The Micro, Small and Medium Enterprises (MSME) Registration in India is governed by the Micro, Small and Medium Enterprises Development Act, 2006. The registration is now known as Udyam Registration, effective from 1st July 2020, and is applicable to all businesses falling under manufacturing, service, and trading sectors (for registration benefits only in some cases).
An enterprise can obtain MSME registration based on investment in plant & machinery or equipment and annual turnover, as per the revised classification under the Aatmanirbhar Bharat package:
Revised MSME Classification (effective from 01.07.2020)
| Enterprise Type | Investment (Plant & Machinery/Equipment) | Turnover |
| Micro | upto 1 crore | upto 5 crore |
| Small | upto 10 crore | upto 50 crore |
| Medium | upto 50 crore | upto 250 crore |
Udyam Registration is a voluntary and online process via the Udyam Registration portal. Aadhar number of the proprietor/partner/director and PAN of the enterprise are mandatory for registration. The system fetches data from GSTN and Income Tax portals for classification.
Benefits of MSME (Udyam) Registration
- Collateral-free loans under CGTMSE scheme
- Interest rate subsidies and concession in electricity bills
- Preference in government tenders and procurement policies
- Protection against delayed payments under Section 15-24 of MSMED Act
- Subsidies for patent registration, ISO certification, and technology upgrades
The registration is valid for lifetime, unless the enterprise crosses the threshold limits. Filing of Udyam Update is required if there are any changes in business activity, turnover, or investment.
In summary, MSME registration is a strategic tool for small businesses to avail numerous government incentives and enhance their competitiveness in the market.