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What Is Udyog Aadhaar? Why is it useful for MSMEs?

Published on Apr 30, 2024Updated on May 20, 2024

What Is Udyog Aadhaar? Why is it useful for MSMEs?

A government registration process called Udyog Aadhar, or Udyam Aadhar Registration, provides small and medium-sized enterprises with a certificate and a 12-digit unique identification number. Every MSMEs (Micro, Small, and Medium Enterprises) registered through the Udyog Aadhar registration process, initiated by the Government of India, have benefited from it. 

MSMEs are essential to the expansion and advancement of our nation's economy. PIB sources state that in 2022–2023, MSME Gross Value Added (GVA) accounted for over 43.6% of India's exports, contributing close to 30% of the country's GDP. They are a significant driver of economic expansion, innovation, and job creation. Thus, the Indian Government has introduced the Udyog Aadhar benefits for them.

This article will cover in-depth information about the meaning of Udyog Aadhaar, and the different ways it benefits MSMEs. We will also cover how MSMEs can register for Udyog Aadhar.

What is Udyog Aadhaar?

The citizens of India use an Aadhaar card with a unique number issued by the Government of India as identification proof. Similarly, Udyog Aadhar is Aadhaar for small and medium-sized businesses in India. Small and medium-sized businesses are given a special 12-digit number by the Government of India. Every small and medium-sized business is identified by their Udyog Aadhaar card. As of 2018, there are over 48 lakh registered businesses using Udyog Aadhaar to get some benefits from the government.

What are the Udyog Aadhar Benefits for MSMEs?

Now that we have learned about the basic concept of Udyog Aadhar, it’s time to see its benefits for MSMEs. Some of the most important benefits include:

  • You may be able to get loans without mortgages or collateral. 
  • Tax benefits for MSMEs may be more easily availed of with Udyog Aadhar. 
  • You may be able to get lower interest on MSME loans. 
  • ISO certification reimbursement may be availed of through specific Government schemes. 
  • Reduced electricity costs and other things Government subsidy eligibility.
  • Businesses can now apply for current accounts more quickly and easily.
  • Subsidy for barcode registration which can be availed under certain schemes or programs for MSMEs. 
  • Udyog Aadhar may be able to get you easier access to any provisions for business by the Government.

Essential Documents Required for Udyog Aadhaar Registration

If you are wondering what documents you need for the registration of Udhyog Aadhaar online, no documents are required. But, in some cases, you may have to provide the  following details:

1. Aadhaar Number: This is your unique 12-digit number issued by UIDAI (Unique Identification Authority of India)

2. PAN Number: It is mandatory for the following to provide a PAN number for Udyog Aadhaar registration:

  • Co-operative
  • Private Limited
  • Public Limited
  • Limited Liability Partnership

For all the other organisations it is optional to provide a PAN number

3. Account Details: You need to provide your bank details, including the IFSC code of the participating branch where your account exists.

Other details may include:

  • Key details of your service or manufacturing business
  • Business type (Proprietorship, Partnership, etc.)
  • Location of your business
  • Official business address
  • Number of people employed
  • Mobile phone number

How can MSMEs Register for Udyam?

Once you have assembled all the above-stated documents, it is time to get your MSME registered. The registration process is fairly straightforward, online, and free of cost. These are the general steps you will need to follow for registration:

  1. Owners of businesses can complete their Udyam registration by visiting the official website.
  2. Click the button labeled "Udyam Registration Form” or similar. 
  3. For new enterprises, select the option meant for new entrepreneurs who are not yet registered as MSMEs. Put the entrepreneur's name and Aadhaar number in here. 
  4. Completing the registration process requires you to validate and generate an OTP.
  5. The next step is to choose the type of business you operate and provide details related to the same. 
  6. Upon successful submission of the registration form, a confirmation message is sent to the registered email address and mobile number provided during the registration process.
  7.  The Udyam Certificate will be sent to your registered email address once the registration is complete and verified.

How does Udyam Registration help while Applying for MSME loans?

