You would agree with me that most startups are under the categories of Micro Enterprise that is having an investment of less than Rs 25 lakhs. Considering the total share of MSMEs being 37% of the GDP, one cannot ignore the importance of this sector. Thus, Government of India wants to ensure that MSMEs gets maximum benefits of the current fiscal and trade policies. However, to avail the benefit of any such existing policies, it is required that your Enterprise must be a registered one. Prior to October 2016, to get yourself registered as MSMEs you need to carry out a lot of paperwork and fill Employment Memorandum I and II. However, Kamath Committee on Financial Structure of MSME sector recommended a single window clearance system. Hence, Policy of Udyog Aadhar came into force. This blog walks quickly through the Incentives for MSMEs under Udyog Aadhar.
What is Udyog Aadhar?
Udyog Aadhar is a facility by which your company gets a 12 digit unique ID and becomes a legal entity. Any micro, small or medium enterprise to start out any business needs to get itself registered under Udyog Aadhar. Process of getting your own Udyog Aadhar Id
- To do registration, owner of the enterprise needs to fill a single form online or offline available at the site of ministry. This form is free of cost.
- The document required for the registration are Personal Aadhar number, Industry name, Address, bank account details, PAN number in case of Cooperatives, private or public limited and LLP and details of major activity carried out by the enterprise.
Why get your Udyog Aadhar?
The government of India announces various incentives time to time to promote MSMEs through MSMED Act 2006. Once registered you get:
- Easy sanction of Bank loans at lower rates of interest
- Credit Guarantee scheme
- Excise exemption
- Exemption under direct tax laws
- Interest on Delayed Payments Act which is thrice of the rate stipulated by RBI for the time being
- Other Subsidies from State Governments as extended credit facilities, Industrial extension support, and services, Assistance in marketing( both within the country and outside) Assistance for construction of industries in underdeveloped areas,
- Technical consultancy, assistance in capital, and so on, for enhancement of technology in MSMEs
Apart from it Government in a phase wise manner enhances the list of reserved products to be brought from MSMEs only. Moreover, as per Trademark Rules 2017, special provision has been carved out for micro and small industries. As per schedule A of the rules, the fees for filing a trademark application for MSMEs is only 50% as compared to another form of business.
Understanding the nature of Your Enterprise
Since for the time being, Udyog AAdhar is available to MSMEs only, it is important to understand What an MSME is. MSME standing for MICRO, SMALL and MEDIUM enterprise are divided on the basis of Investment which is different for manufacturing or service sector.
|Enterprises||Investment in plant & machinery|
|Micro Enterprises||Does not exceed 25 lakh rupees|
|Small Enterprises||More than 25 lakh rupees but does not exceed five crore rupees|
|Medium Enterprises||More than five crore rupees but does not exceed ten crore rupees|
|Enterprises||Investment in equipment|
|Micro Enterprises||Does not exceed 10 lakh rupees:|
|Small Enterprises||More than 10 lakh rupees but does not exceed two crore rupees|
|Medium Enterprises||More than 2 crore rupees but does not exceed five crore rupees|
These are just the top a few Incentives for MSMEs under Udyog Aadhar, there is more for MSMEs depending on the type of business the firm is engaged in.
Wazzeer is vouched by Entrepreneurs as the reliable Legal and Accounting partner, we would be happy to help you in MSME Registration. Let’s connect!