Micro, small, and medium enterprises (MSMEs) have played a crucial role in the nation’s economic growth and development. As India’s GDP approaches its $5 trillion objective, certain analysts have the opinion that the MSME sector could reach a value of Rs. 1T in the coming three years.
However, several challenges such as higher compliance burden and lack of adequate credit access plague SME growth. Further, as per the Economic Survey 2019, the SME industry in India is lacking growth necessary to transform smaller businesses to become major industrial players.
In light of their significance to the Indian economy, the Indian government has announced several kinds of regulations and initiatives designed to facilitate business operations for Indian-registered entities. Among multiple schemes, the Udyam Registration program is the one which enables legal recognition to entities as a Micro, Small and Medium enterprise in India. Keep reading to know the other invaluable benefits of Udyam Registration.
Udyam Registration- Meaning and Purpose
Udyam Registration is an online and transparent government registration based on self-declaration which enables legal recognition as a MSME under the MSME Act. The primary objective of Udyam registration is to streamline the MSME registration process and enable MSME expansion. Simplification of the registration process helps SMEs to take advantage of a number of tax and legal benefits.
The Udyam Registration in India has replaced the more taxing, heavy paperwork and laborious traditional registration process. Following registration, the registered entities receive an e-certificate referred as the Udyam registration certificate, that includes a distinctive 16-digit alphanumeric Udyam registration number.
The process does not require submission of any lengthy paperwork for fulfillment of the process. Once registered, business entities have access to a range of benefits solely available to legally recognized MSMEs.
Benefits of Udyam Registration
Features of Udyam Registration
- Paperless and Self-Declaration Based-There is no need to upload any documentation since the entire registration is based on self-declaration by authorized person.
- Aadhar-Based Registration- An organization can register itself by merely providing the applicant’s Aadhar number.
- Exclusion of Exports from Turnover- While calculating the annual turnover value for classification as a Micro, Small, or Medium Enterprise, the value of exports is not taken into consideration.
- Digital Registration Certificate- Businesses can readily access and download an e- registration certificate from any location by using the internet, which improves accessibility and convenience.
- Incorporation with Tax System Databases- The updated Udyam portal system has been integrated with the Income Tax as well as GST portals which will enable easier tax obligation and easier authorization of the MSME organization.
- No requirement of renewal- Unlike other licenses or registration requirements, SMEs who have registered successfully for Udyam Registration do not need any licence renewals which eases unnecessary burden for SME business owners.
Eligibility Criteria
General Criteria
Business organizations who wish to seek the Udyam Aadhaar Registration shall meet the eligibility criteria specified below-
- Sole Proprietorship,
- Partnership Firm,
- Private Limited Company/Limited Company,
- Limited Liability Partnership,
- Co-Operative Societies,
- Any similar legal entity.
Financial Criteria
Further, as per revised guidelines 2025 such legal entities shall fulfill the following criteria of investment and annual turnover-
SME Type |
Investment Amount |
Annual Turnover |
| Micro Enterprise | Not above Rs.2.5Cr | Up to Rs. 10Cr. |
| Small Enterprise | Up to Rs. 25 Cr. | Up to Rs. 100 Cr. |
| Medium Enterprise | Up to Rs. 125Cr. | Up to Rs. 500Cr. |
Documents Required
Only the following documents and information shall be required to be submitted at the time of registration-
Documents Required |
Particulars |
| Aadhaar Details | Every individual citizen is issued a unique 12-digit identification. For registering a MSME businesses shall submit-
|
| Details of Business owner | Details such as Name, identity proof, proof of residence, etc. shall be provided. |
| Business entity type |
|
| Business Name including details of business units | Name of the Entity under which it is conducting its business. A business entity functioning across multiple entities shall register individual registration for every industry. |
| Business Address | Postal Address of the business for communication purposes including contact numbers and email address |
| Bank Details | Details of current account owned by the business entity- account number and IFSC number details. |
| Manpower employed by the entity | Total number of staff employed by the entity. |
| Investment in Plant & Machinery / Equipment | Total investment in terms of machinery and equipment by the business. |
| GSTIN Details | Where a business has obtained GST registration, a GST identification number should be mentioned. |
Udyam Registration Process
To begin the MSME registration procedure, visit the official Udyam Registration portal managed by the union MSME Ministry at http://www.udyamregistration.gov.in.
