Understanding UDYAM Registration: A Comprehensive Guide

Simran Gupta |Updated on: April 12, 2024

In India, micro, small, and medium enterprises (MSMEs) face many challenges in continuing their operations and business expansions. These MSMEs have a tough time getting credit or loans from banks and financial institutions. As a result, many MSMEs are forced to discontinue their operations despite employing nearly 100 million people and contributing significantly to the country's GDP.

The Government of India proposed the  2020 to help MSMEs overcome this problem. According to this scheme, all MSMEs should register as MSMEs as soon as they are established to qualify for some attractive benefits offered by the Government.

Though registering for UDYAM is not mandatory, it gives MSMEs multiple benefits for running their operations in India that help them mitigate not only financial but also other operational and logistical difficulties.

If you are looking to register for an MSME in this scheme, this blog will help you. It provides a detailed guide to the UDYAM registration process.

UDYAM Registration – What is it all about?

Earlier, MSMEs in India were registered under the Udyog Aadhaar Memorandum scheme, which the UDYAM scheme has replaced. Under the UDYAM scheme, all MSMEs will get an electronic certificate, which will make them eligible for many government offers and benefits.

The UDYAM registration process is simple and doesn’t involve any complex paperwork or formalities. Every registered MSME gets a unique number, known as the UDYAM registration number. This number remains the permanent identity of the MSME throughout its business life.

Who is Eligible for UDYAM Registration?

All trading, manufacturing, and service MSMEs can apply for UDYAM registration. The Government of India has defined the eligibility criteria as follows:

• Micro Enterprises – Enterprises whose investment in their assets is a maximum of Rs 1 crore and annual turnover is less than Rs 5 crores
• Small Enterprises – Enterprises whose investment in their assets is a maximum of Rs 10 crores and annual turnover is less than Rs 50 crores
• Medium Enterprises – Enterprises whose investment in their assets is a maximum of Rs 50 crores and annual turnover is less than Rs 250 crores

Any type of entity belonging to any of the above categories can apply for UDYAM registration. These entities include partnership firms, sole proprietorships, Hindu Undivided Families, Private Limited Companies, Limited Liability Partnerships, Limited Liability Partnerships, Cooperative Societies, and more.

What is the Process of UDYAM Registration?

Here are the steps to get an online UDYAM Registration Certificate:

• Click on the official portal for UDYAM Registration - https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm
• Select “For New Entrepreneurs who are not registered yet as MSME or those with EM-II”
• Provide the Aadhaar Number and Entrepreneur’s Name on the page that opens. After entering these details, click on the option “Validate and Generate OTP.”
• You will receive an OTP on your Aadhar-linked phone number. Enter these details and click on “”
• After successful Aadhaar verification, you will now see the PAN Verification page. Enter details like the type of organisation and PAN. Click on Validate. If you have a GST number or if you have filed last year's tax returns, click on the relevant details.
• You will now see the UDYAM Registration form on the screen. Fill in all the necessary details, including the entrepreneur's name, the company's name, bank details, mobile number, number of employees, status of the business unit, and others.
• Next, enter details of the MSME, which should be filled in carefully. It includes details, such as investment in assets (plant, machinery, etc.) and the annual turnover. Also, click the self-declaration option to prove all information you provided is valid. Submit the details and generate the OTP.
• Click the OTP you received on your number and submit the form now. After submitting the form, you will receive the UDYAM Registration Certificate from your registered email address. You can download this certificate easily as proof of your successful registration.
• This certificate will have your unique MSME Registration Number. You can furnish these details to qualify for the incentives provided by the Government for MSMEs.

MSME Payment Terms as per the New Scheme

Under the new UDYAM scheme, the MSME payment terms are as follows:

• Buyers should pay the suppliers of goods or services within 45 days of the transaction's acceptance. This rule applies even if the buyer and supplier have agreed to a credit period of more than 45 days.
• In case of payment delays, buyers have to pay interest on the payments. The interest rate is almost thrice the rate decided by the Reserve Bank of India.
• If buyers and MSMEs haven’t decided on any credit terms, payment should be made within 15 days of buyers accepting goods/services from the MSMEs.
• MSMEs can file a complaint with the Micro and Small Enterprises Facilitation Council (MSEFC) for continued delays or buyer non-payments.

[Related Read: Streamlining Compliance and Payments to MSMEs with TallyPrime 4.1]

Bottom Line

Though not mandatory, it would be prudent for MSMEs to apply for UDYAM registration right now. This certification will ensure they can access government schemes at subsidised rates, have quick and hassle-free financing options, and get loans at lower interest rates.