Small and medium businesses in India have a number of duties related to starting a business. This also includes registering your enterprise. If you run a Micro, Small or Medium Enterprise in India, then you must have heard about terms like MSME Registration in India, Udyam Registration & Udyog Aadhaar. But what are these and how do they differ?
If you don’t understand what is the difference between MSME vs Udyam Registration or between Udyam vs Udyog Aadhaar then in this article, we will clarify everything for you. At the end, you will know for sure which registration is relevant for your business and just how it could help you.
What is MSME Registration?
MSME Registration is a government certification which identifies your company as a Micro, Small or Medium Enterprise. The Indian government provides assistance, easy loans and tax exemptions to MSMEs.
Earlier, businesses had to register under the MSME Development (MSMED) Act, 2006 for these benefits. However the registration procedure has changed with time. The government launched Udyog Aadhaar (MSME) in 2015 and this was replaced by Udyam Registration in 2020.
Now you are probably wondering whether you require MSME Registration or Udyam Registration. Let us answer your question ahead.
What is Udyog Aadhaar (MSME)?
Before 2020, MSMEs had to register under Udyog Aadhaar for government benefits. Udyog Aadhaar (MSME) is a basic online registration system launched in 2015. The concept was to make it simpler for small businesses to register and obtain benefits without a bunch of paperwork.
Key Features of Udyog Aadhaar:
- Provides a 12 digit unique identification number (like an Aadhaar number).
- Minimum documentation was needed.
- Allowed businesses might apply for government schemes and subsidies.
- Could be done on the internet / offline.
However, Udyog Aadhaar information had to be updated manually and also required several submissions of information. This rendered it less efficient in the long term.
Is Udyog Aadhaar Still Valid?
No. The government introduced Udyam Registration in July 2020 to replace Udyog Aadhaar. Now all businesses must register under Udyam Registration even though they had a Udyog Aadhaar earlier.
What is Udyam Registration?
The only official Registration for MSMEs in India now is Udyam registration. It replaced Udyog Aadhaar (MSME) in 2021.
Why Was Udyam Registration Introduced?
The government desired to make MSME registration digital, transparent and easier. Rather than sending out several forms and paperwork, businesses may now register on the internet with just their Aadhaar number.
Key Features of Udyam Registration:
- Completely online and paperless – No physical documents needed.
- Link with government databases – GST and PAN details are verified automatically.
- Free of charge – No charges for registering.
- Permanent and no need for renewal.
- Instant MSME certificate with QR code for verification.
In case you were registered under Udyog Aadhaar before, then migrate to Udyam Registration to maintain MSME benefits.
MSME vs Udyam Registration: What’s the Difference?
Many business owners wonder whether MSME Registration and Udyam Registration are the same. The simple answer is that Udyam Registration is the new MSME Registration. While earlier businesses used Udyog Aadhaar (MSME) for MSME certification, the process is now simplified under Udyam Registration.
| Feature | MSME Registration (Old System) | Udyam Registration (Current System) |
| Process | Required multiple forms and documents | Fully online and requires only Aadhaar |
| Mode | Could be done offline or online | Completely online |
| Validity | Required renewal | Permanent (no renewal needed) |
| Documents | Aadhaar, PAN, business details, and other documents | Only Aadhaar (PAN & GST auto-verified) |
| Government Benefits | Available | Available (with improved access) |
So, if you hear the term MSME Registration in India, it actually refers to Udyam Registration, as this is now the official MSME certification process.
Udyam vs Udyog Aadhaar: What’s the Difference?
If you are still using Udyog Aadhaar details, it’s time to switch to Udyam Registration. Here is how these two are different:
| Feature | Udyog Aadhaar (Old System) | Udyam Registration (New System) |
| Registration Number | 12-digit unique Aadhaar-like number | Permanent Udyam Registration Number |
| Process | Required multiple entries of business details | Automated verification using government databases |
| Documents | Aadhaar, PAN, business documents | Only Aadhaar (PAN & GST auto-linked) |
| Mode | Online and offline | Fully online |
| Validity | Required updates and renewal | Permanent |
If you registered under Udyog Aadhaar, you must migrate to Udyam Registration to continue enjoying MSME benefits.