- Any business owner/authorized person shall put contact details including official email address to start filling single page e-registration form. Businesses functioning across multiple industries shall opt for individual registration.
- Submit documents such as Aadhaar card for (sole proprietor/managing partner/business owner) and PAN card of the business entity.
- Subsequently, entities must self-declare their existence by submitting data about their business, including their annual turnover, plant and machinery investments, total number of employees, business address, bank account information, etc. and other information.
- After submitting required information, an identification number will be issued via email address submitted during the registration process.
- Upon approval, the applicant business entity will receive an Udyam Registration certificate with a 16-digit alphanumeric identification number. Additionally, a QR code will be included, facilitating users to access the Udyam Portal right away to authenticate MSME details.
Benefits of Udyam Registration
- Lower cost of compliance– Udyam Registration process is a completely online, paper-free, and no cost process. The unified Udyam portal significantly reduces time and costs required for the registration process for a legal recognition. Above all, Udyam registration does not require any further expenses or hassle for license renewal.
- Access to financing opportunities for MSME- Financing is a prevalent challenge for both large as well as small enterprises. Although banks and NFBCs provide a range of business credit options (for start-ups and small-scale businesses), the government has also launched a number of MSME lending programs to resolve such challenges. Such lending schemes come with attractive benefits such as lower rate of interest, minimal paperwork, repayment terms, collateral-free etc. including other benefits only available to registered MSMEs. Among the government financing programs available to MSMEs are-
- Pradhan Mantri Mudra (PMMY)
- Stand-up India loan MUDRA loans
- Loan from PSB in 59 minutes
- Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTSME)
- Extra years to take forward MAT Credits- The Udyam registration certificate enables MSME firms to carry over their Minimum Alternate Tax (MAT) credit for up to 15 years while other entities get only 10 years.
- One-Time Settlement Charge- Recognized MSMEs have the added benefit of One-Time settlement fee on overdue payments. It could be especially beneficial for stressed MSMEs particularly during financial crises.
- Special Considerations in International Trade – MSMEs who have obtained Udyam Registration have access to export incentives and programs which encourage going global. Additionally, it enables MSMEs involved in export of goods to benefit from duty-free raw material imports. Such assistance helps enterprises to increase chances of boosting revenues and brand exposure.
- Government Tax and Bill Concessions – Registered MSMEs are granted discounts on utility bills helping them to lower down operating costs. Moreover, such organizations may be eligible for direct tax deductions and subsidies for eligible businesses through programs like the National Small Industries Corporation (NSIC) and the Credit Linked Capital Subsidy Scheme (CLCSS). Savings in costs could be utilized by MSMEs to enhance their profits and streamline operations.
- Refundable ISO Certification Fees – Securing ISO certification could help businesses to enhance their market reputation and viability in particular when gaining large contracts or export prospects. The Govt of India reimburses ISO certification fee to the MSMEs for encouraging MSMEs to avail the same.
- Manufacturing-Specific Reservation Rules- Businesses recognized as MSMEs particularly those functioning in the manufacturing industry are offered by special reservation policies. Such policies limit the production of specific commodities to MSMEs guaranteeing a defined market, shield MSMEs from more established rivals, and promote industry innovation.
- Barcode Registration Subsidy- Barcode registration is an effective technique for optimizing MSME operations, inventory management, and sales monitoring. In addition to addressing retail and e-commerce requirements, automation enhances product identification and supply chain efficiency, which propels business expansion. Udyam registration offers discounted rates on barcode registration which encourages MSMEs to sign up and profit from the automation.
- Patent Registration Subsidies- Udyam registration encourages research, development, and acceptance of innovative ideas through offering patent incentives to small enterprises, helping them safeguard their novel ideas and concepts against copying. It enables SMEs to innovate and differentiate themselves from competitors.
- Subsidy in credit rating- MSMEs must have a high credit score in order to draw in investors and obtain financing. Udyam Registration makes organizations eligible for credit rating subsidies which assists them to build a strong credit profile. A strong credit score leads to better financing terms, higher investor trust, and financial stability. This subsidy helps MSMEs overcome credit constraints, get timely finance, and achieve sustainable growth.
