Udyam Registration vs. Previous MSME Registration: What’s Changed?

by nisha roy
Udyam Registration vs. Previous MSME Registration What's Changed


The Micro, Small, and Medium Enterprises (MSMEs) sector plays a crucial role in driving economic growth and employment generation in India. In June 2020, the Government of India introduced a new registration system called Udyam Registration portal, replacing the previous MSME registration process. This article examines the changes introduced by Udyam Registration and highlights the key differences and benefits compared to the previous registration system.

  1. An Overview of the New Udyam Registration System

The Udyam Registration system is an online portal designed to simplify the registration process for MSMEs. It is based on self-declaration and aims to provide ease of access, increased transparency, and streamlined compliance procedures. Udyam Registration is governed by the Ministry of Micro, Small and Medium Enterprises (MSME) and is available to all eligible enterprises across India.

  1. Key Differences and Benefits of Udyam Registration

2.1. Revised Eligibility Criteria:

One of the significant changes introduced by Udyam Registration is the revision of the eligibility criteria for MSMEs. The previous system had separate criteria for classifying micro, small, and medium enterprises based on investment in plant and machinery or equipment. Under Udyam Registration, the classification is based on a composite criterion of investment in plant and machinery or equipment and turnover of the enterprise. This shift aims to provide a more holistic assessment of the enterprise’s scale and encourage the growth of small businesses.

2.2. Aadhaar Integration and Ease of Registration:

Udyam Registration incorporates Aadhaar integration, making it easier for entrepreneurs to register their businesses. Aadhaar authentication allows for swift and hassle-free verification of the business owner’s identity. This integration streamlines the registration process and reduces the time required for completing the formalities.

2.3. Online Documentation and Simplified Process:

Unlike the previous system, which involved submitting multiple documents physically, Udyam Registration utilizes a simplified process with minimal documentation requirements. The online platform enables entrepreneurs to upload the necessary documents, such as Aadhaar card, PAN card, and bank account details. This digital approach reduces paperwork and eliminates the need for physical visits to government offices, making the registration process more convenient and efficient.

2.4. Instant Generation of Udyam Registration Certificate:

One notable benefit of Udyam Registration is the immediate generation of the Udyam Registration certificate upon successful completion of the registration process. The certificate serves as proof of registration and facilitates access to various government schemes, incentives, and credit facilities. The real-time generation of the certificate allows small businesses to avail themselves of these benefits without unnecessary delays.

  1. Understanding the Implications for Small Businesses

3.1. Access to Credit and Government Schemes:

Udyam Registration enhances the credibility and visibility of small businesses, improving their access to credit facilities from financial institutions. The registration certificate acts as a recognized proof of existence and enables businesses to establish their creditworthiness, facilitating smoother loan approvals and better financial support.

Moreover, Udyam Registration provides small businesses with better access to various government schemes and programs aimed at promoting their growth. The registration certificate serves as a gateway to these initiatives, allowing businesses to leverage subsidies, grants, and other benefits offered by the government.

3.2. Streamlined Compliance and Reporting:

With Udyam Registration, the government aims to simplify compliance and reporting obligations for MSMEs. The self-declaration approach eliminates the need for recurring filings and multiple registrations across different departments. This streamlining reduces the administrative burden on small businesses, allowing them to focus more on their core operations and growth.

3.3. Enhanced Market Opportunities and Supplier Preference:

Udyam Registration opens up new market opportunities for small businesses. Many government procurement programs, both at the central and state levels, have specific preferences for procuring goods and services from registered MSMEs. Udyam Registration grants small businesses access to these procurement opportunities, giving them a competitive edge and increasing their chances of securing government contracts.

Furthermore, Udyam Registration enhances the visibility of small businesses in the market. The registration certificate serves as proof of their status as a recognized MSME, instilling confidence in potential customers and partners. This increased credibility can lead to more business collaborations and partnerships, fueling the growth and expansion of small enterprises.


Udyam Registration has introduced significant changes to the MSME/ Udyam registration process in India, replacing the previous system with a more streamlined and digitized approach. The shift to Udyam Registration brings several benefits, including revised eligibility criteria, Aadhaar integration for ease of registration, simplified documentation, instant generation of registration certificates, and improved access to credit, government schemes, and market opportunities.

Small businesses stand to gain from these changes, as Udyam Registration simplifies compliance and reporting, enhances their credibility, and opens up avenues for growth and expansion. Entrepreneurs should embrace Udyam Registration and leverage its advantages to unlock the full potential of their businesses in the dynamic and evolving landscape of MSMEs in India.

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