Synopsis: In today’s blog, we will elaborate on the process of applying for a Udyam Registration Certificate by MSMEs and the benefits of holding such a small business certification. 

Micro, small, and medium enterprises (MSMEs) play a crucial role in India’s growth story. As India’s GDP closes on its $5 trillion target, some experts believe that the MSME sector will be worth Rs. 1 trillion by 2028

But such growth does not come easily. MSMEs continue to suffer from a slew of problems, including a lack of accessible, affordable credit and a heavy compliance burden. Indeed, the Economic Survey 2018-19 highlighted how MSMEs do not grow enough and must be turned into giants from their current dwarf versions. 

This has spurred the government to introduce more reforms, many of which are targeted at enhancing the ease of doing business. The Udyam Registration Certificate is one such measure, and we elaborate on its meaning, process, and benefits in our Udyam Registration guide below. 

What is the Udyam Registration Certificate?  

The Udyam Registration Certificate is an e-certificate that gets issued to MSMEs when they register themselves on the MSME Ministry’s Udyam portal. It was introduced by the government in July 2020 against the backdrop of the revision in the classification of MSMEs. 

The Udyam portal aims to streamline the MSME registration process by replacing the previous Udyog Aadhaar Registration/Memorandum (UAM) e-filing process. Udyam Registration is a self-declaration-based, fully online, paperless, and costless process. 

After startup registration, MSMEs are allotted an “Udyam Registration Number” that serves as their operational and legal identifier across the country. They are also issued the Udyam Registration Certificate, which bears a dynamic QR code that can be scanned to access the MSME’s details. 

This certificate comes without any expiration, i.e., there is no need to renew it. Moreover, MSMEs can only file for one Udyam Registration Certificate, which can include any number of activities related to manufacturing and services. 

Almost 1.75 crore MSMEs have registered on the Udyam portal to date, compared to 6.34 crore unincorporated non-agricultural enterprises per the NSS 73rd round survey. 

What is the process for MSME Udyam Registration? 

Any MSME, or “Udyam,” that intends to get itself registered must apply online only on the Udyam Registration Portal. The process is digital through and through and does not require the submission of heaps of documents. Instead, furnishing an Aadhaar number suffices. 

As the Udyam Portal is already integrated with the GSTIN and income tax systems, such business details, including PAN information, are automatically pulled in by the portal at the time of MSME registration. Please note that having a PAN and GSTIN has been mandatory for Udyam Registration since April 2021. 

The step-by-step process for Udyam startup registration is as follows: 

Step 1: Log on to the Udyam Registration Portal and click on the tab “For New Entrepreneurs who are not registered yet as MSME or those with EM-II”. 

Step 2: You will now be taken to the Udyam Registration Form. Fill in your Aadhaar number and personal details. Then select the checkbox giving your consent to the MSME ministry to use your Aadhaar details for government registration, and click on “Validate & Generate OTP”. 

Note: For a proprietorship firm, a partnership firm, and a Hindu Undivided Family (HUF), the Aadhaar number will be that of the proprietor, the managing partner, and the Karta, respectively. 

Step 3: After Aadhaar verification, you will be taken to the PAN verification page. Key in the details of the type of organization and your PAN number, and select the checkbox giving consent. 

Note: A company, LLP, cooperative society, or trust must furnish their GSTIN and PAN details. 

Step 4: At this stage, you will also be asked whether you have filed your previous year’s ITR. If you select “No,” then you will need to self-declare the data. Additionally, you will be questioned about your GSTIN status. 

Step 5: Continue to fill in personal details, including mobile number, email ID, social category, gender, and disability status. Also, furnish business details, including plant details, official address, previous UAM/EM-II registration number, the status of the enterprise, bank details, unit activity, NIC activity code, and the number of employees. Then, sign the declaration about being aware of the provisions of the Child & Adolescent Labour Act, 1986. 

Step 6: After declaration, the form will show auto-filled details of your plant’s written-down value and business turnover that have been extracted from your ITRs. However, if no ITR has been filed or was filed in the ITR-4 form, then details must be filled out on a self-declaration basis. 

Step 7: Finally, indicate your interest in affirmative or negative to the questions about registering on the portals of GeM, TreDS, NCS, and NSIC B2B and availing of a free .in business domain. Choose your District Industries Centre (DIC), check the declaration box, and submit the application to generate your final OTP, which you then enter to get your registration certificate. 

You can check out this application form for more details. 

However, if you have previously registered as UAM, you will need to re-register on the Udyam portal. In this case, you will need to select the “For those already having registration as UAM” tile from the registration page, add your Udyog Aadhaar number, and generate an OTP. 

What are the benefits of MSME Udyam Registration in India? 

Registering on the Udyam portal and getting this small business certification issued yields several business benefits for MSMEs, which are listed below: 

  1. Lower compliance cost: As the registration process on the unified Udyam portal is end-to-end digital, paperless, and free of cost, it immensely reduces the time and cost spent on creating a legal and operational identity. This identity improves the MSMEs reputation, enabling better access to finance, entrepreneurship support, skill development, and market opportunities. Best of all, this registration is permanent, requiring no renewal. 
  1. Improved access to MSME schemes: Udyam Registration affords MSMEs better opportunities to capitalize on the government’s schemes, including the credit guarantee scheme, public procurement policy, and several tax incentives. 
  1. Easy securing of government tenders: Registered MSMEs enjoy higher chances of capturing government contracts, especially in procurement, because of their linkages to the GeM portal and the marketplaces of other state governments. 
  1. Eligibility for PSL norms: MSMEs registered on the Udyam Portal can benefit from enhanced access to finance, especially formal loans, as priority sector lending (PSL) norms apply to all bank loans sanctioned to them. 
  1. Enhanced protection against payment delays: As MSMEs gain access to the SAMADHAAN portal—a platform to address the issue of delayed payments—post-registration, they can levy compound interest on the overdue payments after 45 days at three times the approved policy rate. 
  1. Better access to funds: Registered MSMEs can onboard themselves on the TReDS platform, where they can trade in and get their receivables discounted for immediate cash. Similarly, they also become eligible for collateral-free loans under several government schemes. 

The Key Takeaway 

MSMEs can greatly benefit from acquiring an Udyam Registration Certificate, as it not only functions as a permanent, legal identifier but also enhances access to affordable credit, government tenders, MSME schemes, and more. By encouraging small business development, the government has been improving the entrepreneurial business ecosystem and amplifying financial inclusion.