resolution of disputes, and enhanced marketability and visibility.
Requirements for documents and information
To register your small or medium-sized business with the Udyam portal, there are certain documents and information you need to provide. The good news is that the government has made the process much simpler and requires minimal documentation. To register, you will need to provide the following documents:
1. A copy of your Aadhaar card that has been properly connected to an active mobile number.
2. Aadhaar-linked Pan Card Copy of Individuals Proprietors Partners and Directors.
3. If previously registered MSME CERTIFICATE.
4. The company’s PAN card (constitution whatever it may concern).
5. The company’s GST NO (please note GST NO PREPARED BY THE COMPANY PAN NO IS ESSENTIAL EXCEPT INDIVIDUAL APPLY).
6. Company email address and phone number to reach you.
7. Bank information for the individual or business, either a savings account or a current account.
8. ITR return statements with profit and loss information (Please request the clients not to send acknowledgement only).
9. Indicate whether the company’s unit name and office are the same as the company’s registered name and office. Details must be received if they have any production or service units such as any branch offices.
10. Indicate their preferred social category, such as General SC ST or OBC.
11. If any specially impaired.
12. Declare if they intend to register as a manufacturer, a services provider, or both.
13. How many employees, male, female, or other, work at the company?
14. Do they intend to take part in the Gem Portal?
Providing these documents and information is essential to gain all the benefits attached to the MSME sector. Ensure that you have all the required documentation before applying for Udyam registration. The process is relatively straightforward and can help your small or medium-sized business gain access to government schemes, loans and credit facilities, protection against delayed payments, quicker dispute resolution, enhanced marketability and visibility, and much more.
IV. How to apply for Udyam registration
Steps for registering online
Registering for Udyam registration is a straightforward process and can be done online. To register, an individual needs to follow three easy steps outlined below:
Step 1: Apply for Udyam registration online – An individual who wants to establish a micro, small or medium enterprise needs to apply for online registration through the . There is no need to upload any documents, certificates or papers. The registration process is based on self-declaration.
Step 2: Get the Udyam registration number – On successful submission of the application, a unique identification number known as the Udyam registration number or a permanent identification number is issued to the enterprise.
Step 3: Get the Udyam registration certificate – An e-certificate called the Udyam registration certificate is issued to the enterprise on completion of the registration process. The certificate is a proof of the enterprise’s registration and can be used for availing benefits from various government schemes and incentives.
To ensure a smooth registration process, individuals should keep in mind the following points:
– The form of registration is available only on the Udyam registration portal.
– Aadhar number is mandatory for the registration process.
– No fee is required for registration.
– Enterprises should specify the number of activities like manufacturing and service during the registration process.
– Misrepresenting or suppressing the self-declared facts and figures can attract penalties under the law.
By registering with Udyam, small and medium-sized businesses in India can avail of various benefits and access government schemes that were previously unavailable. The process of registration is simple, straightforward and can be completed online, making it easy for enterprises to register and avail benefits.
After completing the Udyam registration process, the final step is to make the payment. This payment enables you to receive the Udyam Registration certificate, which is a crucial document that validates your MSME status. The payment for Udyam registration can be made via online methods such as credit/debit cards, UPI, and internet banking. ThereOnce the registration process is complete, the MSME can obtain its registration certificate online through email. The Udyam Registration process is completely paperless and based on self-declaration, which means the applicant has to provide all the necessary information and documents through an online form. In order to complete the registration process successfully, the applicant must keep the Adhaar, PAN, GSTIN, and Bank Current Account details handy. The government uses the PAN and GST linked details on investment and turnover of the enterprise from the government database. The online MSME registration is simple and user-friendly. After generating the OTP through Adhaar, filling the form with all the required details and submitting it will complete the registration process. The registration certificate is typically sent to the registered email address within 1-2 hours. There is no fee charged for Udyam registration and it is valid for the lifetime of the enterprise. It is important to note that only the Udyam Portal should be used for MSME registration or for undertaking any activity related to the process. No other private online or offline system, service agency, or person is entitled to register any MSME. It is advised that all MSMEs register themselves with Udyam to avail of its various benefits that enable ease of doing business.
V. Recap of the benefits of Udyam registration for small and medium-sized businesses in India
In summary, Udyam registration provides various benefits for small and medium-sized businesses in India. With Udyam registration, businesses can access government schemes and incentives, avail of credit facilities and loans from banks and financial institutions more easily, and protect themselves against delayed payments. Moreover, businesses can resolve disputes quickly and efficiently and enhance the marketability and visibility of their products and services.
