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MSME Registration

Pankaj Tyagi
| Updated: 22 Mar, 2022 | Category: MSME

Udyam Aadhaar Certification Key Benefits: Explained

Udyam Aadhaar Certification
Reading Time: 4 minutes

Udyam Aadhaar Certification serves as the growth-oriented certificate for entities falling under the MSME sector. With this certificate, the entities can claim several benefits, including protection against delayed payment, access to government tenders, availability of easy credit, etc. This write-up will explore all the benefits available under the Udyam Aadhaar Certification.

Before exploring the main topic, let us know some facts about eligibility criteria and the registration process. Presently, Udyam Aadhaar Certification is accessible to the following entities operating under the MSME sector.

What is Udyam Registration, and who can obtain it?

Udyam Registration, formerly known as MSME registration, refers to a government-backed registration that primarily benefits the small businesses.  It is accessible to entities falling under the MSME sector. Technically, it is a unique Identity Number and acts as a recognition certificate for MSMEs.

The types of enterprises who are eligible to secure Udyam Aadhaar Certification are shown below:

Enterprise Type  Annual Turnover(in crores) Investment
Micro 5 Upto 1 cr
Small 5-25 Upto 10 cr
Medium 25-250 Upto 50cr

Process for Securing the Udyam Aadhaar Certification

  1. Login to the Udyam Aadhaar Portal or create a new account by completing the OTP verification process.
  2. On the home page, click on the option called “Apply for new registration.”
  3. Start filing the e-form and include the details such as registration number, types of company, number of workers, detail of person-in-charge, so on and so forth.
  4. Next, upload the PAN[1] and Aadhhar of the company.
  5. Click on the submit button.

Benefits of Udyam Aadhaar Certification

Following are the benefits rendered under by the government under Udyam Aadhaar Certification: 

Protection against delayed payment

Most entities under the MSME sector continually face inconsistent cash flow, which in some cases, creates a liquidity crunch for the company. The delayed or non-payment from vendors and suppliers is the primary reason for such mishaps. The Indian government has taken this concern seriously and came out with rules that prevent defaulters from making such defaults.

According to the new rules, the vendors, suppliers, or other persons accountable for payment issues cannot hold the payment for more than 15 days from the date of the business transaction. Violation of such rules could compel the defaulter to pay interest in the form of a penalty. This is by far one of the most productive benefits of Udyam Aadhaar Certification.

Open Access to Government E-tenders

Another vital benefit of Udyam Aadhaar Certification for MSMEs entities is open access to the Government E-tender portal. The Government e-tendering has never been available to small businesses a decade back. But after the advent of the MSMS Act, this problem has been resolved. Entities with Udyam Aadhaar Certification can approach synched government portals that entirely deal in tendering affairs. The GOI has also relaxed the conditions relating to the minimum turnover criteria and earnest money deposit.

Access to collateral-free loans

GOI launched the Credit Guarantee Fund Scheme for rendering collateral-free credit to MSMEs. Both the prevailing and new entities have access to this scheme. The Ministry of MSME, GOI, and Small Industries Development Bank of India formed a trust known as Credit Guarantee Fund Trust for Micro and Small Enterprises (aka CGTMSE) to ensure nationwide implementation of this scheme for MSME.

Exemption under Direct Tax Laws

Enterprises with the Udyam Aadhaar Certification can access Direct Tax Exemption in the starting year of operation.

Subsidy on NSIC Performance and Credit ratings

Enterprises that have the Udyam Aadhaar Certification can apply for Subsidies on NSIC Performance and Credit ratings.

50% subsidy for patent registration

Enterprises with the Udyam Aadhaar Certification are eligible to avail 50 per cent subsidy for patent registration by filing a prescribed application with authority concerned.

Reimbursement of ISO Certification

Enterprises with the Udyam Aadhaar Certification can reimburse ISO registration charges by filing a prescribed application with the respective authority.

Concession in electricity bills

Enterprises with the Udyam Aadhaar Certification are eligible to access Concession on the electricity bill. For this purpose, the company needs to file a prescribed application with the respective electricity department.

15% CLCSS subsidy to purchase fully

The Ministry of MSME has rolled out a scheme called Credit Linked CGSTI Subsidy Scheme (CLCSS) for the purpose of technology up-gradation of Micro and Small Enterprises. The GOI has already amended the scheme. The revised scheme aims at rendering technology up-gradation of MSEs by facilitating 15 per cent capital subsidy (maxed out at Rs 15 lakhs) for the procurement of Plant and Machinery.

The maximum threshold of loan for estimation of subsidy under this scheme is Rs 100 lakhs. Up till now, the scheme has been assessed by thousands of established/improved technologies spanning across 51 sub-sectors.

Reduction in rate of interest from banks

The interest rate for entities with Udyam Aadhaar Certification is lower than other entities. Certain targets are underpinned for banks’ lending to the MSEs. The banks have to accomplish a 20 per cent growth in MSEs, 10 per cent annual growth in the micro-enterprises account and 60 per cent of overall lending to MSEs.

The banks should mandatorily comply with the following.

1. 40 per cent of the overall advances must go to MSEs involved in manufacturing having investment in plant and machinery up to ten lakh rupees and for service enterprises having investment in equipment up to four lakh rupees

2. 20 per cent of the overall advance to MSEs should go to manufacturing entities that have above ten lakhs rupees till twenty-five lakh rupees investment in the plant and machinery and for service entities that have investments in equipment above four lakh rupees

3. To simplify, 60 per cent of the advances should be routed to the micro-enterprises.

Conclusion

Udyam Aadhaar Certification brings plenty of benefits for the small business owner and helps them keep on track during financial adversity. The government of India is making every possible effort to widen the access of this scheme by encompassing more small scale units under its ambit.

Read our Article:MSME Udyam Registration Portal: Everything you Need to Know

Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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