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UDYOG AADHAR Registration: Document Needed, Benefits, Memorandum and Application Process

Embarking on the journey of establishing and nurturing a business in India brings forth many opportunities and challenges, particularly for micro, small, and medium-sized enterprises (MSMEs). In the pursuit of fostering an environment conducive to the growth of these enterprises, the government of India introduced the Udyog Aadhar registration.

The term "Udyog Aadhar" was coined to represent a unique identification system for enterprises in India, specifically for micro, small, and medium-sized enterprises (MSMEs). "Udyog" translates to "Industry" or "Enterprise" in Hindi, and "Aadhar" means "Foundation" or "Base." Therefore, "Udyog Aadhar" can be understood as the foundational identification for businesses or enterprises. This blog provides an in-depth look into the application process and the essential documents required for a seamless Udyog Aadhar Registration.

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Understanding Udyog Aadhar Memorandum

Udyog Aadhar is a government initiative that aims to promote the growth of micro, small, and medium enterprises by simplifying the registration process. It provides businesses with a unique 12-digit identification number, making it easier to access government schemes, subsidies, and credit facilities.

Applicability of  Udyog Aadhar

The classification of MSMEs is based on their investment in plant and machinery or equipment and turnover. As of July 2020, the MSME classification is as follows:

1. Micro Enterprises:

Investment in plant and machinery or equipment does not exceed INR 1 crore.

Turnover does not exceed INR 5 crore.

2. Small Enterprises:

Investment in plant and machinery or equipment does not exceed INR 10 crore.

Turnover does not exceed INR 50 crore.

3. Medium Enterprises:

Investment in plant and machinery or equipment does not exceed INR 50 crore.

Turnover does not exceed INR 250 crore.

Benefits of Udyog Aadhaar registration

Udyog Aadhaar registration offers several benefits to Micro, Small, and Medium Enterprises (MSMEs) in India. Here are some of the key advantages:

1. Easy Access to Credit: Udyog Aadhaar registration simplifies the process for MSMEs to secure loans and credit facilities. Financial institutions often consider Udyog Aadhaar as a key document for assessing creditworthiness.

2. Government Subsidies and Schemes: Registered MSMEs can access various government subsidies, incentives, and schemes aimed at promoting business growth. This includes financial support for technology upgradation, marketing assistance, and more.

3. Preference in Government Procurement: MSMEs with Udyog Aadhaar registration enjoy preference in government procurement processes. This can open up new business opportunities and markets for the registered enterprises.

4. Lower Interest Rates: MSMEs with Udyog Aadhaar registration may be eligible for lower interest rates on loans and financial assistance, promoting cost-effective financing for business operations.

5. Easier Compliance: Udyog Aadhaar simplifies the compliance process for MSMEs. It reduces the complexity of paperwork and regulatory requirements, making it easier for businesses to adhere to legal obligations.

6. Facilitates Technology Upgradation: The Credit Linked Capital Subsidy Scheme (CLCSS) is available to Udyog Aadhaar-registered MSMEs, providing financial support for technology upgradation and modernization.

7. Marketing Assistance: MSMEs can benefit from government-supported marketing initiatives, helping them promote their products and services in domestic and international markets.

8. Entrepreneurial Support: Udyog Aadhaar registration is a step towards recognizing and supporting entrepreneurs. It provides a unique identification number, enhancing the visibility of MSMEs in the business ecosystem.

9. Increased Competitiveness: With easier access to credit, government support, and other benefits, Udyog Aadhaar registration enhances the competitiveness of MSMEs, allowing them to thrive in the market.

10. Financial Assistance for Patent Registration: Udyog Aadhaar-registered enterprises may receive subsidies on patent registration fees, encouraging innovation and intellectual property protection.

11. Ease of Communication with Government Authorities: The registration provides a streamlined channel for communication between MSMEs and government authorities, facilitating a more efficient exchange of information.

Udyog Aadhaar, therefore, serves as a valuable tool for MSMEs, providing them with a platform to access various resources, financial assistance, and opportunities for growth in the business landscape.

Documents Required for Udyog Aadhaar Registration

To complete the Udyog Aadhaar registration process, you typically need the following documents:

1. Aadhaar Number of the Business Owner: The Aadhaar card serves as a primary identification document for the business owner or authorized signatory.

