The micro, small, and medium-sized enterprises (MSMEs) contribute heavily to India's Gross Domestic Product (GDP). In fact, over 110 million people are employed by MSMEs. Yet, these enterprises face several challenges and issues while growing or expanding their footprints.
To identify and help these MSMEs, the Indian government took the initiative on May 13, 2020 to announce a new metric for classifying MSMEs in India. As per this classification metric, all MSMEs in India would be known as ‘Udyam’ and will have to go through a registration process known as ‘Udyam Registration’. The Union Cabinet approved this classification, and the Udyam registration process became mandatory for all MSMEs from July 1, 2020.
Also read: A Complete Guide on Business Loans for MSMEs
Why was Udyam introduced?
The Ministry of Micro, Small, and Medium Enterprises introduced Udyam Registration to classify MSMEs in India and provide them with the due benefits. The government has set the structure of Udyam registrations such that the registered organisations will automatically start reflecting in other government databases, including PAN, GST, and IT.
Benefits of Udyam registration
As an MSME business owner, there are several benefits of registering your business under the Udyam classification. These include:
It will help you in getting government tender
You can get business loans from banks and non-banking financial corporations (NBFCs) at lower interest rates.
You can avail of various tax rebates available exclusively for Udyam.
It will become easy for you to get government approvals, licenses, and registrations for your business.
You will get tariff subsidies and capital tax subsidies.
You can avail of rebates and concessions for setting up your industry.
How to complete your Udyam registration?
To avail of the benefits mentioned above, you will need to complete the Udyam registration of your business. After completing the registration process, you will get an Udyam Registration Certificate. Below is a step-by-step guide to Udyam registration:
Step 1 – You need to visit the official website for Udyam registration by clicking here.
Step 2 – Click on the ‘New Registration’ tab on the Home Page. You will get an Udyam registration form.
Step 3 – Enter your Aadhar card number and PAN card number, and then validate them by entering the OTP received on your mobile number.
Step 4 – Select your type of business or organisation. Enter the business PAN number attached to your business accounts.
Step 5 – Fill in all other relevant details in the form. Double-check every piece of information before submitting the registration form.
Step 6 – Submit and validate your Udyam registration form by entering your mobile number and the OTP received on it.
Step 7 – After successful registration, you will receive a ‘Thank You’ message on your mobile number and e-mail ID, along with your Udyam registration number.
Step 8 – You can then download and print your Udyam Registration Certificate.
Eligibility criteria for Udyam registration
Any business entity that fulfils the maximum turnover and investment (in equipment and machinery) criteria for MSMEs in India can get the Udyam registration certificate. The table below depicts the eligibility criteria for a business to qualify as an MSME in India:
Type of Enterprise | Investment Criteria | Annual Turnover Criteria |
Micro | Does not exceed ₹1 crore | Not exceeding ₹5 crore |
Small | Does not exceed ₹10 crore | Not exceeding ₹50 crore |
Medium | Does not exceed ₹50 crore | Not exceeding ₹250 crore |
Registering your business as Udyam has a plethora of benefits. However, it’s necessary to fulfil the eligibility criteria and possess the required documents to complete your Udyam registration. After this, the process of Udyam registration is simple, online, and hassle-free.
If you are a micro or small business owner seeking additional financing, HDFC Bank has numerous customised solutions to help you. You can also apply for a Working Capital Loan to get started. For further details, reach out to your Relationship Manager or visit the closest branch to know more.
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*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. All loans for MSMEs, at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.