Ease of Doing Business for MSMEs: As many as 35,501 enterprises registered on the government’s MSME registration portal Udyam have withdrawn their registration due to multiple reasons so far since the launch of the portal on July 1, 2020, according to the government data. Out of the total withdrawals as of July 15, 2022, 67 per cent or 24,075 registrations were withdrawn in the previous financial year 2021-22 while 931 registrations were withdrawn in FY21. In the current financial year, 10,495 enterprises withdrew their Udyam licenses.
The data shared by the Minister of State for MSMEs Bhanu Pratap Singh Verma in Lok Sabha on Thursday showed the shutting down of operations by 9,141 enterprises among the key reasons for revoking licenses (from July 1, 2020, till July 15, 2022). Moreover, 5,510 enterprises withdrew their registrations because they didn’t require it any further while 3,911 registrations were revoked due to ‘change of owner’ in the business. Lastly, 15,597 enterprises had cancelled their licenses due to ‘other’ reasons.
Reply from the MSME Ministry wasn’t immediately available for this story.
Out of the total withdrawals in the current financial year, 2,744 enterprises have already revoked their licenses due to business shutdown while 1,138 enterprises cited ‘owner change’ as the reason for withdrawal. Other 1,607 businesses said they don’t need the registration anymore.
However, the total number of withdrawals was only 0.36 per cent of over 97 lakh registrations on the portal so far. “The withdrawals are not very significant if we look at the total registration count. Maybe MSMEs didn’t see significant benefits from the portal as unless one is doing business with the government or raising bank credit at a lower interest rate, there aren’t many benefits from the registration,” Ashok Saigal, MD, Frontier Technologies and Co-chairman, CII National MSME Council told Financial Express Online.
Out of over 97 lakh registrations on the Udyam portal, 92.76 lakh are micro enterprises. In contrast, the erstwhile platform for MSME registration Udyog Aadhaar had registered a little over 1 crore businesses in its five-year period (September 2015-June 2020) of existence.
According to the data shared by MoS Verma, the Udyog Aadhaar portal also saw the withdrawal of registrations during its time frame. 1,470 businesses had revoked their licenses from the portal due to reasons including shutdown (400 registrations), not required further (251), owner change (158), other (496), etc.
“It is surprising that businesses take time and make effort to withdraw their registrations even if they don’t need it. However, the withdrawal count is negligible currently,” Rajiv Chawla, Chairman at the MSME association IamSMEofIndia told Financial Express Online.