Udyog Aadhar Replaced! Understanding the New Udyam Registration System

The MSME sector is the backbone of India's economy. The government has made its share of attempts towards encouraging small companies and bringing them into the formal economy. One such was replacing Udyog Aadhaar with Udyam Registration.

In this article, we will describe in detail why Udyog Aadhaar was phased out, how the new system of Udyam Registration functions, and how it is advantageous to the owners of MSMEs. 

What Was Udyog Aadhaar?

Udyog Aadhaar was an identification number granted to MSME enterprises. It was a 12-digit unique identification number with which small enterprises could avail schemes of the government, subsidies, and other advantages.

But with time, the system was being tested on numerous fronts—like outdated information, fraudulent registrations, and no verification. Due to this, the government launched a fresh and more digital system, i.e., "Udyam Registration.

Why did Udyam Registration commence?

The government introduced the Udyam Registration system on 1st July 2020. Its purpose was to make the MSME registration easy, transparent, and online.

The primary motives for launching Udyam Registration were:

• Aadhaar and PAN direct connection to confirm identity.
• Automated validation of data to minimize misinformation.
• Unified data platform, enabling banks, GST, and other government departments to see data directly.
• Paperless, online process, conserving time and expense for small businesses.

Registration procedure for new Udyam Registration?

Udyam registration is an entirely online procedure, which is executed on the Udyam registration portal 

Step-wise procedure is as below:

1. The entrepreneur must visit the Udyam registration portal.
2. Then provide business information like name, address, investment, employees' strength, etc, in the Udyam registration form.
3. Connect PAN and GST numbers so that all the information is authenticated at a time.
4. Once submitted, you are given a Udyam Registration Number (URN).
5. You may then download your Udyam Certificate, i.e., the MSME identification number issued officially.

Major differences between Udyog Aadhaar and Udyam Registration

• Udyog Aadhar: Procedure Manual and Limited Online
• Udyam registration: Fully Online, and Auto-Verification Based
• Udyog Aadhar: Data Verification Low 
• Udyam registration: Accuracy Linked to PAN, GST, and Aadhaar
• Udyog Aadhar: The issue of the Certificate was not instant 
• Udyam registration: Certificate issued online instantly
• Udyog Aadhar: Validity, Frequent updates required
• Udyam registration: Permanent Registration Number
• Udyog Aadhar: Limited Security and Transparency
• Udyam registration: Very high transparency

What are the advantages of Udyam Registration?

There are numerous significant advantages of the new system for MSME companies.

 Access to the Government Scheme Conveniently

After Udyam Registration, you can access schemes such as the Prime Minister's Employment Generation Programme (PMEGP), Micro Units Development Scheme (MUDRA), and Credit Guarantee Scheme conveniently.

Advantage in Bank Loan and Subsidy

Udyam Certificate makes MSMEs eligible for collateral-free loans (guarantee-free loans). Interest rates are also subsidized.

Preferential Tendering

MSME businesses receive preference in the government. Tenders. Your bid also receives preference along with the Udyam Certificate.

GST and PAN Linked Data

Data in the new regime is linked to the PAN and GST records to prevent any spurious registrations.

Permanent Identification Number

No regular renewal is to be done as before. Registered, your Udyam number now becomes permanent.

How to Upgrade from Udyog Aadhaar to Udyam Registration?

If you are already using Udyog Aadhaar, you must upgrade to the new regime.

Upgrade Process:

1. Open the website Udyam registration portal 
2. Click on "Udyam re-registration." 
3. Fill out the Udyam re-registration form.
4. Click on Submit Information.
5. On submission, your new Udyam Registration Number will be generated.

Udyam Registration Certificate

• When registered, MSMEs receive a digital certificate that has a QR code.

• Your MSME status can be verified by any bank or institution by scanning the QR code.

• You may use this certificate as an MSME identification card and display the authenticity and transparency of your business.

Advantages of the Udyam Registration System to the National Economy

• It is a massive leap not only for MSMEs but also for the whole national economy.

• The system brings the company into the formal economy, thus expanding the base of taxation.

• Digital mapping of information makes the government realize the real picture of the MSME sector.

• It makes it easy to do business and links small firms with big opportunities.

You Can Apply for Udyam Annexure Download Through Udyam Portal

Conclusion

This Udyog Aadhaar to Udyam Registration scheme is a new, online procedure for India's MSME segment. 

Companies no longer have to deal with any convoluted processes—everything is online, quick, and safe. 

If you haven't already registered your MSME Udyam, register it today at the official portal.