Expert Assistance

UDYAM Registration is the new, simplified online process for registering Micro, Small, and Medium Enterprises (MSMEs) in India, launched by the Ministry of MSME.1 It replaces the former Udyog Aadhaar Memorandum (UAM) registration.2

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Why UDYAM Registration is Essential

 

UDYAM registration is crucial because it provides formal government recognition to MSMEs, which are the backbone of the Indian economy.3 This formal status is the key that unlocks a wide array of government support, schemes, and financial incentives designed to help small businesses grow, compete, and stabilize their operations.4

 

It aims to:

1. Simplify and Digitize: Make the process of officially registering a business completely paperless, free, and based on self-declaration, using only the Aadhaar number.5

    

2. Provide a Permanent Identity: Give each registered enterprise a unique and permanent Udyam Registration Number (URN) and a dynamic certificate.6

    

3. Ensure Policy Access: Act as the mandatory gateway for MSMEs to avail the various benefits and schemes rolled out by the Central and State Governments.7

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Key Benefits of UDYAM Registration

 

The UDYAM certificate provides significant advantages across finance, operations, and compliance:

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Financial and Credit Benefits

 

• Access to Collateral-Free Loans: Registered MSMEs can get unsecured loans up to a certain limit under schemes like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).9

   

• Lower Interest Rates: Banks often offer concessional interest rates (subsidies) on loans to Udyam-registered businesses, reducing the cost of capital.10

   

• Priority Sector Lending: MSMEs are classified under Priority Sector Lending (PSL) guidelines by the RBI, ensuring banks prioritize lending to them.11

   

• Tax Exemptions and Concessions: Eligibility for certain tax benefits and extensions on credit for Minimum Alternate Tax (MAT).12

   

Protection and Subsidies

 

• Protection Against Delayed Payments: Under the MSME Development Act, registered enterprises can charge a compound interest rate on payments delayed by buyers beyond 45 days and seek resolution through the MSME Samadhaan portal.13

   

• Reimbursement and Subsidies:

  • Subsidies for Patent and Trademark registration (up to 50%).14

     

  • Reimbursement of costs for obtaining ISO Certification.15

     

  • Concessions on electricity bills in some states.

 

Operational and Procurement Advantages

 

• Easier Government Tender Participation: Registered MSMEs get preference in government procurement policies and are often exempted from paying the Earnest Money Deposit (EMD) and tender fees.16

   

• Enhanced Business Credibility: Formal recognition boosts the business's trust factor and credibility when dealing with banks, large companies, and government departments.17

   

• Simplified Compliance: The registration process is integrated with Income Tax and GST systems, automatically fetching key details and reducing manual effort for compliance and updates.18

   

• Access to Government e-Marketplace (GeM):19 Easier onboarding onto the GeM portal, allowing them to sell their products and services directly to government organisations.

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UDYAM REGISTRATION: STEP-BY-STEP PROCESS

 

The registration is done exclusively on the official Udyam Registration Portal ($\text{udyamregistration.gov.in}$).

 

Step 1: Aadhaar and PAN Verification

 

1. Visit the Official Portal: Go to the official Udyam Registration website.

2. Select Registration Type: Click on the link for "New Entrepreneurs who are not Registered yet as MSME."

3. Enter Aadhaar Details: Enter your Aadhaar Number and Name as per the Aadhaar card.

   • Proprietorship: Aadhaar of the Proprietor.

   • Partnership: Aadhaar of the Managing Partner.

   • Company/LLP/Trust/Society: Aadhaar of the Authorized Signatory.

4. Validate and Generate OTP: Click the button to validate the Aadhaar and receive an OTP on the mobile number linked to the Aadhaar.

5. PAN Validation: After Aadhaar is verified, you will be directed to the PAN verification page.

   • Select the Type of Organization (e.g., Proprietorship, Company, LLP).

   • Enter the PAN Number of the entity/proprietor and click Validate PAN.

   • The system will fetch and verify your details from the Income Tax and GST databases.

 

Step 2: Filling the Udyam Form

 

Once Aadhaar and PAN are verified, the main registration form appears. Fill in the following details:

1. Mobile Number & E-mail: Provide working contact details.

2. Social Category & Gender: Select the relevant options (for a company/LLP, this is based on the majority shareholder/partner).

3. Name of Enterprise: Enter the business name (this is often auto-populated after PAN verification).

4. Plant/Unit Location: Enter the address of the enterprise unit(s).

5. Office Address: Enter the official business address.

6. Date of Incorporation/Commencement: The date the business was officially started or registered.

7. Bank Details: Provide the Bank Name, IFSC Code, and Bank Account Number.

8. Major Activity: Choose between Manufacturing or Service.

9. NIC Code: Select the appropriate National Industrial Classification (NIC) Code for the business activity.

10. Number of Employees: Enter the total count of male, female, and other employees.

11. Investment & Turnover: The details of Investment in Plant & Machinery/Equipment and Annual Turnover are auto-populated from the latest ITR/GST records.

12. Declaration & Submission: Select the final declaration and click "Submit and Get Final OTP."

 

Step 3: Certificate Generation

 

1. Final OTP Verification: Enter the final OTP received.

2. Udyam Registration Number: Upon successful submission, a "Thank You" message will appear, and your permanent Udyam Registration Number (URN) will be generated instantly.

3. Certificate: The Udyam Registration e-Certificate is usually issued and sent to the registered email within a few days after final verification.

 

RELATED INFORMATION

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1. Documents Required (Self-Declaration)

 

The process is paperless; no physical documents are uploaded. However, the following mandatory details are required to fill the form:

• Aadhaar Number of the Proprietor/Karta/Partner/Authorized Signatory.

• PAN Card of the Proprietorship/Entity.

• Bank Account Number and IFSC Code.

• GSTIN (GST Identification Number) is mandatory for entities that are required to be registered under GST laws.

 

2. Eligibility Criteria (MSME Classification)

 

The classification as a Micro, Small, or Medium Enterprise (MSME) is a composite criterion based on Investment and Annual Turnover.

Enterprise CategoryInvestment in Plant & Machinery/EquipmentAnnual Turnover

MicroNot more than ₹1 CroreNot more than ₹5 Crores

SmallNot more than ₹10 CroresNot more than ₹50 Crores

MediumNot more than ₹50 CroresNot more than ₹250 Crores

 

3. Key Features of Udyam Registration

 

• Free of Cost: There is no government fee for Udyam Registration.

• Permanent Number: The registration provides a permanent 19-digit identification number.

• No Renewal: The registration has perpetual validity and does not require periodic renewal.

• Single Registration: An enterprise can have only one Udyam Registration, but it can include all its activities (manufacturing and service) under that single registration.

• Automatic Data Linkage: Investment and turnover data are automatically fetched from Income Tax and GST systems.

 

4. Major Benefits of Udyam Registration

 

• Access to Government Schemes: Mandatory requirement to avail of various schemes of the Ministry of MSME, such as the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for collateral-free loans.

• Priority Sector Lending (PSL): MSMEs are eligible for priority sector lending from banks, which often means lower interest rates on business loans.

• Protection Against Delayed Payments: MSMEs can register their outstanding dues on the MSME Samadhaan portal for quick resolution and penal interest on delays.

• Tender/Procurement Benefits: Relaxation in public procurement policies and an advantage in government tenders (e.g., exemption from Earnest Money Deposit).

• Rebates & Concessions: Subsidies on fees for Patent and Trademark registration, and reimbursement of expenses for ISO Certification.

• Simplified Licenses: Udyam is often accepted as proof of business for obtaining various other licenses and clearances.