2. Social Category Document (OBC/SC/ST): A document supporting the selected social category (OBC, SC, or ST) must be provided.

3. Name and Initial Registration Details: Details about the name of the company and the initial registration process should be documented.

4. Type of Organization Document: Submit documents supporting the type of organization, such as a partnership deed or registration certificate.

5. Documents for Postal Address and Bank Details: Valid address proof for the business entity (utility bills, rental agreement) and bank account details are required.

6. National Industrial Classification (NIC) Code: The NIC code, specifying the industry type, is a crucial requirement.

7. PAN Card Details:  PAN card details of the business entity are essential for taxation and regulatory compliance.

These documents are usually uploaded online during the Udyog Aadhaar registration process. If filing the form offline, the documents need to be submitted to the General Manager of the concerned District Industries Center along with a fully filled application form. Keep in mind that the exact requirements may vary, and it's advisable to check the latest guidelines on the official Udyog Aadhaar portal or with the relevant authorities.

Registration process under Udyog Aadhaar

The application process for registering a company under the Micro, Small, and Medium Enterprises (MSME) category through Udyog Aadhar is remarkably simple and user-friendly. Below are the step-by-step guidelines for completing the registration:

Step 1: Visit the official website of Udyog Aadhar at Udyog Registration

Step 2: Fill in Personal Details:

Provide your name and 12-digit Aadhaar number.

Select "Validate & Generate OTP."

Receive and enter the OTP sent to your registered mobile number.

Choose your social category (SC, OBC, ST, or General).

Step 3: Company Details:

Enter the names of the company or companies you wish to register.

If you have more than two companies, a separate Udyog Aadhar is needed for each.

Select the type of organization for each company.

Step 4: Additional Details:

Provide information about the companies, including postal address, registered email address, and mobile number.

Step 5: Further Information:

Enter details related to the commencement of the enterprise and any previous registration information using SSI, EM1, or EM2 processes.

Step 6: Bank Details:

Furnish bank details, including account number, bank name, IFSC code, and branch name.

Step 7: Company Classification:

Indicate the core business of the company – whether it's a manufacturing or service-providing entity.

If the company engages in both, select the category that represents the majority of its activities.

Step 8: Total Investment:

Specify the total number of employees in the company.

Enter the investment amount in lakhs for each registered company.

Step 9: Industry District Center and Declaration:

Choose the industry district center from the provided list.

Accept the declaration and click the submit button to receive an acknowledgment number.

What are the key steps involved in correcting details for Udyog Aadhar, and how can one initiate the process through the official website?

Correcting details in your Udyog Aadhar is a simple process if you encounter any mistakes in the card. Follow these simple steps to edit Udyog Aadhar details:

1. Visit the official Udyog Aadhar website.

2. Look for the newly launched provision for editing Udyog Aadhar details.

3. Click on the editing option and follow the provided instructions.

4. Enter your Udyog Aadhar number and name.

5. You will receive an OTP on your registered mobile number. Enter the OTP to proceed.

6. Once validated, you will be directed to a webpage where you can make the necessary changes.

7. Edit the details that require correction and upload any supporting documents, if needed.

By following these steps, you can efficiently rectify any errors in your Udyog Aadhar details and ensure that the information accurately reflects your business particulars.

What are NIC Codes?

NIC codes are a numerical representation of economic activities. They help in classifying businesses based on their primary line of work. The codes are used by statistical agencies, government authorities, and other organizations to collect and analyze data on economic activities.

How to Choose the Right NIC Code:

1. Understand Your Business Activities:  Start by comprehensively understanding the primary activities of your business. Identify the core areas that define your operations.

2. Refer to NIC Code List:  Access the official NIC code list provided by the Ministry of Statistics and Programme Implementation, Government of India. The list is organized into sections, divisions, groups, and classes, making it easier to navigate.

3. Select the Relevant Section: Identify the section that broadly represents the nature of your business. Sections are divided based on overarching categories such as agriculture, manufacturing, construction, etc.

4. Navigate Through Divisions and Groups: Within each section, there are divisions and groups that provide more specific classifications. Drill down to the divisions and groups that closely match your business activities.

5. Choose the Specific Class: The class level offers detailed categorization. Choose the specific class that best describes your business. Each class is associated with a unique NIC code.