How to Migrate from Udyog Aadhaar to Udyam Registration?
If you have a Udyog Aadhaar (MSME) certificate already, follow these steps to shift to Udyam Registration:
Step One: Visit Udyam Registration Portal
Head over to the official Udyam Registration site and select options for businesses now registered under Udyog Aadhaar.
Step two: Enter Your Udyog Aadhaar Number
Enter your Udyog Aadhaar details and select to receive an OTP on your registered mobile number and email.
Step 3: Verify OTP
Enter the OTP you received to confirm your identity and proceed to the next step.
Step 4: Verify Business Details
Verify business details, PAN and GST registration details for further processing.
Step 5: Submit Application
After all things are checked out, submit the application. You’ll get your Udyam Registration certificate by email.
Why Register Under Udyam?
By registering under Udyam Registration, you obtain the following benefits for your business:
- Official MSME recognition by the Indian government.
- Access to government subsidies & benefits.
- Easier access to bank loans at reduced prices.
- Eligibility for several business development schemes
- Faster approval for registrations and licenses
In case you run an MSME, you have to migrate from Udyog Aadhaar (MSME) to Udyam Registration to help keep these advantages.
Read Also | What are the Benefits of MSME Registration in India?
Final Thoughts
Every small business proprietor in India should know the difference between MSME Registration, Udyam Registration and Udyog Aadhaar. While Udyog Aadhaar was a starting point, the government has simplified everything under Udyam Registration.
To register your MSME formally and obtain government benefits, financial aid & growth opportunities, complete your MSME Registration in India through Udyam Registration.
Do you need any help with your MSME registration? StartupFino will assist you throughout the process. Get in touch with our expert today and get professional help in expanding your business!
FAQs
1. Is Udyam the same as Udyog Aadhaar?
No. Udyam isn’t exactly Udyog Aadhaar. Udyog Aadhaar is a twelve digit unique identity number for MSMEs in India launched in 2015. Though the government replaced Udyog Aadhaar with Udyam Registration in July 2020. Udyam Registration is online and paperless with a lesser amount of documentation than earlier systems.
2. Must Udyog Aadhaar be changed into Udyam?
Yes, businesses under Udyog Aadhaar must migrate to Udyam Registration. The government withdrew Udyog Aadhaar and only Udyam Registration is valid for benefits as an MSME. Businesses that fail to transition risk missing out on numerous government schemes and incentives for MSMEs.
3. Who could apply for Udyog Aadhaar?
Udyog Aadhaar was offered to all existing and new MSMEs in India. However, it was replaced by Udyam Registration in July 2020 and businesses wanting MSME recognition must register under Udyam. The government sets investment and turnover thresholds for eligibility.
4. Who may apply for MSME registration?
Eligibility for MSME registration under the Udyam system depends upon the enterprise’s investment in plant 1and1 machinery or equipment along with its yearly revenue:
- Micro Enterprises: As much as 1 crore investment and turnover up to 5 crores.
- Small Enterprises: Investment up to ten crores/turnover up to 50 crores
- Medium Enterprises: Investment up to 50 crores/turnover as much as 250 crores
These classifications enable businesses to get many government benefits based on scale.
5. Is Udyog Aadhaar free?
Yes, Udyog Aadhaar registration was free. Similarly, MSMEs can register for free using the existing Udyam Registration procedure.
6. Is GST mandatory on Udyog Aadhaar?
MSME registration wasn’t necessary under GST registration under Udyog Aadhaar system. However with Udyam Registration, GSTIN is required for enterprises needed to get GST registration under GST law. This integration enables accurate verification and classification of enterprises.
7. What’s the MSME registration fee?
MSME registration under Udyam is free. There are no registration fees for becoming an MSME and every business can gain actual recognition and access benefits.
8. Could a person have two MSME registrations?
An individual could register several enterprises that have the same Aadhaar number under Udyog Aadhaar. However with Udyam Registration one enterprise per Aadhaar number may be registered. This change simplifies MSMEs registration & records.
