Udyog Aadhar and its benefits

As an Aadhar number is your unique personal identity, your business can now also have a unique Udyog Aadhar number assigned by the Ministry of Micro, Small and Medium Enterprises. Micro, small and medium-sized enterprises (MSMEs) refer to any business that fits one of these three classifications as defined by the government.

Small and medium-sized enterprises (SMEs) are the foundation of any country’s economy and an engine of economic progress, enabling equitable growth. MSME enterprises are often more labor intensive than large enterprises, and with modest investment, MSMEs are the main job creators for the country. MSMEs also make up the majority of India’s manufacturing and export operations, so they are crucial for the growth of India’s industrial base.

Being the lifeblood of the growing economy, it is the primary duty of the government to enable their growth and to achieve this goal, the government has created the MSMED Act to regulate and govern MSMEs. Udyog Aadhar or MSME registration is essential to enjoy all the benefits of the MSMED Act with national or state governments and the banking industry.

What are MSMEs?

The classification of MSMEs is based on their annual turnover and investment:

  • Micro enterprise: investment less than 1 crore and turnover less than 5 crores.
  • Small business: investment less than 10 crore and turnover less than 50 crore.
  • Medium enterprise: investment less than 50 crores and turnover less than 250 crores.

Although MSME registration is not a mandatory requirement by law, it has been designed to help all types of MSME businesses. After registering, any organization can benefit from the advantages of the MSMED law. Rapid approval of bank loans (primary industry financing), cheaper interest rates, excise duty exclusion scheme, exclusions under direct tax legislation and legislative assistance such as reservations and the incentive of the “deferred payment law” are some of the benefits offered to MSMEs by the central government.

State governments and UTs have also established their incentive program and services for MSMEs. Establishment of specialized industrial sites, tax rebates, electricity bill subsidy and capital investment subsidies, assistance are some of the benefits granted by the state to MSMEs. Both the Center and the State direct their incentive schemes and assistance programs to all entities registered with them, whether by law or otherwise.

The words MSMEs were inserted into the advertisements for exclusion from banking laws, excise laws and direct tax laws. Therefore, the “Certificate of Registration” provided by the Registrar is considered proof of MSME status and is required to access MSME benefits.

Benefits of MSME Registration

The main advantages of registration are:

1. Unsecured bank loans: All registered MSMEs in India now have access to unsecured financing from the Government of India. This scheme provides financing to these businesses. Benefits can be claimed by both old and new companies under this program. The Government of India, SIDBI (“Small Industries Development Bank of India”) and the Ministry of Micro, Small and Medium Enterprises have set up the Loan Guarantee Scheme to ensure the implementation of the Credit Guarantee Scheme.

2. Subsidy when registering intellectual property rights: Companies that have received an MSME registration certificate are entitled to a generous 50% discount on all types of intellectual property registrations such as trademarks, patents, etc.

3. Overdraft Interest Rate Exemption: Registered MSMEs can benefit from a 1% discount on overdraft facilities.

4. Eligibility for industrial promotion: Companies registered in MSMEs are also eligible for a government-suggested subsidy for industrial development.

5. Late payment protection: Customers of MSME goods or services are used to delaying payments. The Ministry of MSMEs stimulates these businesses by allowing them to charge interest on payments that have been delayed by the customer. Alternative dispute resolution mechanisms such as conciliation and arbitration should be used to resolve these issues as soon as possible. Suppose a company registered as an MSME supplies goods or services to a buyer. In this case, he must pay on the date agreed for payments, or if there is no predetermined payment date, it must be made within 15 days of receipt of the products from the MSME registered company. If a buyer delays payment beyond 45 days after receipt of the goods or services, the buyer will be charged compound interest and monthly interest on the agreed sum. The interest rate is 3 times the rate published by the RBI.

6. Subsidy on the electricity tariff: This grant is available to all businesses with an MSME registration certificate. They submit an application to the Electricity Division and MSME registration certificate.

7. Reimbursement of ISO Certification Fees: Expenses for ISO certification can be claimed by registered MSME enterprises.

MSMEs are the backbone of the Indian economy. Not only do they generate employment, but they also foster innovation. If you are looking to set up an MSME, you should register yourself as this would provide you with a host of benefits as well as legal protection.



The opinions expressed above are those of the author.


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