Here is a quick recap of the benefits of Udyam registration for small and medium-sized businesses:
1. Access to government schemes and incentives
2. Availability of loans and credit facilities
3. Protection against delayed payments
4. Quicker resolution of disputes
5. Enhanced marketability and visibility
Furthermore, businesses that register for Udyam can benefit from a range of subsidy and concessional offers on various bills such as electricity bills, credit rating, and NSIC performance fees. Udyam registration also provides different reservation policies for production or manufacturing units.
In conclusion, Udyam registration is an essential initiative for small and medium-sized businesses in India. By registering for Udyam, businesses can enjoy a range of benefits that will help them grow and succeed in today’s competitive business environment.
Importance of Udyam registration in the current business environment
Udyam registration is the need of the hour when it comes to small and medium-sized businesses in India. The current business environment is highly competitive and demanding, and having an Udyam registration can provide a significant advantage to such enterprises. With the government’s support and incentives, these businesses can stand a better chance to grow and sustain in the market.
Firstly, Udyam registration provides easy access to government schemes and incentives like collateral-free loans from banks, special considerations in international trade, and subsidies on NSIC performance fees and credit rating. It also offers protection against delayed payments, quicker dispute resolution, and lower interest rates on bank loans. All of these benefits create a favorable business environment for small and medium-sized enterprises to grow.
Moreover, Udyam registration enhances the marketability and visibility of the registered businesses. It grants them legal and operational certification, which improves their credibility and attracts more customers, investors, and business partners.
To summarize, Udyam registration is highly beneficial for small and medium-sized businesses, especially in the current economic climate. It can streamline the registration process, reduce bureaucratic hurdles, and provide a better chance for growth, sustainability, and profitability. Therefore, it is essential for all eligible enterprises to get registered and leverage the benefits offered by the government.
VI. Documents required for Udyam registration in India
1. Aadhaar Card of the applicant: It is mandatory for the applicant to have an Aadhaar card for Udyam registration.
2. PAN Card: The PAN card is also required for Udyam registration.
3. Business Address proof: It can be a rental agreement or a property tax receipt. In case of a home-based business, any utility bill in the name of the proprietor can suffice as address proof.
4. Bank account details: A cancelled cheque or bank statement in the name of the applicant is required.
5. Mobile number and email ID: The applicant must provide a valid mobile number and email ID for communication purposes.
VII. Advantages of Udyam registration in India
1. Recognition: Registration under Udyam makes a business entity legally recognized and provides it with a unique identification number.
2. Access to schemes and subsidies: Small businesses registered under Udyam can easily access various schemes and subsidies offered by the Government of India.
3. Lower interest rates: Registered Udyam businesses can avail various credit facilities at lower interest rates as compared to non-registered businesses.
4. Ease of doing business: Udyam registration has simplified the process of compliance for small businesses, making it easier for them to navigate regulations.
VIII. Disadvantages of Udyam registration in India:
1. Stringent regulations: Udyam registration brings with it certain regulations that a small business needs to comply with, which can be a challenge.
2. Additional costs: Registering under Udyam may incur additional costs, which may not be feasible for small businesses with limited financial resources.
IX. Process of getting Udyam registration in India
1. Visit the official website: The applicant needs to visit the official Udyam registration website (www.udyamregistration.gov.in).
2. Provide Aadhaar card details: The applicant has to provide their Aadhaar card number and other personal details.
3. Provide business details: The applicant needs to provide details about their business, such as its name, type, and location.
4. Upload documents: The applicant should upload the necessary documents such as PAN card, address proof, and bank account details.
5. Submit application: After filling in all the details, the applicant needs to submit their application.
X. Types of Udyam registration in India
1. Micro Udyam: Businesses with an investment of up to Rs. 1 crore and turnover of up to Rs. 5 crore can register under Micro Udyam.
2. Small Udyam: Businesses with an investment of up to Rs. 10 crore and turnover of up to Rs. 50 crore can register under Small Udyam.
3. Medium Udyam: Businesses with an investment of up to Rs. 50 crore and turnover of up to Rs. 250 crore can register under Medium Udyam.
XI. Frequently Asked Questions about Udyam registration in India
1. Who can apply for Udyam registration?
Any business entity that is involved in manufacturing, production, processing, or preservation of goods can apply for Udyam registration.
2. Can an individual apply for Udyam registration?
Yes, an individual can apply for Udyam registration if they are involved in any of the eligible business activities.
3. What is the fee for Udyam registration?
There is no fee charged for Udyam registration. The process is free of cost.
4. Is Udyam registration mandatory?
No, Udyam registration is not mandatory. However, it is advisable for small businesses to register under Udyam to avail various government schemes and benefits.
5. Can the details provided during Udyam registration be updated later?
Yes, the details provided during Udyam registration can be updated later if needed.