MSMEs are the heart and soul of the Indian economy, creating millions of jobs each year and contributing significantly to India’s growth and prosperity.
Three inspiring facts about MSMEs in India are:
- By 2023, MSMEs and small companies will employ 16 crore Indians.
- MSMEs account for 30% of India’s GDP.
- MSMEs account for 40% of India’s total exports.
This obviously demonstrates that tiny firms, small organisations dispersed across India have huge potential and a bright, exciting future. If you own a small business but have yet to register it, you are missing out on valuable business and subsidy opportunities. MSME Udyam registration in India is advantageous and required for a variety of legal and tax considerations.
We will demonstrate the complete online MSME Udyam registration procedure and discuss the benefits of MSME registration, as well as the MSME Udyam registration fees.
Micro, Small, and Medium Enterprises (MSMEs) play an important part in any country’s economic development. MSMEs in India provide more than 30% of GDP and employ a considerable proportion of the workforce. The Indian government recognises the importance of MSMEs and has implemented a variety of initiatives to promote and assist their growth.
In India, the Ministry of Micro, Small, and Medium Enterprises (MSME) is in charge of promoting and developing MSMEs. An MSME is defined as any small business that is registered with the MSME ministry. Based on their line of operation, these businesses are divided into two categories: manufacturing companies and service enterprises.
But before, let’s understand what is the meaning of MSME.
Definition of MSME – What is MSME?
A Micro-Small and Medium Enterprises (MSME) is a small business that has been registered with the Ministry of Micro, Small, and Medium Enterprises. It is divided into two groups: manufacturing firms and service enterprises.
Here are the definitions as of the most recent government rules (May 2020):
- A microenterprise is a company with an investment of less than Rs 1 crore and a turnover of less than Rs 5 crore.
- A small enterprise is defined as a company having an investment of less than Rs 10 crore and a turnover of less than Rs 50 crore.
- A medium enterprise is one that has an investment of less than Rs 20 crore and a turnover of less than Rs 100 crore.
How can an Enterprise be Classified as a Micro, Small or Medium Enterprise?
Investment in plant and machinery or equipment (including all tangible assets excluding land and building, furnishings and fixtures) will be calculated using the prior year’s Income Tax Return.
How to do MSME Udyam Registration Online?
MSME Udyam registration can be completed online at this government website run by the Ministry of Micro, Small, and Medium Enterprises. Furthermore, further information on the numerous initiatives for MSMEs in India, such as credit and lending schemes, subsidy schemes, and so on, may be found on the Ministry of Micro, Small, and Medium Enterprises’ official website.
An Aadhaar card, as well as the registered phone number, are now required to begin the MSME Udyam registration procedure.
List of Other Documents which are Required for MSME Udyam Registration
- Rent agreement or ownership documents
- Cancelled cheque
- PAN Card
- Company registration documents (sale/purchase bill)
- For self-owned premises, documents such as lease deed, property tax receipt, etc.
- For rented premises, NOC from the owner, rent receipts, utility bills, etc.
- Partnership deed (if exists)
- Memorandum of Association (MoA)
- Articles of Association (AoA)
- Copy of the Licenses and Bills of Machinery Purchased
Steps to follow for MSME Udyam Registrations if not Registered Yet as MSME
Step 1: Go to
, click on the “For new Entrepreneurs who are not registered yet as MSME” option.
Step 2: Fill in your Aadhaar no, name as per Aadhaar and click on “Validate & Generate OTP”. Enter the OTP number that you have received in your mobile number and select Validate. Your Aadhaar no will be validated successfully.
Step 3: PAN Verification. Select the type of organization and enter your PAN no and click on validate. Your PAN will be validated. Your PAN will be validated.
Step 4: Filling of UDYAM registration form. Fill in the following details:
- Mobile no. and E-mail id
- Social Category and Gender
- Name of Enterprise and Address of office
- Date of incorporation
- Select, whether production is commenced or not
- Date of commencement of business
- Bank details of the entity
- The major activity of the business unit
- National Industry Classification (NIC) Code for Activities
- The number of persons employed
- Amount invested in plant or machinery
- Check yes or no if you are interested to get registered on Government e-Market (GeM) Portal
- Check yes or no if you are interested to get registered on the TReDS Portal
- select the District Industry center from the drop-down
Step 5: After filing the details select on agree on terms and conditions check box and click on “Submit and Get final OTP”. Enter the OTP received on mobile and click on the “Final Submit” button. Once you click on ‘Submit and Get Final OTP’ you will receive a registration number. Once all your information is verified by the Government, you will receive an E-registration document on your e-mail id
Steps to follow for MSME Udyam Registrations if Already Registered as EM-II or UAM
Step 1: Go to https://udyamregistration.gov.in, click on the “For those already having registration as EM-II or UAM” option.
