Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly vibrant and dynamic sector of the Indian economy. MSMEs not only play a crucial role in providing large employment opportunities but also help in industrialization of rural & backward areas, thereby, reducing regional imbalances, assuring more equitable distribution of national income and wealth. MSMEs are complementary to large industries as ancillary units and this sector contributes enormously to the socio-economic development of the country. MSMEs need assistance and help from the Government as they are not equipped with technology and resources like big companies. Hence, the government provides schemes, incentives and rebates to this sector of the economy.
Udyam Registration or MSME Registration is the new process for registering MSME (micro, small and medium enterprises) launched by the Ministry of Micro, Small & Medium Enterprises on July 1, 2020. The Ministry had also revised the definition of MSMEs from the same date. An enterprise for this process is known as Udyam, and its Registration Process is known as Udyam Registration. A permanent registration number along with a recognition certificate will be issued after Registration.
The Udyog Aadhaar registration has been transformed to the Udyam registration since July 2020. Udyam registration has made the process more accessible than it was earlier, at the time of Udyog Aadhaar registration. Udyam registration is essential for availing the various benefits of schemes or programs of the Ministry of MSME, such as the Credit Guarantee Scheme, public procurement policy, additional edge in Government Tenders and protection against delayed payments, etc.
The classification of Micro, Small and Medium Enterprises is defined under the MSMED Act 2006 amendment dated 01/06/2020. The classification of Manufacturing and service Enterprises into Micro, Small and Medium Enterprises is based on the Investment in Plant, Machinery or Equipment values (excluding land and building) and Annual Turnover. This shall come into effect from 01.07.2020.4
- A micro enterprise– is a company with investment under Rs 1 crore and turnover not more than Rs 5 crore
- A small enterprise-is a company with investment under Rs 10 crore, and turnover not more than Rs 50 crore
- A medium enterprise– is a company with investment under Rs 50 crore and turnover not more than Rs 250 crore
Note-The calculation of Investment in plant and machinery or equipment (including all tangible assets excluding land and building, furniture, and fixture) will be ascertained through the Income Tax Return of the previous year.
An Aadhaar card is mandatory now for initiating the MSME Udyam registration process, along with the registered phone number.