Micro, Small & Medium Enterprises (MSME) sector has been considered as the primary contributor to the Indian economy. The Micro, Small, and Medium Enterprises Development Act (MSMED Act) come into the existence in 2006. Previously, the SSI (Small Scale Industry) certification is used to be granted by the relevant District Industries Centres (DICs). In this write-up, you will come across some important fact in regards to the implementation of Udyog Aadhaar Memorandum.
Historical Context of MSME Registration
But after 2006, the SSI registration was replaced by the Entrepreneurs Memorandum (EM-I) and Entrepreneurs Memorandum (EM-II). The EM-I was available to such entities that are about to start the business operation and EM-II is accessible to those who have already started the business operation.
The MSME 2006 Act[1] also broadened the definition of entities. Nowadays the term “entities” is being referred to as “enterprises” in place of “industries” that bring the service sector under its ambit. Such memorandum was supposed to be filed with the respective District Industries Centers (DICs). As time progresses, some States/UTs computerized the EM filing process, meanwhile, the rest continued with the conventional way of filing. In 2014, the Ministry of MSME came up with the EM portal in association with States/UTs. Since then this IT platform has been adopted by fourteen States/UTs for EM filing.
Implementation of Udyog Aadhaar Memorandum
To further ease out the process of registration, the Ministry of MSME in association with all the stakeholders has announced Udyog Aadhaar Memorandum (UAM) on 18th Sep 2015. UAM only seeks an Aadhaar Number from an applicant for making an application. UAM has made the registration a lot easier and less painstaking by excluding unnecessary paperwork and application fees.
Key Points Regarding Udyog Aadhar Memorandum
- The ministry of MSME has announced a one page Udyog Aadhar Memorandum (UAM) via a Gazette of India on 18th Sep 2015 to ease out the process of registration of MSMEs.
- The Udyog Aadhar Memorandum (UAM) supersedes Memorandum Part EM I & EM II.
- Filling of Udyog Aadhar Memorandum (UAM) is optional for MSMEs. However, it is mandatory for Medium class enterprises.
- The units having SSI registration certificates before the implementation of the Udyog Aadhaar Memorandum or EM-II Memorandum would be able to access various schemes launched by the Government of India.
- UAM is optional for entities under EMII registration.
- The memorandum is accessible to only those entities which are functional.
- SSI registration and Entrepreneurship Memorandum-If (EM-II) has been replaced by Udyog Aadhar Memorandum (UAM) for all purposes. State or central government regulatory bodies, financial institutions, and banks should accept Udyog Aadhar Memorandum (UAM) for all purposes. Earlier it was necessary to obtain EM-II registration before establishing an enterprise. Applicants were required to make an application for building plan approval from relevant bodies, permission from Pollution Control Board, or seeking credit from a financial institution or banks to establish the enterprise along with a copy of EM-I.
UAM registration is granted after an entity commences commercial operations. Authority has stopped granting registration before establishing an entity. The EM1 registration does not exist anymore. There is no counterpart document to EM-I.
Therefore, the regulatory bodies, utilities, tax authorities, local bodies, and banks should not demand EM-I from applicant seeking the establishment of a new enterprise.
Updated Procedure for MSME Registration 2020
Step 1: Visit the Udyog Aadhar Registration portal for the registration.
Step 2: Enter your 12-digit Aadhar Number on the new page along with the Name of the entrepreneur.
Step 3: Tap on the “Validate & Generate OTP” button and enter the OTP to get verified. After the verification, the online form for registration will be visible on your screen.
Step 4: In the application form, fill up the following details:
Step 5: Click on the “submit” button to generate an OTP. You will receive the OTP on your email id mentioned by you in the registration form.
Step 6: Enter Aadhar OTP for the second time and then tap on the “Final Submit” button.
Step 7: After completion of the registration process, you will come across an acknowledgment number on your email.
Step 8: Upon verification of the details, the portal will generate the UAM number for your business.
Benefits of MSME registration
Some of the prominent advantages offered by the State/Central government to the entities registered under the UAM registration
- To encourage SSIs and micro-enterprises, the SEZs are needed to allocate ten percent space for SSIs.
- Under the MSMED Act, protection is granted regarding the timely payment for goods & services by buyers to MSMEs.
- Moreover, the government is constantly striving to encourage the sector through policies regarding preferential purchase policy, preferential access to credit, etc.
- The government has been offering a plethora of schemes as well as incentives in terms of financing, marketing, training, and technical up-gradation to the functional MSMEs.
- As per Trademark rules 2017, special provision has been laid down for the SSIs and micro industries. Under schedule, A of Trademark rules 2017, the fees related to the filing of a trademark registration application has been slashed to 50% for the MSMEs.
- Entities under MSME registration can easily avail of concessions under Performance credit rating
- MSME registered enterprises would be eligible to avail of subsidy up to 15% under CLCSS i.e. credit linked capital subsidy scheme
Conclusion
Udyog Aadhar memorandum is web-based declaration form that changes the MSME registration requirement from ground up. The implementation of Udyog Aadhar memorandum is a ground-breaking step from the government in the light fact that not all MSMEs are accustomed to technicality of the registration process. By excluding additional paperwork, the registration has now become surprisingly easier. Connect with CorpBiz expert to avail more information on the same.
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