The emerging sector in India, namely the micro, small and medium enterprises (MSME) is no stranger to the Udyam Registration portal and the benefits of Udyam Registration for MSMEs. Launched in July 2020, the portal as of November 2022 had 12,201, 228 MSMEs registered, with micro-enterprises making up the lion’s share of 96.17% (Source: IBEF, MSME Industry in India).
The online Udyam registration process is simple and paperless and is considered a step towards the holistic goal of MSME digital transformation and growth. Udyam registration also provides MSMEs with a unique identity number and the MSME Udyam registration certificate, which further enables ease-of-doing-business, brings transparency, and a host of financial benefits.
There is an estimated 7.9 million micro, small, and medium enterprises (MSME) in India, contributing to 33% of the country’s GDP (Source: TOI, October 2022). And, as a MSME business owner if you have not yet registered and downloaded your Udyam registration certificate, there are benefits and opportunities you are missing out on.
On that note, let us understand the Udyam portal, the process of online registration, and benefits to MSMEs better.
What is Udyam registration?
Udyam or MSME registration is a government initiative that encourages MSMEs to sign-up and self-declare themselves as micro, small, or medium enterprises, in a hassle-free manner. The online registration process requires PAN and Aadhaar details, to generate a Unique Identity Number (UIN) and a MSME Udyam certificate (e-certificate) which allows the MSME to avail several benefits such as subsidies, exemptions, concessions, and ease in government tender application.
Apart from businesses in the manufacturing and service sectors, MSMEs today also include wholesalers and retailers (as of July 2021).
Benefits of Udyam registration: Why your MSME should register on Udyam portal
A commonly asked question is, is Udyam registration necessary?
The portal was set up exclusively to aid MSMEs in their growth journeys, by providing them with support and new opportunities. As such, if you are an emerging business, it is highly recommended to register your business on the portal and reap the benefits of MSME Udyam Registration in India.
Listed below are some of the benefits of registering your MSME business on the Udyam portal.
1. Access to government MSME loan schemes
Financing is probably one of the most common challenges your MSME faces. Especially, with business running sluggishly since the last two years, it is understandable if your business is facing financial challenges.
To help businesses in these difficult times, the government introduced several MSME loans to address different aspects of business challenges (e.g., working capital loans, loans for purchasing machinery, business expansion loans, special loans for women entrepreneurs etc.).
Since these loans are exclusively for MSMEs, they come with low interest rates, minimum documentation requirements, repayment terms and more. In many cases, these are collateral-free loans (commonly known as unsecured business loans) that do not require businesses to keep any asset as security.
However, if you are keen to avail MSME business loans, it is necessary for you to register your business on Udyam and be officially classified as a MSME.
Some of the government loan schemes for MSMEs include:
- MUDRA loans under Pradhan Mantri Mudra Yojana (PMMY)
- Stand-up India loan
- PSB loan in 59 minutes
- Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTSME)
- AROG special scheme by SIDBI
Alternatively, you may visit the UdyamiMitra homepage to learn more about MSME government loan eligibility.
2. Apply to government tenders
When it comes to government tendering, the MSME Udyam e-certificate can be a great advantage. The government publishes thousands of tenders every month (central and state) on its online eProcurement system and GeM portal.
With the goal to enable more participation from the MSME sector, there are tenders published that MSMEs can apply to (either as a single bidder or sub-contract). This not only creates new business opportunities for MSMEs but also helps them in building their portfolio and creating business credibility. These tenders have simpler requirements and documentation, to enable MSMEs to bid and stand a chance at winning.
To participate in these tenders, and leverage the exemptions and benefits, an Udyam registration certificate is required. For instance, being certified as a MSME, exempts you from paying Earnest Money Deposit (EMD) as per Rule 170 of GFR, and in several cases, the tender fees are also exempted (check tender documents for specifications).
