What is MSME Registration and how to get it

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How does online Udyog Aadhaar registration work?

Under the Udyog Aadhaar, only one page needs to be filled for registration with Aadhaar Cardacting as the sole legal document.

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What is MSME Registration and how to get it

While in the last century, India’s growth story was powered by agricultural improvisation and the creation of service industries, in this century, it is largely small innovative business improvisations in the technology, manufacturing and service sector that are fuelling economic growth and investments. To further incentivize business owners from taking the risk to constitute themselves into an organized structure – whether micro, small or medium, the government has prescribed what is known as the MSME registration. If you’re an existing business owner or have a potential idea that can be developed, there are the distinct advantages that an MSME registration can confer.

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Who can apply for MSME registration?

Apart from micro, small and medium level business entities, limited liability partnerships, private and one person companies, proprietorship firms, and public companies can also apply for registration under MSME.

While small and medium are generic terms, for deciding the applicability of the MSMED Act, the government has prescribed specific turnovers and investment limits to reckon whether an enterprise falls under the micro, small or medium category.

For units in the manufacturing sector, the investment in plant and machinery is considered, and for units in the service sector, it is the investment in equipment that is looked at, for reckoning the threshold limits.

Micro category:

If the investment in your manufacturing industry does not exceed 25 lakh rupees or a service industry investment does not exceed 10 lakh rupees, you are eligible for a micro category registration. Since manufacturing requires a greater asset base and input costs, the threshold is kept higher.

Small category:

If the investment in your manufacturing industry does not exceed 5 crore rupees or a service industry investment does not exceed 2 crore rupees, you are eligible for a small category registration.

Medium category:

If the investment in your manufacturing industry does not exceed 10 crores or a service industry investment does not exceed 5 crore rupees, you are eligible for a medium category registration.

Is an MSME registration mandatory if the threshold is met?

Although it is ideal to have an MSME registration which makes it easier to apply for government incentives, subsidies and tax rebates, it is not compulsory to apply for one. However, in the absence of this certificate, one is likely to lose out on monetary advantages like reimbursement of expenses in infrastructure development, getting ISO or international licensing, availing priority sector lending from banks and also non-monetary benefits such as access to trade exhibitions abroad, promoting entrepreneurship development, etc.

How to get an MSME registration certificate:

The process of registering a business has been simplified by the government through the introduction of the Udyog Aadhaar in 2015 for existing business units after the government made it a simple one-page registration form for businesses. Instead of filing detailed forms of entrepreneur Memorandum while registration, a business owner can now register online through quick steps. Over the past few years, more than 54 lakh registrations under the Udyog Aadhaar scheme have been granted.

Details required to be filled:

The following information needs to be filled for securing an MSME registration through Udyog Aadhaar at its official website

  • Major activity (whether manufacturing or service)
  • National Industrial Classification Code (NEC code is a number classifying the product or service; multiple options can also be chosen)
  • Persons employed
  • Investment in Plant and Machinery (for manufacturing units)
  • Investment in Equipment (for service sector units)
  • Location of the plant(s)
  • Documents required:

    The following documents have to be kept handy while uploading the registration details like bank details, PAN card, Aadhaar card number of the applicant and his/her social category number (if applicable), date of commencement of business and previous registration details (if any).

    Find Out More About The MSME/SSI registration Process.

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