The Micro Small and Medium Enterprises (MSME) sector has been crucial to India’s development over the past five decades. Other than providing large employment opportunities at lower capital cost, MSMEs also aid in industrialisation of rural and backward areas. This helps reduce regional imbalances, assuring a more effective equitable distribution of national income and wealth.
State governments are responsible for promotion and development of MSMEs, though the Government of India does announce various initiatives, too. The Micro, Small and Medium Enterprises Development (MSMED) Act was notified in 2006 to provide subsidies and exemptions to MSMEs. According to the Act, all enterprises are to register, but most enterprises are not because of the paperwork involved. This is despite the significant benefits available. The ministry, therefore, in 2015, decided to put in place the Udyog Aadhaar, which ensures easy registration and a wider coverage of MSMEs to avail of the benefits under various central and state-run schemes.
For this reason, an Udyog Aadhaar (UA) has been introduced for running units. Udyog Aadhaar Memorandum (UAM) can be created online at http://udyogaadhaar.gov.in.
Udyog Aadhaar Memorandum (UAM)
An UAM is a one-page registration form in which the MSME self certifies its existence, bank account details, owner/promoter’s Aadhar details and other requisite information. This is free of cost.
Once the form is submitted, an acknowledgment form is released to the email ID containing a unique Udyog Aadhaar Number (UAN).
Since this a self declaration form, there is no supporting document that is required to be uploaded or submitted. That said, any state or central authority can ask for any documentation as proof of the information provided in the Udyog Aadhaar Memorandum.
Details For Online Udyog Aadhaar Form
Aadhaar Number 12-digit Aadhaar number issued to the applicant should be filled.
Name of Owner The applicant should fill his/her name strictly as mentioned on the Aadhaar Card issued by UIDAI.
Validate Aadhar The applicant must click on Validate Aadhaar button for verification of Aadhaar. This is required for the user to continue with his/her form.
Reset The applicant can click on reset button to clear the field of Aadhaar No. and name of the owner for different Aadhaar.
Social Category The applicant may select any of the categories thus mentioned: General, Scheduled Caste, Scheduled Tribe or Other Backward Castes (OBC). The proof of the same may be asked, if and when required.
Name of Enterprise This name must be the same as the applicant wants his/her enterprise to be known in public as a legal entity. It is to be noted that one applicant can have more than one enterprise registered in his/her name with the same Aadhar number.
Type of Organization The applicant may select from the given list the appropriate type of the organisation for his/her enterprise. Only one UAN will be issued for each enterprise.
Postal Address The complete postal address of the enterprise including state, district, pin code, mobile number and email must be filed in.
Date of Commencement This is to be the date of the start of the operations for the business entity.
Previous Registration Details If the applicant’s enterprise, for which the UAN is being applied, is already issued a valid EM-I/II by the concerned GM (DIC) as per the MSMED Act 2006 or the SSI registration prevailing prior to the said Act, such a number must be mentioned in the appropriate place.
Bank Details The applicant must provide his /her bank account detail that is used for running the business. The details include the account number, bank branch, IFSC. All details can be found out on the account holder’s cheque book or can also be found out from the concerned bank directly.
Major Activity The major activity i.e. either “Manufacturing” or “Service” must be chosen by the enterprise for Udyog Aadhaar. Now say if you engage in both, but manufacturing happens to take over a chunk of your business, then please mention manufacturing as a major activity, and vice versa if its services.
National Industry Classification Code (NIC Code) The Applicant may choose multiple National Industrial Classification-2008 (NIC) Codes to includes all their activities. This means that the user can select multiple NIC code of Manufacturing and Service sector by clicking “Add More” button. If you want to add Manufacturing then select “Manufacturing” radiobutton and continue by clicking “Add More” button. The procedure is the same if you want to do it for services. These codes are prepared by the Central Statistical Organisation (CSO) under the Ministry of Statistics and Program implementation, Government of India.