When updating details for Udyam certificate generation, there is the option to get registered on the GeM portal (Government e-Marketplace). This means, you can easily get alerts on latest tenders published and bid for relevant ones hassle-free.
Every year, almost 20-25% of government tenders are contracted to MSMEs. With the MSME certificate classifying your business as a legit MSME, your chances of winning government contracts increase.
3. Enjoy government subsidies
As an Udyam registration certificate holder your business can also enjoy government subsidies. A subsidy is an financial aid or economic support that the government provides to MSMEs to release them from financial burdens.
With the Udyam certificate, there are several subsidies you can enjoy as a MSME. You can get a subsidy on:
- Direct tax laws (for the initial year depending on the type of business)
- Electricity bills for your manufacturing plants
- Industrial Promotion activities for promoting your business
- Trademark, patent registration (up to 50%), and barcode registration (up to 75%)
- Credit rating (based on turnover)
4. Avail exemptions and other financial benefits
One of the major advantages of Udyam registration is the exemptions and financial benefits (including tax subsidies, low interest rates, etc.) it offers MSMEs.
The Udyam portal was incorporated to recognise MSMEs and confirm that their enterprises are functional. By linking the platform to other government databases, namely Income Tax and GSTIN, it was further able to gather all financial data and tax details from the respective platforms, making it possible for MSMEs to be transparent about their turnover, taxes paid, GST, and overall business financial health.
Some of the exemptions that MSMEs can avail with the Udyam e-certificate include:
- Overdraft interest fee (1% discount paid)
- Up to 15 years exemption (instead of 10 years) on credit for minimum alternate tax (MAT)
Some of the financial benefits that MSMEs can get include:
- One time settlement fees on non-payment of dues
- Reimbursement of ISO registration fees
- Higher interest rates on delayed payments from other businesses
How to apply for Udyam registration certificate?
The procedure for Udyam registration is completely online. It is a one-time activity and designed in a way that once a MSME is registered on the platform, any additional data will be reflected/fetched across other government platforms namely Income Tax (IT) and GSTIN. There are some basic eligibility criteria (related to investments and turnover) and documents for Udyam registration, after which MSMEs can easily get their business registered on Udyam.
The steps to the Udyam portal registration process includes (for first time registration):
- Visit the official Udyam portal website
- Click ‘For New Entrepreneurs who are not Registered yet as MSME or those with EM-II’ to start the process and get the Udyam registration form
- Enter Aadhaar details and the OTP received to validate details
- Enter PAN details, select ‘Type of business/organisation’, and enter business PAN
- Update other details (e.g., NIC number, mobile number, bank details, turnover, etc.)
- Click to get final OTP
- Enter OTP and captcha to submit the form
- Check pop-up for status confirmation and URN
- Check mobile/email for Udyam Registration Number (URN) and Udyam e-certificate
- Visit the website and click on ‘Print/Verify’, and enter details to view certificate, print, or download Udyam Registration Certificate in PDF format
We have answered some common questions on Udyam registration, eligibility qualifications, MSME types, and more, to help you learn more about the importance of Udyam registration for your business.
Are there any Udyam registration fees?
Whether you are registering as a new business or migrating from Udyog Aadhar (i.e., users with UAM), Udyam registration is free. As a MSME you do not have to pay any amount to register your business on the Udyam portal and get your Udyam Registration Certificate.
Next steps: Getting started with Udyam Registration
The pandemic has been a difficult time for all businesses – large and small. While large businesses in most cases have been able to recover from the setback, it has been challenging for most MSMEs to perform like before.
With initiatives like low-interest loans, zero collateral loans, MSME tenders, and similar, the government is endeavouring to create opportunities for MSMEs to accelerate their business growth. Private banks and NBFCs also have relaxed loan eligibility for MSMEs to support them with funds when required.
The Udyam Registration Portal is one such initiatives that has been designed to make it easier for MSMEs to do business. As a MSME owner therefore, if you have not registered your business on the platform, it’s time for you to do so.
