The NIC code, which stands for National Industrial Classification code, is a classification system provided by the government with primary purpose of classifying and categorising various business activities undertaken by MSMEs. It enables a precise and meticulous tracking of commercial activities in the Indian market, providing insights into market behaviour and preferences.
The NIC code finds extensive application across government agencies, industry organisations, and academic research. It serves various administrative, analytical, and research purposes. Moreover, it forms the standard industrial classification that forms the basis of Indian Industrial Statistics. In this blog, we shall see how to apply for NIC Code for MSME registration.
Where is NIC Code Used?
Before going into how to apply for NIC code for MSME registration, let us first see where is it used. It is used in the following cases:
Udyam Registration
Udyam Registration is a crucial process for businesses seeking recognition as micro, small, or medium-sized enterprises under the Micro, Small, and Medium Enterprise Development Act (2006). When applying for Udyam Registration, it is essential to provide your NIC (National Industrial Classification) code as part of the registration process, which is why it is essential to know how to apply for NIC code for MSME registration.
Formation of a Company and LLP
The formation of a company or a limited liability partnership requires registration through the Ministry of Corporate Affairs Portal. To initiate this process, it is mandatory to specify the appropriate NIC code for the company being formed. The NIC code plays a vital role in the registration of both corporations and LLPs, ensuring accurate classification and recognition within the industrial system.
Importance of NIC Code
The NIC code holds significant importance in the business system of India, and it is important to learn how to apply for NIC code for MSME registration. The significance of the code is based on:
1. Accurate Business Classification:
It is a vital tool for the Indian government to ensure accurate classification and categorisation of businesses based on their economic activities. This aids in better regulation and monitoring.
2. Tracking Commercial Activities:
The NIC code helps government departments track and monitor the diverse commercial activities of businesses, providing essential data for policy formulation and decision-making.
3. Udyog Aadhaar Registration:
Businesses utilise the NIC code to obtain a Udyog Aadhaar, which is crucial for the registration of a company or a Limited Liability Partnership (LLP). This simplifies the registration process and ensures compliance with government norms.
4. Access to Government Benefits:
NIC registration enables companies to avail various government benefits, incentives, and schemes, supporting their growth and operations. It acts as a gateway to access the advantages offered by the government.
5. Invoicing and Government Tracking:
Businesses registered under NIC are required to mention their NIC code in all invoices. This practice aids the government in tracking and managing businesses more efficiently, ensuring compliance and transparency in transactions.
Learning how to apply for NIC code for MSME registration is a fundamental tool that facilitates accurate business classification, aids in efficient tracking of commercial activities, enables essential registrations, provides access to government benefits, and ensures transparency in business transactions through proper invoicing.
Advantages of Udyog Aadhaar Registration
Before going deeper into how to apply for NIC code for MSME registration, let us see the benefits of Udyog Aadhaar Registration. This is a government initiative aimed at fostering the growth of small-scale businesses. It serves as a viable alternative to traditional MSME Registration or SSI Registration. With a significant number of MSME businesses already registered, this initiative is driving the industry towards greater organisation and systematisation. Some key benefits of obtaining an NIC (National Industrial Classification) Code for MSME registration under Udyog Aadhaar are:
1. Access to Government Scheme Benefits:
Udyog Aadhaar Registration offers entrepreneurs access to a range of benefits available under various government schemes. These benefits include loans with lower interest rates, secure loans, and loans without the need for guarantees, among others.
2. Financial Support for International Exhibitions:
Registered MSMEs can receive financial support from the government to participate in foreign exhibitions. This support enables them to showcase their products and expand their reach on an international scale.
3. Eligibility for Government Subsidies:
Udyog Aadhaar applicants become eligible for subsidies provided by the government. These subsidies can significantly reduce operational costs and promote business growth.
4. Streamlined Bank Account Opening:
MSME Registration simplifies the process of opening bank accounts in the name of the business. This streamlines financial transactions and enhances the credibility of the business entity.
5. Access to Micro-Business Loans and Additional Schemes:
Registered businesses have the opportunity to apply for micro-business loans and avail themselves of various additional schemes offered by the government. These schemes are designed to provide financial support and promote the development of MSMEs.
Udyog Aadhaar Registration, along with an NIC Code, offers numerous advantages to MSMEs, ranging from financial support and subsidies to streamlined operations and enhanced access to government schemes. This initiative plays a vital role in nurturing the growth and development of small-scale businesses in India.
Checklist of Documents Required for MSME Application
To complete the Udyog Aadhaar Registration process, applicants are required to provide the following documents and information:
1. Aadhaar Number: The twelve-digit Aadhaar number issued to the applicant.
2. Name of Applicant: The name of the applicant must match the name specified on their Aadhaar card.
3. Category: Indicate the category you belong to, whether General, Scheduled Tribe, Scheduled Caste, or Other Backward Castes.
4. Name of Business Entity: Specify the name of the entity under which the business is conducted. It’s important to note that an applicant can have multiple enterprises, and each one can be registered individually using the same Aadhaar Number for separate Udyog Aadhaar registrations.
5. Type of Business Entity: Specify the type of your business or legal entity, which can include options like Partnership Firm, Hindu Undivided Family, Proprietorship, Co-Operative, Private Limited Company, Self Help Group, LLP, Public Limited Company, and others.