Person employed The total number of people who are directly paid for their work by the enterprise must be mentioned.
lnvestment in Plant & Machinery/Equipment When asked to calculate the total investment, the original one( purchase value of items) is to be taken into account excluding the cost of pollution control, research and development, industrial safety devices, and such other items as may be specified, by notification of RBI..
DIC The applicant, based on the location of the enterprise, has to fill in location of DIC. This section will be active and show an option only when there is a chance of more than one DIC existing in the district. Say if there is just one DIC, then you’ll be automatically be made part of that.
Submit Hit submit to generate the acknowledgment number.
Frequently Asked Questions
Q. Am I eligible for a GST number after registering through Udyog Aadhar?
Udyog Aadhar is a mandatory registration for an MSME enterprise. On its own, it is proof of a sole proprietorship entity. It can be used to register for GST. We at Vakilsearch can help you get the GST registered as well as help with the filing GST returns.
Q. Is the process of registering for Udyog Aadhar easy?
Yes, the registering process for the Udyog Aadhar easy, instant and paperless that is why it is of maximum benefit to the MSMEs.
Q. What are the salient features of Udyog Aadhar?
The salient features of Udyog Aadhar are as follows:
1. There is no fee for Udyog Aadhar Registration
2. One can file for more than one Udyog Aadhar
3. One can register online
4. There is no documentation required
Q. Has the EM-I/II been replaced by UAM?
Yes, after the notification dated 18-09-2015, the filing of EM-I/II by States/UTs has been discouraged. Iinstead, all efforts have been focused on popularising the filing of UAM on the portal created by the Ministry of MSME.
Q. What was the date for adopting the UAM and stopping EM-I and EM-II?
It was clarified that once the UAM was been notified dated 18-09-15, there won’t be a different cut-off date announced for adopting the UAM. However, in order to maintain a continuity, the cases of EM-I/II filing under process till 18-09-2015 was accepted.
Q. Do all the states/UTs have access to the reports/ query and such other functions as may be required by GM (DIC)/ Directorate of Industries on the UAM portal?
The Udyog Aadhar portal has been visualised to take care of these requirements.
Q. How can one select NIC the Code of the Activity performed by the enterprise.
The NIC code can be selected after the Aadhar number is validated and the major activity (manufacturing or service) is selected. In order to simplify the selection of the appropriate NIC code, there exists a three-stage drop-down list for the users.
Q. Is there any difference between the information sought under EM-I/II and the new UAM?
In order to promote the ease of doing business for the MSMEs, it was been decided to seek lesser information than EM-I/II in the UAM.
Q. Is it compulsory to have an Aadhar Number for an entrepreneur to file the Udyog Aadhar memorandum?
The registration for Udyog Aadhar can be done online by individuals themselves if they have an Aadhar number. Nevertheless, in all exceptional cases, that includes those not having Aadhar number, can still file an Udyog Aadhar Memorandum, in an offline mode with the General Manager(GM) of the concerned District Industries Centre(DIC). This has also been notified in the gazette dated 18-09-15.
Q. What is the origin of the Udyog Aadhar?
The ministry for the micro, small and medium enterprises had in September 2015 notified the Udyog Aadhar, taking a sign from the prime minister’s radio show “Mann Ki Baat”, where Narendra Modi had talked about simplifying the procedures to start any business with a single-page registration form.
A lot of enterprises in India were earlier not registered due to the unwieldly paperwork involved in the process and, so, couldn’t tap the government schemes which were for their benefit. The KV Kamath panel on financing the MSME sector, was the biggest job creator in recent years, recommended that the registration must be universalized.
Hence, the concept of Udyog Aadhar and the ease of registration originated to ensure a wider coverage of the MSMEs to avail the benefits under the various Schemes of the Central/ State governments.
Q. Why are certain product codes not available for selection?
The registration process has been designed to capture mainline of business and not all products (including their variations and the micro descriptions). Therefore, the UAM captures main activity, either in manufacturing, or, on the service side. The aim here is to work towards ease-of-doing-business.