6. Check for Subclasses (Optional): Some classes have subclasses for further specificity. While not always necessary, checking for subclasses can ensure a more accurate representation of your business activities.

7. Validate with Udyog Aadhar Registration: If you are applying for Udyog Aadhar registration, you can validate your chosen NIC code during the application process. The system will often provide suggestions based on your business description.

8. Seek Professional Advice (if needed): If you find it challenging to determine the most suitable NIC code for your business, consider seeking advice from a professional or a business consultant familiar with the classification system.

Importance of Choosing the Right NIC Code:

  1.  Government Registrations: NIC codes are used in multiple government registrations, including Udyog Aadhar for MSMEs.

  2.  Statistical Reporting: Accurate NIC coding ensures that your business is correctly represented in statistical data, contributing to accurate economic analysis.

  3.  Policy Formulation: Government policies and schemes often target specific sectors. Proper NIC coding helps align your business with relevant policies and benefits.

Udyog Aadhar vs. Traditional MSME Registration: A Comparison

In the dynamic landscape of MSME registration, the emergence of Udyog Aadhar has brought a paradigm shift, revolutionizing the way businesses obtain their Micro, Small, and Medium Enterprises certification. In a comparative analysis with the traditional MSME registration process, Udyog Aadhar stands out for its simplicity, speed, and cost-effectiveness. The digital platform streamlines the registration journey, requiring minimal documentation and offering a quick turnaround time. This contrasts with the traditional method, which often involves cumbersome paperwork and prolonged verification processes. Udyog Aadhar's online accessibility, integration capabilities with other systems, and facilitation of government benefits position it as a contemporary solution tailored to the evolving needs of small businesses.

Frequently asked questions

Q

Is Udyog Aadhaar the same as a Shop ACT License?

A

No, Udyog Aadhaar and Shop Act licenses are different. Shop Act Registration is regulated by local state laws, whereas Udyog Aadhaar Registration is regulated by central law.

Q

How do I register Udyog Aadhar for the service sector?

A

Any service sector can apply for Udyog Aadhar registration with a maximum investment of Rs. 5 Cr in equipment. Aadhaar card number and basic details like bank details and activity are mandatory for official registration.

Q

How can one select the NIC code and the core activity of the enterprise?

A

The NIC code can be selected after the 12-digit Aadhar number is validated. You can then choose the core category from the drop-down list on the website, selecting either manufacturing or service. If the company deals in both processes, choose the category that represents the majority of the company's operations.

Q

Who is eligible to apply for Udyog Aadhaar?

A

Any micro, small, or medium-sized enterprise operating in India can apply for Udyog Aadhaar registration. The classification is based on investment in plant and machinery or equipment and turnover.

Q

How can I apply for Udyog Aadhaar registration?

A

The application process is online. Visit the official Udyog Aadhaar website, fill in the required details, and submit the application. Alternatively, you can visit the District Industries Center for offline registration.

Q

What are the benefits of obtaining Udyog Aadhaar for my business?

A

Udyog Aadhaar registration provides various benefits, including easier access to credit, government subsidies, preference in government procurement, and simplified compliance procedures.

Q

Is there any fee for obtaining Udyog Aadhaar registration?

A

No, the registration under Udyog Aadhaar is free of cost. The government does not charge any fee for the registration process.

Q

Can I make changes to my Udyog Aadhaar details after registration?

A

Yes, you can edit your Udyog Aadhaar details online through the official website. Simply use the editing option, enter your Udyog Aadhaar number and name, verify with an OTP, and make the necessary changes.

Q

What documents are required for Udyog Aadhaar registration?

A

The primary documents required include the Aadhaar number of the business owner, social category proof, company details, organization type documents, postal address proof, and bank details.

Prachi Jain

Chartered Accountant

Prachi Jain is a Chartered Accountant with a passion for simplifying finance and tax-related matters through her insightful and informative blogs. With a background in finance and a deep understanding of tax regulations, Prachi has established herself as a trusted source of financial wisdom. Prachi is committed to empowering her readers with the knowledge they need to make informed financial decisions. Her expertise and dedication shine through in every blog post, helping her audience navigate the intricacies of finance and taxes with confidence. Follow Prachi Jain's blog for practical insights and guidance on managing your finances effectively.