6. Business Address: Provide the address or postal details of the business for communication purposes. This should include contact numbers and email addresses for effective communication.
7. Details of Previous MSME Registration: If applicable, provide details of any previous MSME registrations.
8. Bank Details: Include the bank details of the company, including the IFSC Code and Bank Account number for financial transactions.
9. Operational Areas: Clearly state the key operational areas of the business, indicating whether it is involved in manufacturing, service, or other specific activities.
10. National Industrial Classification (NIC) Code: Specify the NIC Code for MSME that corresponds to your business activities. This code helps in accurate classification and recognition within the industrial landscape, which is the reason it’s essential to learn how to apply for NIC code for MSME registration.
11. Date of Commencement: Mention the date when the respective business operations commenced.
12. Number of Employees: Provide the number of persons employed in the business.
13. Investment in Plant & Machinery/Equipment: State the investment made in plant and machinery or equipment by the business.
14. District Industry Centre (DIC): If necessary, mention the District Industry centre nearest to your business.
Ensuring the submission of these documents and information is essential for a smooth and successful MSME registration process under Udyog Aadhaar.
Procedure to Apply for NIC Code for MSME Registration
When completing the Udyog Aadhaar form for MSME registration, the process includes specifying the NIC Code for your business activities. Follow these steps to accurately enter the NIC Code after learning how to apply for NIC code for MSME registration:
1. Keyword-Based NIC Code Search:
- Begin by conducting a keyword-based NIC Code search. This involves entering relevant keywords related to your business activities.
- The system will provide a list of NIC Codes that match the keywords you entered.
- Choose the NIC Code that best represents the primary nature of your business.
2. Manual Selection of NIC Code:
- Alternatively, you can manually select the NIC Code by choosing a business activity category, such as manufacturing or service.
- After selecting the category, you will be prompted to enter the appropriate two-digit, four-digit, or five-digit NIC codes.
- Ensure that you enter the correct NIC Code as per the nature of your business activities.
3. Editing or Correcting NIC Code:
- If you mistakenly enter the wrong NIC Code, don’t worry. You can edit or correct it in the Udyog Aadhaar form before generating the acknowledgement.
- Make sure to verify the NIC Code for accuracy before finalising your application.
4. Selecting Multiple NIC Codes:
- In some cases, a business may have multiple activities that fall under different NIC Codes.
- You can select and include more than one NIC Code to cover all the business activities accurately.
- To add additional NIC Codes, click the “Add More” icon after selecting either the “Manufacturing” or “Services” radio button.
- This ensures that your Udyog Aadhaar registration reflects the diverse nature of your business activities.
Remember that knowing how to apply for NIC code for MSME registration plays a crucial role in classifying and recognising the nature of your business. Accurately selecting and entering the NIC Code is essential for the successful registration of your MSME under Udyog Aadhaar.
List of NIC Codes for MSMEs in India
The government has issued NIC Codes for the purpose of registering a company/LLP or obtaining an Udyog Aadhaar. To view the entire list, visit https://www.ncs.gov.in/Documents/NIC_Sector.pdf
NIC Code for education:
Section P, Division 85 of the National Industrial Classification 2008 specifies NIC Codes for the education sectors. Codes in Group 851 apply to basic education sectors, while codes in Group 852 apply to secondary education sectors. Furthermore, Group 853 has codes for higher education, Group 855 for educational support services, and Group 854 for other education sectors
NIC Code for Extraterritorial Organisations:
Section U, Division 99 of NIC-2008 provides NIC Codes for Extraterritorial Bodies and Organisations. This category includes the activity of international organisations such as the World Bank, UN and its agencies, IMF, OPEC, and others. 99000 is the code for these.
NIC Code for Hairdressing and Beauty Treatment:
Section S, Division 96 of the NIC-2008 covers hairdressing and beauty treatment activities for men and women such as shaving, beard trimming, cutting, colouring, waving, and tinting, etc. This Section also includes information on other related activities such as face massage, manicure, and makeup. The activity code for these activities is 96020.
NIC Code for Retail Shops:
These are given below:
| NIC Codes | References |
| 47711 | Retail of readymade garments, hosiery goods, clothing accessories like ties, gloves, etc. |
| 47712 | Retail sale of artificial fur as well as articles of fur |
| 47713 | Retail sale of footwear |
| 47714 | Retail sale of travel accessories made of leather, leather goods as well as leather substitutes |
Final Thoughts
Knowing how to apply for NIC code for MSME registration and Obtaining an NIC Code for MSME registration under Udyog Aadhaar are critical step for small and medium-sized enterprises. Learning how to apply for NIC code for MSME registration not only helps in accurately classifying businesses but also opens doors to various government schemes and benefits. Whether through keyword-based searches or manual selection, entrepreneurs can efficiently identify the appropriate NIC Code that aligns with their business activities. The flexibility to select multiple NIC Codes ensures comprehensive coverage of all business operations.
Furthermore, the ability to edit or correct NIC Codes before finalising the application adds an extra layer of convenience. Overall, this process promotes transparency, recognition, and access to essential support, fostering the growth and development of MSMEs in India.
