Government Recognition has become a key factor today for small and medium-sized enterprises in India. When people are setting up a small business, the first question that comes to their mind is, Do I need Udyam registration or MSME registration (Udyog Aadhar)? A large number of MSMEs owners see both terms as different, while in fact they are related concepts.

In this article, you will discover the difference between Udyam Registration and MSME Registration, which one is better, and which is required to be done from your side. 

What is MSME registration?

MSME stands for Micro, Small, and Medium Enterprises. In the past, the government of India used to provide MSME registration, known as Udyog Aadhar, to small businesses for recognition. 

Earlier, businesses had to submit various documents to register under MSME. It used to be paperwork-intensive and time-consuming.

The main objective of MSME registration was to:

• Connect small businesses with government schemes
• Assist with loans and subsidies
• Give businesses legal recognition

However, there is a little bit of complexity in this MSME Registration or Udyog Aadhar process, so to simplify the process Government has come up with Udyam Registration.

What is Udyam Registration?

In 2020, the MSME registration (Udyog Aadhar) was replaced by Udyam Registration by the Government of India. This was to make the entire process online and to facilitate greater ease of doing business. 

Udyam Registration is 100% online and depends on Aadhaar, along with a few other details. Filling the Udyam registration form or registering your MSME is a hassle-free process, and the certificate is instantly obtained when all the processes, like verification, are complete.

Udyam Registration is now essential for MSME recognition. 

Legal Difference

Legally, the Government of India now only recognizes Udyam Registration. Old MSME or UAM registrations are no longer valid.

The main legal differences are as follows:

Earlier:

• MSME registration was a separate process
• More paperwork was required
• Manual verification was required

Now:

• Udyam registration is the official process
• The entire process is online
• Linked to the government database

This means that today, if you want to legally register your business under MSME, you must obtain Udyam registration.

Practical Difference

Now, let’s understand the practical difference between the two, i.e., what is easier and more beneficial for the average businessman.

Registration Process

MSME registration:

• Longer process
• More documents
• Took more time

Udyam registration:

• Completed in 10 to 15 minutes
• Only Aadhaar number required

Clearly, Udyam registration is easier.

Documents Required

Earlier in MSME:

• PAN Card
• Bank Statement
• Business Proof
• Address Proof

In Udyam:

• Aadhaar Card
• PAN (in some cases)
• Basic Business Information

This has provided great relief to small businesses.

Benefits of Government Schemes

Both MSME and Udyam have the same objective – to avail government benefits. However, now the government gives priority only to Udyam registration.

Benefits of Udyam registration:

• Loans at low interest
• Discounts in government tenders
• Subsidy schemes
• Tax relief
• Registration on the GeM portal

These facilities are gradually being discontinued on the old MSME number.

Updates and Renewals

In the old MSME:

• Updating information was difficult
• Required frequent office visits

In Udyam:

• Online updates
• Changes from home
• Instant processing

This is in line with today’s Digital India.

Classification based on investment and turnover

The government now classifies businesses based on investment and turnover:

• Micro: Low investment, low turnover
• Small: Medium
• Medium: Large

This classification is automatically integrated into the Udyam portal, eliminating the need for separate proof.

Which registration is best for you?

The answer is quite simple today.

If you haven’t registered yet, then:

• Get Udyam registration directly

If you have an old MSME number, then:

•  Migrate it to Udyam

Udyam registration is the way of the future.

Why is Udyam Registration Necessary?

Many small businesses think they can get by without registration. But this cannot be good in the long run.

Udyam Registration:

• Your business is listed on government records

• Banks grant loans more easily
• Customers trust you more
• Brand value increases
• It becomes your business’s identity.

Conclusion

Today, there is a clear distinction between Udyam Registration and MSME Registration. MSME registration was the norm, but now it has been substituted with Udyam Registration. 

Legally and practically, Udyam Registration is more secure, easier, and beneficial.

If you want to grow your business, avail government benefits, and build a strong identity, definitely get Udyam Registration.

This small step can make a big difference for your business.