What is Udyog Aadhar and how can I register for it?

The MSME sector in India is a significant contributor to the country’s economy. The MSME sector employs 55 million people and accounts for about 8% of the GDP. As a result, India’s commercial economy relies heavily on micro, small, and medium-sized firms (MSMEs). MSME Registration / SSI Registration in India requires the usage of a Udyog Aadhar number. We’ll go over what a Udyog Aadhar registration is, how to get one, and how it’s made it easier for MSMEs (Small Scale Industries) to register and obtain government benefits in this article (SSI).

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MSME status eligibility

The Ministry of MSME defines the criteria for a Small Scale Industry (SSI) to be designated as an MSME under the MSME Development Act of 2006. The essential contrast between the three types of MSME businesses, namely Micro, Small, and Medium Businesses, is detailed here.

Micro-Businesses: The smallest entities are micro-manufacturing companies with a plant and machinery investment of less than Rs. 25 lakh and microservice companies with a plant and machinery investment of less than Rs. 10 lakh.

Small Business: These are small manufacturing companies that have spent between Rs. 25 lakh and Rs. 5 crores on machinery and equipment. and small service firms with equipment investments ranging from 10 lakhs to 2 crores

Medium-sized Businesses (MSMEs): Small service businesses invest between 2 and 5 crores in equipment, while medium manufacturing businesses invest between 5 and 10 crores.

The Indian government has permitted many initiatives and is granting multiple benefits to MSMEs registered in India in order to boost the ease of doing business in India as well as the Make in India program. Among the advantages of registering your MSME under the guidelines of the Udyog Aadhar Memorandum are GST perks and GST returns (UAM).

Msmes Before Udyog Aadhar:

In an attempt to simplify and declutter the process of registering an MSME in India, the ministry introduced Udyog Aaadhar. The previous approach for establishing enterprises under MSME laws was cumbersome and time-consuming, including a significant amount of paperwork and red tape. Before the current UAM system, the Entrepreneur Memorandum, or EM-I/II, was the former procedure for registering an MSME. In this approach, the MSME certificate was distributed in a very random and heterogeneous manner. For SSI registration, some businesses had to use the national portal, while others had to utilize state-specific portals. Furthermore, hardcopy paperwork was the only way to get your MSME registration in several localities and states.

Udyog Aadhar: An Overview

The state governments of individual states bear major responsibility for the growth of MSMEs. However, due to the lengthy procedures, delays, and difficulties in carrying out the operations, the federal government decided to step in to help the states. The government aided these organizations by offering incentives and making the registration process simpler.

In September 2015, the Central Government, in partnership with the Ministry of MSME, took a bold step by issuing a notification declaring that the current Entrepreneur Memorandum system would be phased out (EM- I). In addition, the government pledged that registration would be easier and that MSME would be covered by the state/federal government’s programs for these businesses.

The Udyog Aadhar’s main purpose was to give the government a streamlined way to help and facilitate the maximum amount of benefits to India’s small businesses.

The owner/director/proprietor will provide their 12-digit Aadhar Number regardless of whether the firm or corporation is a sole proprietorship, an LLP, or a Private Limited Company.

Memorandum on Udyog Aadhar

The Udyog Aadhar Memorandum (UAM) is a one-page registration form with a self-declaration structure in which the MSME self-certifies their existence, bank account details, promoter/owner Aadhar Card Details, and other information such as PAN Card Details.

The filing of the Udyog Aadhar is free; there is no fee for filing the Udyog Aadhar.

After the form is submitted, an Udyog Aadhar Acknowledgement number is generated and sent along with the Udyog Aadhar Number to the e-mail address specified in the Memorandum.

As a general rule, the UAM is filed on a self-declaration basis and does not require any supporting paperwork.

The federal and state governments, on the other hand, have every right to require proof of the facts as forth in the Memorandum.

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Who is eligible for an Aadhar number from Udyog Aadhar?

In theory, every form of business is eligible for the Udyog Aadhar and can apply if they like. It could be a Hindu Undivided Family (HUF), a proprietorship, a one-person company (OPC), or any other type of business structure.

However, as previously indicated, certain qualifying circumstances must be met in order for an MSME to be recognized. The requirements for either MSME category have already been established. 

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