How Does Udyam Registration Foster Growth For Small And Medium Enterprises?

Small and medium enterprises (SMEs) play a vital role in the Indian economy. They contribute significantly to employment, innovation, exports, and economic growth. Despite their importance, SMEs face several challenges, including lack of access to finance, technology, and markets. In recent years, the Indian government has launched several initiatives to support SMEs, including the Udyam Registration. This article will discuss how Udyam Registration fosters growth for small and medium enterprises.

What is Udyam Registration?

Udyam Registration is a government initiative launched on 1st July 2020 to provide a unique identity to micro, small, and medium enterprises (MSMEs) in India. It replaced the earlier registration process of Udyog Aadhaar, which was launched in 2015. The objective of Udyam Registration is to streamline the registration process and provide benefits to MSMEs by simplifying the regulatory regime. Under the Udyam Registration, the MSMEs are categorized based on their investment in plant and machinery or equipment and annual turnover.

The Udyam Registration is a simple and easy process that requires minimal documentation. The MSMEs are required to provide their Aadhaar number, business details, and bank account details. After the registration process is complete, the MSMEs receive a 12-digit unique identification number called the Udyam Registration Number (URN).

Benefits of Udyam Registration for SMEs

1. Easy Access to Finance

One of the significant benefits of Udyam Registration is easy access to finance. Banks and financial institutions provide several incentives to MSMEs registered under Udyam. They offer lower interest rates on loans, collateral free loans, and credit without third-party guarantee. The government also provides credit-linked capital subsidy to MSMEs, which facilitates their growth and expansion.

2. Access to Technology and Markets

Udyam Registration provides MSMEs access to new technology and markets. The government has launched several schemes to promote technology upgradation and market expansion for MSMEs. The Technology Upgradation Fund Scheme (TUFS), Credit Linked Capital Subsidy Scheme (CLCSS), and Marketing Assistance and Technology Upgradation Scheme (MATU) are some of the initiatives launched by the government to support MSMEs.

3. Protection Against Delayed Payments

One of the significant challenges faced by MSMEs is delayed payments from their customers. Udyam Registration provides protection to MSMEs against delayed payments under the Micro, Small and Medium Enterprises Development Act, 2006. The Act mandates that every buyer has to make the payment to the MSME supplier within 45 days of accepting or receiving goods or services. If the buyer fails to make the payment within the stipulated time, they have to pay interest at 3 times the bank rate notified by the Reserve Bank of India.

4. Government Tenders and Subsidies

MSMEs registered under Udyam are eligible to participate in government tenders and subsidies. The government provides several incentives and subsidies to MSMEs to encourage their growth. The National Small Industries Corporation (NSIC) facilitates the participation of MSMEs in government tenders and provides raw material assistance, marketing assistance, and credit facilitation.

5. Reduced Compliance Burden

Another significant benefit of Udyam Registration is the reduced compliance burden. The Udyam Registration is a one-time process that provides MSMEs with a unique identification number. The MSMEs do not have to apply for any other registration, license, or certificate. The Udyam Registration also exempts MSMEs from obtaining approvals or filing returns under various laws such as the Industrial Disputes Act, Factories Act, and Minimum Wages Act.

6. Easy Access to Government Schemes and Programs

MSMEs registered under Udyam have easy access to various government schemes and programs. The government has launched several initiatives to support the growth and development of MSMEs, such as the Prime Minister’s Employment Generation Programme (PMEGP), Cluster Development Programme (CDP), and Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). MSMEs registered under Udyam can apply for these schemes and programs easily.

How to Apply for Udyam Registration

MSMEs can apply for Udyam Registration online through the Udyam Registration Portal. The registration process is simple and easy and can be completed in a few minutes. The MSMEs are required to provide their Aadhaar number, business details, and bank account details. After submitting the application, the MSMEs receive a 12-digit unique identification number called the Udyam Registration Number (URN).

The MSMEs can also apply for a PVC Aadhaar card online. The PVC Aadhaar card is an enhanced version of the traditional Aadhaar card, which is made of PVC material. The PVC Aadhaar card is more durable and looks more professional. The MSMEs can apply for a PVC Aadhaar card through the UIDAI portal by paying a nominal fee.

Conclusion

In conclusion, Udyam Registration is a government initiative that provides a unique identity to MSMEs in India. It aims to streamline the registration process and provide benefits to MSMEs by simplifying the regulatory regime. Udyam Registration provides MSMEs with several benefits such as easy access to finance, technology, and markets, protection against delayed payments, government tenders and subsidies, reduced compliance burden, and easy access to government schemes and programs. MSMEs can apply for Udyam Registration online through the Udyam Registration Portal and receive a 12-digit unique identification number called the Udyam Registration Number (URN). The Udyam Registration is a vital step towards fostering growth and development for small and medium enterprises in India.