Udyam Registration: What is Modi govt’s new portal, why MSMEs need to register, what about existing units?

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June 02, 2021 6:01 PM

The Reserve Bank of India (RBI) had last year clarified that existing EMs part II and/or UAMs of MSMEs obtained before June 30, 2020, will continue to remain valid till March 31, 2021.

In the current financial year so far, public procurement worth Rs 44,198 crore has been made by the government, of which Rs 13,325 crore (30.15 per cent) worth procurement was made from 67,224 MSEs so far. (Express File/Gurmeet Singh) (Representational image)

Zero-cost MSME registration portal Udyam Registration launched by the government in July last year has registered 31.56 lakh entities as of June 2, 2021, according to the MSME Ministry’s data. As per the MSME Ministry annual report 2020-21, there were 1.02 crores Udyog Aadhaar Memorandum (UAM)-registered MSMEs between September 2015 and June 2020 apart from nearly 22 lakh units registered under Entrepreneur Memorandum II between 2007 and 2015. Overall, as per the last survey documenting India’s MSME population was the National Sample Survey (NSS) 73rd round conducted by National Sample Survey Office during FY16, there were 6.33 crore unincorporated non-agriculture MSMEs, of which 6.30 crore were micro firms, 3.31 lakh were small enterprises and 5,000 were mid-sized businesses.

What is Udyam Registration portal?

Small scale industrial units used to register with the District Industries Centres (DICs) before the MSME Development Act, 2006, came into effect. Later under the provisions of the act, entrepreneurs had to file Entrepreneur Memorandum (EM) part-I at DICs before setting up the MSME and EM-II after beginning the production work. Between 2007-15, 21,96,902 EM-II filings were recorded and between September 2015 and June 30 2020 1,02,32,451 (1.02 crore), MSME registrations were done on the e-filing system under Udyog Aadhar Memorandum (UAM). UAM was replaced by Udyam Registration.

“This will help the government aggregate the data on the number of MSMEs in the country. Moreover, the government would also get data based on the product category, for instance, garment, electronics, gems, auto, etc., and the size of the enterprise along with the investment and turnover. Also, geographically, the government would get the data to understand the density of the MSMEs based on city, state, or district wise. Data is a big thing to harvest and today it is all about data,” Vishwanath, Co-chairman, Industry Affairs Committee, PHD Chamber of Commerce and Industry told Financial Express Online.

How to register a new enterprise on the portal?

Udyam Registration is a self-declaration paperless and free-of-cost platform for entrepreneurs to register their enterprises. Businesses don’t have to provide any documents or proof except the Aadhaar number of the registration. Moreover, the portal will automatically pull PAN and GST-linked details on investment in the business, according to Udyam Registration since it is integrated with Income Tax and GSTIN systems. MSMEs are given a permanent registration number and a certificate post-registration. The certificate bears a QR Code from which the details about the enterprise can be accessed.

What about existing businesses?

Businesses with EM-II or UAM registration will have to re-register themselves. Importantly, the Reserve Bank of India (RBI) had last year clarified that existing EMs part II and/or UAMs of MSMEs obtained before June 30, 2020, will continue to remain valid till March 31, 2021, even as they had to register before March under Udyam Registration on or after July 1, 2020. However, renewal of new registration won’t be required.

“New Udyam portal will be helpful for registration of new businesses. Submission of documents at DIC shall be integrated into the same portal. It will be truly helpful for MSMEs, only if provisions related to delayed payments are enforced in a real sense. Moreover, only 24 per cent of MSMEs among over 1 crore EM-II and UAM registered MSMEs and new ones. However, existing MSMEs may not enthusiastic about registration as it is mere compliance and does not offer great benefits as perceived by them,” Veerendra Jamdade, CEO, Vritti Solutions told Financial Express Online.

How many Udyam registrations can be obtained by a single enterprise for multiple manufacturing activities?

While only one Udyam Registration is required by an MSME, it can add any number of activities including manufacturing or service or both may under single registration unlike earlier when multiple Udyog Aadhaar registrations were required for multiple factories. “Before the Udyam portal, there were guidelines for MSMEs to take different Udyog Aadhaar registration for their multiple factories. While in the new portal, which requires Aadhaar and PAN, GST details, one can also add new units but the turnover and investment limit will be picked from the company’s balance sheet automatically unlike in UAM, which required only Aadhaar, where you had to provide details manually,” Mukesh Mohan Gupta, President, Chamber of Indian Micro, Small & Medium Enterprises (CIMSME) had told Financial Express Online.

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