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If you are an Indian MSME business (Micro, Small, and Medium Enterprises) then you are likely to be familiar with the terms Udyam, Udyog Aadhar, and MSME registration. And it’s natural for you to wonder if Udyam and MSME registration is the same, or if there is any difference between the two.
The MSME sector is a key contributor to the socio-economic development of the country, contributing towards its GDP, exports, and creating employment opportunities. However, the MSME sector has its own set of challenges to conquer – the reason why the government has from time to time initiated new policies and financial schemes for their growth.
The Udyam portal or MSME registration is one such initiative that has been introduced to enable MSMEs enjoy specific financial aid, subsidies, exemptions, and other benefits for business growth. On that note, let us understand the difference between Udyam and MSME and/or is Udyam and MSME the same – if not, how are they different.
What is an MSME?
Let us start with the meaning of an MSME – Micro, Small, and Medium Enterprises. The definition of MSMEs as appearing in the MSMED Act, 2006 refers to small businesses primarily from the manufacturing (production) and services sector. In a revised definition of MSMEs, wholesale traders and retailers were also included in the gamut of MSMEs to extend the benefits offered (especially priority sector lending).
Initially the categorisation of MSMEs was based on the investment made in plant and machinery/equipment. However, keeping up with changing times, a revised and new MSME classification was made in 2020. As per the new categorisation of MSMEs, there is a shift in their definition by having a composite criteria for annual turnover and investment made in plant and machinery.
Investment in plant/machinery
|Micro enterprise||Less than ₹5 crores||Less than ₹1 crore|
|Small enterprise||Up to ₹50 crores||Less than ₹10 crores|
|Medium enterprise||Up to ₹250 crores||Less than ₹50 crores|
What is Udyam?
Udyam is an online portal, launched by the Union MSME Ministry in 2020, for registering MSMEs in India. Based on a simple, online registration procedure, through self-declaration requiring minimum documentation, MSMEs can register their businesses.
Registration is free and paperless requiring only Aadhaar (and PAN card at a later stage) to get started. After completing the Udyam registration process online, the MSME gets an e-certificate called ‘Udyam Registration Certificate’ through which relevant information about the business can be accessed.
The Udyam portal is linked to other government platforms including Income Tax (IT) and GST, and can automatically fetch the business’s tax, investment, and turnover details from the relevant platforms.
Registration on the Udyam portal is not mandatory for a business. However, it is recommended that all MSMEs register their business on the Udyam portal. This will ensure that they are acknowledged as a MSME, and can accordingly enjoy the benefits offered such as:
• Exemption from EMD and tender fees (at times) in government eProcurement
• Access to funds through MSME loan schemes by the government
• Government subsidies, tax benefits, credit facilities and support to set up and grow their businessAs of February 20023, there were 1,41,28,891 businesses registered on the Udyam portal.
Difference between MSME and Udyam registration
This brings us to the crucial question – if Udyam registration and MSME is same?
Initially, the government had introduced the Udyog Aadhar for MSMEs to register their business. However, as of July 2020, Udyam is the new portal for MSME registration.
The Udyog Aadhaar MSME registration process was complex. There were multiple steps involved making it a time-consuming process. This naturally did not benefit the cause as few MSMEs were able to complete the process and reap its benefits.
Thus, a change was required leading to establishing the Udyam registration portal as a single online platform for MSME registration. It is the replacement of the old MSME registration process through Udyog Aadhaar.
- Any new or existing MSME can register on the Udyam portal for free
- Businesses that were registered with Udyog Aadhaar can also migrate by re-registering
- Businesses with UAM or EM-II (Entrepreneurs Memorandum Part-II) will have to re-register
- MSMEs can only register once on the Udyam portal though they can add more than one activity (e.g., manufacturing, services, both)
- To learn more about the Udyam portal registration, visit the official site at: udyamregistration.gov.in
Before Udyam was introduced, the registration of MSMEs was a state-based activity. It required businesses to manually fill documents to get a MSME or SSI registration (Small Scale Industries). With the MSMED Act, 2006 there was the introduction of EM-1 and EM-II, which gradually took the MSME registration process online to make it easy to access anytime, anywhere.
Udyam is an online portal that allows MSMEs to register their businesses for free in a quick, paperless manner. It’s a self-declaration process that requires minimal documentation. MSMEs after enrolment can download an e-Certificate for Udyam registration that contains basic business details.As of 2020, Udyam is the only portal MSMEs need to register on to get recognised as a MSME unit and obtain a digital certificate. Previous registrations on any other official portal can be migrated to Udyam.
Udyog Aadhaar/MSME registration vs Udyam registration
With the understanding of how the MSME registration process evolved over the years, let us take a look at the basic differences between Udyog Aadhaar and Udyam enrolment/registration.
Udyog Aadhaar platform
Udyam portal (since 2020)
|Registration process||Online and offline, requires Aadhaar and PAN card||Online, requires mobile linked Aadhaar card and later PAN card|
|Declaration & documentation||One page form, self-certify details with certificates for Udyog Aadhar memorandum (UAM)||Longer form, self-declaration, paperless process with no document upload required|
|Fees||No fees required||Free enrolment for all MSMEs|
|Integration||Not integrated with other government portals||Linked to GST and IT portals for all business financial details|
|Certification||Udyog Aadhar certificate received after verification is complete (12 digit unique number)||e-Certificate – Udyam Registration Certificate available with Udyam Registration Number (URN)|
|Status||Businesses need to migrate and re-register on Udyam||The only portal MSMEs need to register on|
|Number of registrations||Multiple registrations allowed (industry-specific)||Single registration only (linked to Aadhaar)|
What is MSME Udyam?
MSME Udyam refers to:
- A government online portal that allows MSMEs to register their business in a simple, paperless, self-declaration based manner, to get recognised as a MSME
- An e-Certificate (with URN) that comes with a QR code and provides details about a business
- An acknowledgment of the category of MSME a business belongs to based on turnover and investment (i.e., micro, small or medium enterprise)
- An initiative that provides MSMEs with multiple benefits to grow their business and solve challenges (i.e., benefits of Udyam registration for MSMEs)
How to register on Udyam portal?
As stated previously, the online Udyam MSME registration process is completely digital and based on self-declaration. It is also less time-consuming. For businesses that are eligible for Udyam registration, the process is simple and quick:
- Visit the Udyam portal and click on ‘For new entrepreneurs’ (i.e., businesses not registered on the Udyog Aadhar portal)
- Enter Aadhaar details and Entrepreneur’s name to receive OTP for verification
- Add PAN and business PAN details, type of business, and update other requested details (e.g., NIC number, bank details etc.)
- Get final OTP and submit the form
- Check mobile/email for URN and Udyam e-Certificate
- Download Udyam registration certificate from the website
MSME registration and Udyam: Same or different
To sum it up, here’s what you need to know about the Udyam-Udyog Aadhar-MSME registration in India:
- As of July 2020, Udyam is the only platform MSMEs need to register on to be recognised as a MSME (check the list of MSME businesses in India)
- There is no difference between MSME and Udyam in that the Udyam registration certificate is an identification of a business as an MSME
- Udyog Aadhar was the old platform requiring registration for MSME status recognition
- Businesses that had registered themselves on Udyog Aadhar should migrate and re-register themselves on Udyam
- The main difference between Udyog Aadhar and Udyam enrolment is in ease of registration and the minimal time required
- Udyam registration is not mandatory for MSMEs – however it offers several benefits that can enable business growth and ease of doing business