The Micro, Small and Medium Enterprises (MSME) Act was introduced in the year 2006 with the objective to facilitate promotion and development of MSMEs. It also aimed at enhancing competitiveness within the MSMEs to accelerate growth in the sector.
The MSME Act covers all categories of enterprises including proprietorship, Hindu Undivided Family, association of persons, co-operative society, partnership firm, company or undertaking. It defines and classifies the MSMEs in manufacturing and service sectors as:
Micro Enterprises refer to enterprises wherein the investment in plant and machinery is up to INR 25 Lakhs. In Small Enterprises, the investment in plant and machinery is above INR 25 Lakhs and up to INR 5 Crores. In the case of Medium Enterprises, the investment in plant and machinery is above INR 5 Crores and up to INR 10 Crores.
Micro Enterprises refer to those enterprises wherein the investment in equipment is up to INR 10 Lakhs. In Small Enterprises, the investment in equipment is above INR 10 Lakh and up to INR 2Crores. In the case of Medium Enterprises, the investment in equipment is above INR 2Crore and up to INR 5Crores
Section 8 of the MSME Act of 2006 explains the procedure for filing a memorandum (also known as Entrepreneurs Memorandum – EM) which is optional in case of Micro and Small enterprises, but compulsory for the Medium enterprises (excluding the service sector).
As per the report provided by the Committee, headed by Mr. K. V. Kamath, which was set up to examine the financial architecture of the MSME sector: ‘Small enterprises also face challenges in registration and complex compliance requirements that act as deterrents to adopting formally registered legal structures.’ This report also suggested the concept of ‘Universalization of Registration’.
On the basis of the recommendation to make the whole process of registration easier and simpler, a new, simple one-page registration form has been introduced. The Modi Government has launched the UDYOG AADHAAR Memorandum (UAM) vide Gazette Notification dated September 18, 2015. This gives an online single page registration form which is in a self-declaration format.
The key features of this new procedure are as under:
- Udyog Aadhar is meant to be filled by running businesses and there is no need for upcoming businesses to file for Udyog Aadhar. This helps ease in starting a business as the paper work is reduced.
- No registration fees for Udyog Aadhaar memorandum
- Only online filing in self-declaration format
- Unique Udyog Aadhaar number to all registrations
- The erstwhile EM-I or EM-II are not mandatory
- No restriction on filing more than one UAM on one Aadhaar Number
The guidelines for filling up this form are provided along with the online registration form. All one needs to register for an Udyog Aadhar is a personal Aadhar number which can be obtained by resident Indian individuals at https://uidai.gov.in.