Micro, Small, and Medium Enterprises (MSMEs) are a critically important part of the Indian economy. There are more than 63 million of these businesses in the country, and they contribute to over 30% of our GDP. However, despite their significance and contribution, MSMEs have historically struggled to access resources like formal financing, government benefits, and business platforms because of the lack of formalization. Since a vast majority of MSMEs functioned as part of the informal economy, they remained outside the financial mainstream, which impacted their growth and capabilities.
This started changing rapidly as the government took note of the vast potential that MSMEs hold, and the need for formalization to harness their full potential. With rapid formalization in mind, the government launched the Udyog-Aadhaar system in 2015, which was eventually replaced by the Udyam portal. Let’s explore how Udyam Registration differs from traditional MSME registration and what it means for the industry.
MSME Registration is a process designed to help MSMEs avail of various government schemes and benefits. Registered MSMEs could access financial assistance, subsidies, and other advantages aimed at promoting business growth. The registration was primarily based on self-declaration, requiring minimal documentation.
The process was a manual and paperwork-intensive one. Entrepreneurs had to submit detailed forms and documents to the District Industries Centre (DIC) and undergo physical inspections and manual verifications. The process included obtaining provisional and permanent registration certificates, which were time-consuming and varied by region. There was no provision for MSME registration online, and the offline nature and heavy documentation requirements made the process cumbersome for small businesses.
There was a pronounced need for the MSME registration to be modernized, as the tech transformation unfolded across the country and small business entrepreneurs became more comfortable with carrying out processes online. Given the vastness of the MSME sector, digitizing the process was the most efficient solution to facilitate formalization at scale. Initially, the Ministry of Micro, Small, and Medium Enterprises launched Udyog Aadhaar in September 2015 as a simplified registration process for MSMEs in India. It aimed to make the process easier and more accessible by opening up online registration through a one-page form and no need for documentation. Upon registration, MSMEs would receive a 12-digit Unique Udyog Aadhaar Number (UAN), which they could use to avail of a host of benefits.
In 2020, the government moved to further streamline the process by upgrading to Udyam Registration, introduced on July 1 by the Ministry of Micro, Small, and Medium Enterprises. Udyam registration is a completely online and more streamlined registration system for MSMEs, aligning with the government’s push toward digitalization. Udyam Registration simplifies the registration process by integrating with government databases like PAN and GSTIN, ensuring accuracy and reducing paperwork. MSMEs are issued an Udyam Certificate upon successfully registering, which they can use as proof of formalization and to access benefits.
The primary difference between Udyam and Udyog-Aadhaar Registration lies in the process and documentation required. Udyam Registration mandates the use of PAN and GSTIN, creating a more robust verification system compared to the self-declaration method used in Udyog-Aadhaar Registration. Udyam Registration is fully digital, providing a seamless experience for entrepreneurs, while the earlier version required manual intervention in some cases. Here’s a side-by-side comparison of the features of the two:
| Feature | Udyog-Aadhaar System | Udyam Registration |
| Registration process | Available both online and offline, required Aadhaar and PAN card | Fully online, requires a phone number-linked Aadhaar card, and PAN card |
| Declaration and documentation | Simple one-page form, self-certified details with certificates for Udyog Aadhaar Memorandum (UAM) | Longer form, self-declaration, no need for document upload, entirely paperless |
| Fees | No charges | Free registration for all MSMEs |
| Integration | Not connected with other government platforms | Integrated with GST and IT portals for financial data verification |
| Certification | Udyog Aadhaar certificate issued after verification (12-digit unique number) | e-Certificate – Udyam Registration Certificate issued with Udyam Registration Number (URN) |
| Registrations | Multiple registrations permitted (specific to industry) | Single registration allowed, linked to Aadhaar |
| Status | Obsolete, requires re-registration on Aadhaar | Current applicable system for MSME registration |
While both registrations serve the purpose of providing MSMEs with government benefits, Udyam Registration is a significant upgrade in terms of ease, accuracy, and compliance. The digital-first approach of Udyam Registration ensures that the process is faster, and the data is more secure, minimizing the chances of errors.
So if you’re wondering if MSME Registration, Udyam Registration and MSME Registration are the same, the answer is no. Udyam Registration is not the same as the previous MSME Registration, but it serves the same purpose with improved efficiency. The Udyam Registration system is a refined version that better meets the needs of modern enterprises. In a Udyam vs MSME registration, Udyam emerges as the far superior alternative. Udyog-Aadhaar was the first step towards digitization and had its own benefits, which were superseded by the improvements implemented under the Udyam Registration system and portal.
Udyam Registration is a modernized replacement for MSME Registration as well as Udyog-Aadhaar, offering a more streamlined, digital process that enhances accuracy and reduces the administrative burden for businesses. It is an essential step for MSMEs in India to ensure they can fully leverage government schemes and initiatives aimed at their growth. More than 40 million MSMEs have already registered through the Udyam portal and the Udyam Assist program, and more are coming on board regularly. The successful initiative is helping millions of MSMEs access a wide range of benefits, adding much-needed impetus to their growth trajectories.
Can an MSME switch from MSME registration to Udyam registration?
Yes, MSMEs need to re-register under the Udyam Registration system to continue availing of government benefits.
Is Udyam registration mandatory for MSMEs?
Udyam Registration is mandatory for all MSMEs to benefit from various government schemes and incentives.
Is there a fee for Udyam Registration?
No, Udyam Registration is entirely free of cost.
Can I make changes to my Udyam Registration details?
You can update your Udyam Registration details online through the official Udyam Registration portal.
How is Udyam registration different from MSME registration?
Udyam Registration is a digital, more efficient system that integrates with government databases like PAN and GSTIN, unlike the self-declaration method used in MSME Registration.
