Highlights of Udyam Registrations, Why Is It Important?

Udyam Registration is aimed at improving the Ease of Doing Business in India.


The Micro, Small, and Medium Enterprise sector has reached the brink of exhaustion with the onslaught of the pandemic. The situation is grim as there doesn’t seem to be hope for recovery post the second wave for small businesses without Government Intervention. In this regard, many measures are being taken by the Government, one of which is the Udyam Registration for recognition.

What is the Udyam Registration?

Udyam is a Portal where small enterprises can register themselves. It falls under the purview of the Ministry of Micro, Small and Medium Enterprises (MSME). It’s a portal where enterprises can get registered and recognised by the Government. Registration will facilitate easy access to enterprise information. It will also be helpful in quick linking with other Government schemes, regulations, and compliance norms like Income Tax and GST (Goods and Services Tax).

Why Udyam registration is important for SMEs

Udyam registration is important for SMEs due to the following key reasons

  • By registering on Udyam, your enterprise can acquire business tenders.
  • Your business can avail bank loans and credit at cheap interest rates of 1.5% lesser than regular bank loans.
  • You can also enjoy various tax holidays and exemptions post Udyam registration.
  • Small businesses across various industries will benefit from expedited license approvals, certifications, and Government registrations. Udyam registered enterprises will be prioritised over unregistered firms.
  • Other benefits include subsidies on tax, tariffs, and capital as well as reduced patent costs.

Eligibility Criteria and Application Process for Small Enterprises

Eligibility Criteria

Enterprises belonging to the manufacturing and services sector are mainly eligible for Udyam Registration. Earlier, wholesale and retail traders were not eligible for Udyam. But after their recent entry into the classification of Micro, Small, and medium enterprises, wholesalers and retailers are also eligible to apply.

Application Process

Here are some crucial pointers on the application process for enterprises.      

    • Irrespective of whether a business is involved in two or more activities, each enterprise needs to have one registration on Udyam.
    • Aadhaar provision

If the enterprise is a proprietorship firm, you need to submit the Aadhaar number of the owner.

If the enterprise is a partnership firm, you need to provide the Aadhaar number of the Managing Partner.

If it is a Hindu Undivided Family (HUF) business, the Aadhaar number of the Karta must be provided.

    • The application process is straightforward and it’s a one-time compliance for businesses.

Who comes under the ambit of micro, small and medium enterprises?

The following enterprises come under the ambit of Udyam Registration.

  • Micro enterprises are those having investment up to INR 1 Cr and turnover of up to INR 5 Cr.
  • Small enterprises with investment of up to INR 10 Cr and turnover of up to INR 50 Cr.
  • Medium enterprises with investment of up to INR 50 Cr and turnover of up to INR 250 Cr.
‘‘

Small businesses across various industries will benefit from expedited license approvals, certifications, and Government registrations.

What’s in it for me?

The Udyam registration was introduced as a unification of EM-II (Entrepreneurs Memorandum – II) and UAM (Udyog Aadhar Memorandum) registrations for small businesses. This compliance is aimed at improving the Ease of Doing Business for SMEs. The Government is keen on strengthening the MSME sector by facilitating faster recovery from the recent disruptions. Udyam Registration is also aimed at boosting economic activity as well as job creation among SMEs.

The new system created under Udyam will ease the process for small businesses registering as an MSME in India. After successful registration, your enterprise will receive an ‘Udyam Registration number along with an e-certificate which will be crucial documentation while availing benefits. Under Udyam, small enterprises have been classified as a ‘priority sector’ for lending by banks and financial institutions. Micro, small, and medium enterprises who have their registration and documentation in order will thus find it easier to avail collateral-free credit and loans.

DU Desk
DU Desk
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