PROCESS OF UDYAM REGISTRATION

INTRODUCTION

UDYAM registration is a process introduced by the Government of India for registering micro, small, and medium enterprises (MSMEs) under the Ministry of Micro, Small and Medium Enterprises (MSME). This registration is mandatory for businesses to avail various benefits and schemes provided by the government to promote and support MSMEs in India.UDYAM registration refers to the process of registering a business under the Government of India's Ministry of Micro, Small and Medium Enterprises (MSME) sector.

IMPORTANCE OF UDYAM REGISTRATION

Access to Government Schemes and Subsidies:

Registered MSMEs become eligible to participate in various government schemes aimed at promoting and supporting small businesses. These schemes often include financial assistance, subsidies for technology adoption, marketing support, and capacity building programs.

Ease of Obtaining Licenses and Registrations:

UDYAM registration simplifies the process of obtaining licenses and registrations required for conducting business operations. Many state governments and financial institutions require UDYAM registration to provide benefits or facilities to MSMEs.

Financial Support and Credit Facilities:

Registered MSMEs have easier access to credit and finance from banks and financial institutions. The registration certificate facilitates easier loan processing and often enables MSMEs to access loans at lower interest rates.

Preferential Treatment in Government Procurement:

UDYAM registered businesses are eligible for certain preferences in government procurement processes. This includes reservation of products or services for exclusive procurement from MSMEs, which enhances business opportunities for registered entities.

Protection against Delayed Payments:

The MSME Development Act mandates that buyers from MSMEs must make payments for goods and services procured within a specified time frame. UDYAM registration facilitates the enforcement of this provision, ensuring timely payments to MSMEs.

Enhanced Market Opportunities:

UDYAM registration enhances the credibility and visibility of MSMEs, making them more attractive to potential customers, investors, and partners. It opens up opportunities for networking, collaborations, and participation in exhibitions and trade fairs.

Government Initiatives and Support:

Being registered under UDYAM allows MSMEs to stay informed about government policies, initiatives, and programs targeted towards MSME development. This includes skill development programs, technology upgradation schemes, and entrepreneurship development initiatives.

Statutory Benefits:

MSMEs registered under UDYAM are entitled to various statutory benefits and protections provided under the MSME Development Act, such as exemption under certain direct tax laws, interest on delayed payments, and protection against unfair trade practices.

Skill Development and Training Programs:

UDYAM registered MSMEs have access to skill development and training programs organized by the government. These programs aim to enhance the skills of the workforce, improve productivity, and ensure alignment with industry standards and best practices.

Contribution to Economic Development:

MSMEs play a crucial role in economic development through job creation, income generation, and balanced regional development. UDYAM registration supports this by providing MSMEs with the necessary tools and resources to grow sustainably and contribute effectively to the economy.

ELIGIBILITY CRITERIA

Micro Enterprises:

For manufacturing enterprises: Investment in plant and machinery does not exceed Rs. 1 crore.
For service enterprises: Investment in equipment does not exceed Rs. 1 crore.

Small Enterprises:

For manufacturing enterprises: Investment in plant and machinery is more than Rs. 1 crore but does not exceed Rs. 10 crore.
For service enterprises: Investment in equipment is more than Rs. 1 crore but does not exceed Rs. 10 crore.

Medium Enterprises:

For manufacturing enterprises: Investment in plant and machinery is more than Rs. 10 crore but does not exceed Rs. 50 crore.
For service enterprises: Investment in equipment is more than Rs. 10 crore but does not exceed Rs. 50 crore.

Turnover Criteria:

In addition to the investment in plant and machinery/equipment, businesses can also qualify based on their turnover.
Turnover limits are:

Micro enterprise:

Turnover does not exceed Rs. 5 crore.

Small enterprise:

Turnover is more than Rs. 5 crore but does not exceed Rs. 50 crore.

Medium enterprise:

Turnover is more than Rs. 50 crore but does not exceed Rs. 250 crore.

Calculation of Investment:

The investment in plant and machinery or equipment is based on the original cost excluding goods and services tax (GST) and other costs after installation.

New Definition (w.e.f. July 1, 2020):

As per the revised definition effective from July 1, 2020, the classification of MSMEs is based on both investment in plant and machinery/equipment and turnover. This dual criteria allows businesses to qualify as MSMEs based on either criterion, providing flexibility.

BENEFITS OF UDYAM CERTIFICATE

Priority Lending from Banks:

UDYAM registered MSMEs are eligible for priority sector lending from banks, which means they can access credit at lower interest rates. Many banks have specific schemes and products tailored for MSMEs, making financing more accessible.

Collateral Free Loans:

Under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme, UDYAM registered MSMEs can avail collateral-free loans up to a certain limit. This reduces the burden of providing collateral security to banks and financial institutions.

Financial Assistance from Government:

UDYAM registered MSMEs can avail various government subsidies and incentives for their business operations. These may include subsidies for technology upgradation, registration fees for patents, credit-linked capital subsidy, etc.

Preference in Government Procurement:

UDYAM registered MSMEs get preference in the allocation of government tenders. A certain percentage of the total procurement by ministries, departments, and public sector undertakings (PSUs) is reserved for MSMEs, promoting their participation in government contracts.

Protection against Delayed Payments:

As per the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, UDYAM registered MSMEs are protected against delayed payments from buyers. If payments are delayed beyond a specified period, the buyer is liable to pay compound interest on the amount due.

Concession in Electricity Bills:

Some states offer concessions in electricity bills for UDYAM registered MSMEs to reduce their operational costs.

ISO Certification Reimbursement:

MSMEs that have obtained the UDYAM registration can get reimbursement for the expenses incurred for obtaining ISO certification.

Subsidies for Industrial Promotion:

States and central government provide subsidies for promoting industries in certain sectors. UDYAM registered MSMEs can avail these subsidies to reduce their operational costs.

Access to Credit Linked Capital Subsidy Scheme (CLCSS):

UDYAM registered MSMEs in the manufacturing sector can avail the CLCSS, which provides upfront capital subsidy for technology upgradation.

Market Assistance:

UDYAM registered MSMEs can participate in trade fairs, exhibitions, and business summits organized by the government for business development and market expansion.

Skill Development and Training Programs:

UDYAM registered MSMEs have access to various skill development and training programs organized by the government to enhance the skills of their workforce.

Tax Exemptions and Benefits:

MSMEs registered under UDYAM can avail various tax exemptions and benefits under the GST regime and other direct tax laws. These exemptions help in reducing the overall tax liability of the enterprise.