- Better protection against payment delays- MSMEs can assess compound interest on past due payments after forty-five days at three times the approved policy rate post gaining access to the SAMADHAAN portal. The SAMADHAAN portal helps SMEs to manage delayed payment concerns in an effective manner.
- Eligibility for Govt tenders- The Udyam Registration certificate offers significant benefits submitting tenders for large contracts. For example, businesses who register as MSME are excluded from paying tender fees, earnest money deposits, and other costs. Similarly, many tenders have stringent requirements for work experience and financial status. However, with Udyam registration allows businesses to submit tenders with relaxed eligibility criteria which helps them to build their portfolio, build credibility and gain growth opportunities.
Common Mistakes to Avoid While Applying for Udyam Registration
Incorrect Classification of the Enterprise
While submitting details of the business enterprise, business owners might fail to choose the correct classification of micro, small, or medium categories which may render the business entity ineligible to seek benefits. It is necessary to consider that any classification of business organizations shall be fulfilled on the basis of investment in plant and machinery and the annual turnover attained by the same in the previous year. It is recommended to verify revised criteria before filling the application.
Error/ Mismatch in details filled
Applicants must pay attention to minute details when submitting information for MSME Udyam registration. Information such as PAN and Aadhaar data, organizational details, authorized person details, etc. shall be filled carefully. Any discrepancies in such critical facts may result in the Udyam registration being delayed or even rejected. Therefore, make sure that the information is consistent across all platforms through double verification.
Failing to prepare necessary documents
Imagine completing half of the form only to discover that neither your bank account information nor PAN card information is available. Not only is it time consuming, but innately frustrating for the MSME license applicant business. Therefore, prior to preparing them, perform adequate research and create a simple checklist to prevent needless delays.
Lack of information regarding Udyam Registration
Several entrepreneurs still confuse the Udyog Aadhaar registration with the new Udyam Registration. Since July 2020, the Government of India has eliminated the older system to be replaced by Udyam Registration. Accordingly, if an entity previously registered for Udyog Aadhaar Memorandum it must register again through the Udyam Registration portal to keep availing MSME benefits.
Not regularly checking application status.
Mere submission of the online registration form does not guarantee registration. At times entrepreneurs fail to regularly check the application status and keep waiting for approval. Hence, business owners/authorized persons should check the application status on the MSME portal every few days for updates on the status of application acceptance or correction. Prompt action can save any unnecessary delays.
Ignoring Minor Errors After Getting the Certificate
Some businesses obtain the Udyam Registration certificate only to discover minor errors such as wrong details/spelling errors in the name of the business entity or the authorized person or incorrect turnover details, etc. Although, such mistakes might seem negligible but may render the entity ineligible to receive benefits such as low interest business loans, government subsidies, or submit tenders, etc. making it costly for the enterprise. Check your MSME certificate the moment you get it and upon identification of any minor mistake seek changes immediately.
Conclusion
Therefore, it could be safely concluded that apart from affording legal recognition to MSMEs Udyam Registration comes with numerous advantages. It helps MSMEs to achieve long-term growth and resilience through access to reduced interest, collateral-free and partially guaranteed credit facilities, tax benefits, fees and subsidy reductions, legal protection against late payments, and relaxed eligibility standards for bid submissions, etc. and more. Similarly, businesses in financial distress might gain from one- time settlement payments for covering late payments.
All such benefits could help MSMEs to survive and progress in a dynamic and cutthroat industry. However, exercise caution to prevent certain common errors during the process, which could ensure a smooth and faster completion of the Udyam registration process.
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FAQs
What is Udyam registration for SMEs?
Udyam Registration is an online and transparent government registration based on self-declaration which enables legal recognition as a MSME/SME under the MSME Act.
Is Udyam registration a legal requirement?
It is not legally mandatory to register, but registration brings exclusive benefits to SMEs and MSMEs like subsidies, tenders, rebates and priorities, etc.
What is the Udyam registration fee?
None, the registration is free.
How many Businesses can be registered under one Udyam Number?
One! Only one business entity can be registered under one udyam number and for every subsequent business a new udyam number needs to be obtained.
When to renew Udyam registration?
Renewal is not Required.
Main points to consider when Udyam applying for udyam registration number are:
- spelling errors
- Name mismatch
- Incorrect Aadhar/PAN number
- incorrect turnover details etc.