Step 2: Fill your Udyog Aadhaar no and click on “Validate & Generate OTP”. Enter the OTP number that you have received in your mobile number/E-mail ID and select Validate. It then asks to re-visit the website after few days to complete the details.
Step 3: You can also print your Udyam registration certificate. Enter Udyam Registration no. Enter the OTP number that you have received in your mobile number/E-mail ID and select Validate. You will be redirected to print the certificate.
Key Points to Note for MSME Udyam Registration
- On or after July 1, 2020, all existing firms registered under EM-II or UAM must re-register on the Udyam Registration Portal.
- Investment and Turnover will be regarded as composite criteria for Micro, Small, and Medium Enterprise classification.
- Investment in plant and machinery or equipment (including all tangible assets excluding land and building, furnishings and fixtures) will be calculated using the prior year’s Income Tax Return. In the case of a new firm with no past ITR, the investment will be based on the promoter’s self-declaration.
- Exports of goods or services, or both, are not included in the computation of turnover.
- All businesses registered before June 30, 2020, will be reclassified.
- After registration is completed, an e-certificate called “Udyam Registration Certificate” will be issued.
Defining Reclassification Norms Between Categories
Benefits of MSME Udyam Registration in India
An unregistered MSME misses out on a variety of government subsidies, benefits, and plans that are introduced and updated on a regular basis.
1. Get Collateral Free Loans
Bank loans are available to registered MSMEs with no collateral or security. Although not every loan for MSMEs is collateral-free, there are some small company and MSME credit programmes that do not demand collateral.
For example, the Credit Guarantee Trust Fund Scheme offers rapid bank loans with no collateral provided certain conditions are met.
2. 50% Subsidy on Patent Registration
Patent registration for a registered MSMEs’ business idea and method might be subsidised by up to 50%. This government scheme requires a certificate from a registered MSME.
3. Exemption on Overdraft Interest Fee
Registered MSMEs can get a 1% discount on their overdraft interest from any bank or financial institution.
4. Industrial Promotion Subsidy Eligibility
Registered MSMEs can receive Industrial Promotion subsidies through various government schemes and programmes in order to raise awareness and information about their businesses around the world.
This can include financial assistance for attending company fairs, promotional campaigns, and other events.
5. Protection Against Delayed Payments
If a registered MSME provides goods or services to another business and payment is not received within 45 days, the government allows those MSMEs to impose compound interest on the delayed payments every month. And the amount of interest to be paid is three times the allowed RBI interest rate.
This assistance with delayed payments is only available to registered MSMEs in India.
6. Subsidy on Electricity Bills
Under certain conditions, registered MSMEs are also eligible for power bill subsidies, particularly in the case of manufacturing facilities.
7. Free ISO Certification
If a registered MSME obtains ISO certification, the Government of India pledges to reimburse the entire ISO registration price.
Unregistered MSMEs are not eligible for this refund.
8. Extended Tax Benefits
Only registered MSMEs can receive credit for minimal alternate tax (MAT) for up to 15 years, rather than the standard 10 years for other companies.
9. Boost In Getting Govt Tenders
Because the Udyam Registration Portal is closely linked with several Govt e-marketplaces and State Govt’s portals for issuing tenders, registered MSMEs might receive additional assistance and a boost in obtaining Govt tenders.
This is a significant benefit of registered MSMEs over non-registered MSMEs.
10. One-Time Settlement Fees for Non-Payments
If a registered MSME is unable to make a past-due payment, the government offers a one-time settlement fee to clear any outstanding debts.
Still have questions regarding the MSME registration procedure and its advantages? Don’t be concerned!
Aside from support with government schemes and MSME Udyam registration, you can also obtain aid with Business Process Optimisation, Sales and Marketing, Fund Raising, IPO, and other topics.