There are several ways in which Udyam Registration or Udyog Aadhar helps when you are applying for an MSME loan:

  • As the Udyog Aadhar registration verifies the business's existence, it enhances your credibility in the eyes of the lenders.
  • Udyog Aadhar may make your business eligible for various loan schemes offered by financial institutions. These may have more relaxed criteria compared to traditional business loans.
  • You may be able to get a collateral-free loan by being registered under Udyam or get a loan with more flexible collateral requirements.
  • As Udyam can improve your loan profile, you may stand to get lower interest rates, depending on other eligibility criteria and the lender’s policy at the time of loan application.

It is important to remember that the loan approval process and terms will also depend on your individual eligibility and creditworthiness.

How to Apply for an MSME Loan?

Here are the general guidelines involved in applying for an MSME loan:

  • Understand your business needs and the purpose of your loan, such as expansion, machinery, or working capital.
  • Check the eligibility criteria for different lenders, which may include age, minimum turnover, nature of business, and so on.
  • Prepare all the required documents and make sure they are accurate to ensure a smooth process.
  • Apply to your chosen lender and submit the application form with the required documents.
  • Upon verification and approval, the loan amount will be disbursed to your account.
Must Read:  How to Apply for MSME Loan Online? (Step by Step Guide)

Conclusion

MSMEs are the backbone of the Indian economy, contributing nearly 30% of the country's GDP. Hence, the government of India is offering Udyog Aadhaar certificates to boost the micro, medium, and minor businesses in the country. This certificate will enable the sustainable growth of MSMEs through various benefits. One such benefit is the possible strengthening of an MSME loan application.

At SMFG India Credit, you can get MSME loans tailored to your needs with benefits such as attractive interest rates and flexible repayment tenures. Online application process and quick disbursals after loan approvals make it easier to acquire the funds you need. Contact us today to find out how we can help your business needs.

* Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG India Credit. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG India Credit's policy at the time of loan application. If you wish to know more about our products and services, please contact us

FAQs

What is the MSME full form?

The full form of MSME is Micro, Small, and Medium Enterprises, under the Indian Government.

What is Udyog Aadhar or Udyam Registration?

Udyam Registration is a free, online process for registering MSMEs in India. Similar to an Aadhaar card for individuals, Udyam Registration provides a unique 12-digit identification number for your business.

Why is Udyog Aadhar registration important for MSMEs?

Udyog Aadhar registration provides several benefits for MSMEs such as easier access to loans with relaxed criteria, increased business credibility, Government benefits such as reduced electricity bills, and so on.

Is the registration for MSME and Udyog Aadhar the same?

Although MSMEs register for Udyog Aadhaar, they are not identical. For Udyog Aadhaar registration, any company can register, not just MSMEs. For MSMEs to benefit from government policies, Udyog Aadhaar is a special identification scheme. The government offers a vast array of MSMEs-focused schemes. Not all businesses, however, can use them.

What is the validity of an Udyog Aadhaar registration certificate?

Upon registering for Udyog Aadhaar, the user receives a certificate. As long as the business is operating and the owner is still alive, it is valid. For the business, there is a special 12-digit number that it has and will have until it is operational. For this reason, the certificate is good for as long as the enterprise is. However, you should take care to update any details related to your business, such as address or ownership change to continue to benefit from Udyog Aadhar.

How can MSMEs register for Udyam Registration?

Udyam Registration is a simple online and free process, involving the following general steps:

  • Visit the official Udyam Registration website.
  • Find the Udyam Registration Form or a similar option.
  • Select the option for new entrepreneurs and enter your Aadhaar number.
  • Validate your information using a one-time password (OTP).
  • Choose your business type and provide details about your business.
  • Submit the application. You'll receive confirmation via email and mobile number.
  • Your Udyam certificate will be sent to your registered email address.

How does Udyam Registration help while applying for MSME loans?

Udyam Registration helps MSME loan applications in a few ways:

  • Eligibility: Registration can make your business eligible for specific MSME loan schemes.
  • Credibility: Verification through registration enhances your credibility with lenders.
  • Collateral-free loans: Registration might increase your chances of getting a collateral-free loan or a loan with easier collateral requirements.
  • Potentially lower interest rates: Udyam Registration can improve your loan profile, potentially leading to lower interest rates (please note that this is subject to other eligibility factors and lender policies).

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