Introduction: MSME

The MSME Ministry has now registered over 4.5 crore micro, small, and medium enterprises (MSMEs) in the country. As per the information from the Udyam registration portal introduced by the government on July 1, 2020, to simplify the registration process for small enterprises in the nation, a total of 4,50,64,147 units had been registered with the MSME Ministry by the time this report was filed.

Out of the 4.5 crore MSMEs, 98.1 percent were micro units, totaling 4.4 crore enterprises, with 7.04 lakh small enterprises and 67,266 medium enterprises following. The total number of micro-enterprises counted also featured 1.86 crore microenterprises not covered by the Goods and Services Tax (GST) like street vendors, which were registered through the Udyam Assist Platform introduced in January 2023.

Before Udyam registration, the government utilized the Udyog Aadhaar Memorandum (UAM) and preceding that, the Entrepreneurs Memorandum (EM-II) for MSME Registration. The MSME Ministry's 2020-21 annual report shows 21,96,902 EM-II filings were reported during 2007-2015, and 1,02,32,451 (1.02 crore) UAM registrations were recorded from September 2015 to June 30, 2020.

The ministry launched UAP earlier this year to formalize informal micro-enterprises in the banking ecosystem through digital transactions, even if they are not registered for GST. Banks must provide necessary information about their small informal business clients to UAP for verification and registration on the Udyam portal.

Back in January, Prime Minister Narendra Modi urged state chief secretaries to focus on formalizing MSMEs to facilitate their growth. During his speech at the second national conference of chief secretaries, PM Modi emphasized the importance of states taking proactive steps towards the formalization of MSMEs. He also highlighted the necessity of providing finance, technology, market access, and skilling opportunities to MSMEs to enhance their global competitiveness.

During May, the Reserve Bank of India (RBI) instructed all financial institutions, such as banks and NBFCs, to recognize informal micro-enterprises registered through the Udyam Assist platform as micro-enterprises for categorization under the priority sector lending (PSL) guidelines.

Read Our Blog: Udyam Registration for MSME In India

The Udyam registration for MSMEs provides advantages like being listed on the government's online marketplace GeM, access to delayed payment monitoring portal Samadhaan, inclusion on the TReDS platform for invoice discounting, and opportunities for credit guarantee scheme, public procurement, priority sector lending from banks, and additional benefits.

Nonetheless, wholesale and retail traders who register for Udyam certification are restricted to the advantages of priority sector lending.

As per information from the Udyam portal, the MSMEs that are registered have disclosed 19.5 crore job positions, with more than 4.3 crore being held by women employees.