With over 3.62 crore MSME (Micro, Small and Medium Enterprises) in operation during the 2017-18 financial year, India’s MSME sector is a major contributor to the country’s economy. The MSME industry employs 55 million people and contributes around 8% of GDP. As a result, micro, small, and medium-sized enterprises (MSMEs) play an essential role in India’s business economy. The use of an Udyog Aadhar number is required for MSME Registration / SSI Registration in India. In this article, we will discuss what Udyog Aadhar is, how to register for one, and how it has made it easier for MSME’s (Small Scale Industries) to register and receive government benefits (SSI).
Eligibility for MSME status
According to the MSME Development Act of 2006, the Ministry of MSME establishes the criteria for a Small Scale Industry (SSI) to be classified as an MSME. The fundamental distinction between the three categories of enterprises included in the MSME, namely Micro, Small, and Medium Enterprises, is outlined below.
- Micro Enterprises: Micro manufacturing firms with a plant and machinery investment of less than Rs. 25 lakh, and microservice enterprises with a plant and machinery investment of less than Rs. 10 lakh, are the smallest entities.
- Small Enterprises: These are small manufacturing firms that have invested between Rs. 25 lakh and Rs. 5 crore in equipment and machinery. and small service companies with equipment investments of between 10 lakh and 2 crores.
- Medium Enterprises: Small service businesses invest between 2 crore and 5 crores in equipment, while medium manufacturing businesses invest between 5 crore and 10 crores in plant and machinery.
In order to promote the ease of doing business in India as well as the Make in India programme, the Indian government has enabled several initiatives and is offering multiple incentives to MSMEs registered in India. MSME benefits under GST and GST returns are among the benefits of registering your MSME under the rules of the Udyog Aadhar Memorandum (UAM).
MSME’s Before Udyog Aadhar
The ministry introduced Udyog Aaadhar in an attempt to simplify and declutter the process of registering an MSME in India. The former system for registering businesses under MSME regulations was lengthy and time-consuming, including a considerable quantity of paperwork and bureaucratic red tape. The Entrepreneur Memorandum, or EM-I/II, was the old procedure for registering an MSME before the present UAM system. The MSME certificate was distributed in this system in a very random and heterogeneous manner. Some businesses had to use the national portal for SSI registration, while others had to use the state-specific portals. Additionally, in some areas and states, hardcopy paperwork was the only method to receive your MSME registration.
Introduction to Udyog Aadhar
The primary responsibility for the growth of MSMEs is with the state governments of the individual states. However, as a result of the lengthy procedures, delays, and problems in carrying out the operations, the federal government decided to intervene to assist the state governments. The government did so by providing incentives and making the registration process easier for such organisations.
The Central Government, in collaboration with the Ministry of MSME, took a bold step in September 2015 by issuing a notification proclaiming that the current system of Entrepreneur Memorandum would be abolished (EM- I). In addition, the government promised ease of registration as well as a broader coverage of MSME to take advantage of the state/federal government’s initiatives for these enterprises.
The major goal of the Udyog Aadhar was to provide the government with a streamlined manner to assist and facilitate the maximum amount of benefits to India’s small-scale companies.
Whether the business or corporation is a sole proprietorship, an LLP, or a Private Limited Company, the owner/director/proprietor will supply their 12-digit Aadhar Number.
Udyog Aadhar Memorandum
The Udyog Aadhar Memorandum (UAM) is a one-page registration form that has a self-declaration format in which the respective MSME self-certifies their existence, bank account details, promoter/owners Aadhar Card Details, and other information like PAN Card Details.
The Udyog Aadhar is free to file; there is no charge for filing the Udyog Aadhar.
After the form is submitted, an Udyog Aadhar Acknowledgement number is generated and delivered to the e-mail address provided in the Memorandum, together with the Udyog Aadhar Number.
The UAM is filed on a self-declaration basis, and it normally does not require any supporting documentation as a rule of thumb.
The central and state governments, on the other hand, are perfectly within their rights to demand confirmation of the facts provided in the Memorandum.
Who is qualified to receive an Udyog Aadhar number?
Every type of business, in theory, is eligible for the Udyog Aadhar and can apply if they so desire. It could be any sort of business structure, including Hindu Undivided Family (HUF), Proprietorship, One Person Company (OPC), or any other.
However, as previously stated, some qualifying conditions must be completed in order to be recognised as an MSME. The qualifications for either of the MSME categories have already been stated. Go here to check if you’re eligible.