MSME (udyam registration
Need for indian government to introduce MSME registration
The Indian government introduced MSME registration to address the challenges faced by Micro, Small, and Medium Enterprises (MSMEs) in India and to promote their growth and development. The need for MSME registration arose due to the following reasons:
- Lack of access to credit: MSMEs often face difficulties in obtaining credit from banks and financial institutions due to the lack of collateral and financial history. MSME registration enables them to get access to credit at lower interest rates and easier terms.
- Lack of formalization: Many MSMEs operate in the informal sector and are not registered with the government. This makes it difficult for them to participate in government tenders and access various schemes and benefits provided by the government.
- Limited market access: MSMEs often face challenges in accessing larger markets due to their limited scale of operations. MSME registration enables them to participate in government procurement and expand their market reach.
- Lack of technology and innovation: MSMEs often lack access to technology and innovative ideas, which limits their growth potential. MSME registration enables them to access various schemes and benefits provided by the government for technology upgradation and innovation.
- Limited access to skilled workforce: MSMEs often face difficulties in attracting skilled workers due to the lack of formal employment opportunities. MSME registration enables them to participate in various schemes and benefits provided by the government for skill development and training.
The introduction of MSME registration is a significant step towards promoting the growth and development of MSMEs in India. It provides them with access to credit, markets, technology, and skilled workforce, which can help them grow and contribute to the overall economic growth of the country.
Introduction of MSME Registration
The Government of India introduced the Udyam Registration portal on 1st July 2020, replacing the earlier Udyog Aadhaar registration process, to simplify the registration process for Micro, Small, and Medium Enterprises (MSMEs). Udyam Registration is an online portal that allows MSMEs to register themselves and obtain a unique identification number called the Udyam Registration Number (URN).
The Udyam MSME registration aims to promote ease of doing business for MSMEs in India by providing a single-window registration process for various schemes and benefits provided by the government. Udyam Registration is based on self-declaration and does not require any documents or certificates to be uploaded at the time of registration.
The Udyam Registration is categorized based on the investment and turnover of the enterprise as follows:
Micro-enterprises: Those with an investment of up to Rs. 1 crore and a turnover of up to Rs. 5 crore.
Small enterprises: Those with an investment of up to Rs. 10 crore and a turnover of up to Rs. 50 crore.
Medium enterprises: Those with an investment of up to Rs. 50 crore and a turnover of up to Rs. 250 crore.
The benefits of Udyam MSME registration include access to credit at lower interest rates, various tax benefits, subsidies, and schemes from the government, and priority in government procurement.
Udyam MSME registration is a simple and easy process that can be completed online through the official Udyam Registration portal. MSMEs can also update their details or migrate from Udyog Aadhaar to Udyam registration through the portal.
Benefits of MSME (Udyam) registration
The Udyam MSME registration provides several benefits to Micro, Small, and Medium Enterprises (MSMEs) in India, which are as follows:
- Access to credit at lower interest rates: MSMEs registered under Udyam are eligible for various credit schemes at lower interest rates from banks and financial institutions.
- Eligibility for government schemes and benefits: Udyam registration enables MSMEs to access various schemes and benefits provided by the government, such as subsidies, tax benefits, and incentives for technology upgradation, among others.
- Priority in government procurement: MSMEs registered under Udyam are given priority in government procurement, which increases their chances of winning government contracts.
- Protection against delayed payments: The government has mandated that all public sector undertakings and government departments must make payments to MSMEs within 45 days of the receipt of goods or services. In case of delays, MSMEs can claim interest on delayed payments.
- Easy access to various registrations and licenses: Udyam registration enables MSMEs to easily obtain various registrations and licenses required for doing business, such as GST registration, Import-Export Code (IEC), among others.
- Expansion of business: Udyam registration enables MSMEs to participate in various government tenders and contracts, which can help them expand their business and increase their market reach.
- Improved credibility: Udyam registration improves the credibility of MSMEs as it provides a unique identification number, which can be used to establish their credentials.
In summary, Udyam registration provides various benefits to MSMEs, which can help them grow and contribute to the overall economic growth of the country.
Eligibility to get register as MSME
Any entity engaged in manufacturing or service activities can register under MSME Udyam, provided they meet the criteria set by the Ministry of Micro, Small and Medium Enterprises (MSMEs). The following entities can register under Udyam:
- Proprietorships: Entities owned and operated by a single individual.
- Partnership firms: Entities owned and operated by two or more individuals.
- Hindu Undivided Family (HUF): Entities owned and operated by a family.
- Limited Liability Partnership (LLP): Entities registered under the Limited Liability Partnership Act, 2008.
- Private Limited Company (Pvt. Ltd.): Entities registered under the Companies Act, 2013.
- Public Limited Company (Ltd.): Entities registered under the Companies Act, 2013.
- One Person Company (OPC): A type of Pvt. Ltd. company with only one shareholder.
To register under Udyam, entities must meet the investment and turnover criteria set by the government, which are as follows:
Micro-enterprises: Those with an investment of up to Rs. 1 crore and a turnover of up to Rs. 5 crore.
Small enterprises: Those with an investment of up to Rs. 10 crore and a turnover of up to Rs. 50 crore.
Medium enterprises: Those with an investment of up to Rs. 50 crore and a turnover of up to Rs. 250 crore.
Entities that meet the criteria can register themselves on the Udyam Registration portal and obtain a unique identification number called the Udyam Registration Number (URN).
