India's Micro, Small, and Medium Enterprises (MSME) sector is the economic backbone of the nation. The owners of a million enterprises are financially dependent on government schemes, loans, and incentives to establish their businesses. Nevertheless, acquiring an MSME identity was a comparatively tedious procedure in the past. Therefore, the Government of India introduced a new and advanced platform—the Udyam Registration Portal—to substitute the current UAM (Udyog Aadhaar Memorandum) system.

This wasn't only a technical change but also made it easier, more understandable, and quicker to obtain an MSME identity. In this article, we will clearly describe in detail how Udyam Registration simplified identifying MSMEs compared to UAM.

What was UAM and its limitations?

Udyam Aadhaar Memorandum was introduced in the year 2015. It was a simple MSME registration process by which the registration online was done through just mentioning the Aadhaar number and some business-related details.

Even this process, which is much more convenient than the previous manual one, had a lot of problems:

• No data verification: There was no effective system of enterprise details verification.

• Multiple registrations: Multiple registrations were previously carried out in the name of the same business.

• Limited government integration: There was no direct integration with other government departments or banking systems.

• Certificate validity and update issues: It was difficult to update the data in the UAM certificate.

To address these drawbacks, the government introduced the Udyam Registration Portal in 2020.

What is Udyam Registration?

Udyam Registration is an online platform launched by the Ministry of MSME in July 2020. It was an initiative to make the MSME identification process solely online, automated, and data-checked.

The portal is linked to Aadhaar and PAN card, with the option of directly matching data with government databases (such as GST and ITR). This brought in more transparency, and it also made registration a cakewalk.

Udyam Registration vs. UAM – Key Differences

Features of UAM (Udyog Aadhaar) and Udyam Registration

Year of Launch

• Udyog Aadhaar: 2015

• Udyam registration: 2020

Integration of Aadhaar and PAN: 

• Udyog Aadhar: Only Aadhaar is required.

• Udyam registration: Aadhaar and PAN are both mandatory

• Udyog Aadhar: Verification of data through manual input.

• Udyam registration: Linked with ITR and GST automatically

Registration Number

• Udyog Aadhar: UAM Number

• Udyam registration: Permanent 19-digit Udyam Number

• Udyog Aadhar: Generation of a certificate involves downloading

• Udyam registration: Automatic e-certificate given

Updation process 

• Udyog Aadhar: Data update limited options. 

• Udyam registration: Available to update at any time

Duplicate registration 

• Udyog Aadhar: Duplicate enrollments may be occurred

• Udyam registration: Duplicate registration avoided (since PAN linking)

How Udyam Registration Simplifies MSME Identification

Completely online and paperless process

Udyog Aadhar used to have several scanned copies of documents needed for it, but Udyam Registration eliminates that.

With merely an Aadhaar number and a PAN card, entrepreneurs can get an MSME certificate in minutes.

Automation of data verification

Udyam Portal directly interfaces with the database of the GST and Income Tax Department. It automatically verifies financial data, turnover, and investment, and cannot furnish a false report.

Single Identification Number

Each business is assigned a single, permanent Udyam Registration Number (URN). It is simple to determine any MSME, verify its authenticity, and avail government concessions.

Prohibition of Duplicate Registrations

Udyam used to register multiple times. But with the PAN linking on the Udyam Portal, an individual or a body can now secure only one valid MSME registration.

Government Schemes with Direct Benefits

Udyam-registered MSMEs become eligible for different government schemes, loan facilities, and subsidy schemes automatically. For the same under UAM, different applications were to be submitted.

Instant Certificates Available

The download of the UAM certificate was typically on account of technical problems. Once the Udyam registration is done, the e-certificate becomes available on the portal immediately, and anyone can download it at any time.

Ease of Keeping Information Current

Udyam portal makes it easy to keep information current, such as turnover, investment, or address, keeping their profiles current and authentic.

Major Udyam Registration Benefits for MSMEs

1. Straightforward and convenient registration process.

2. The facility of getting bank credit and loans with ease.

3. In addition to becoming eligible to bid on government tenders.

4. Concessions of interest rates and taxes.

5. Facility to access government schemes and subsidies easily.

6. Enhanced business credibility and visibility.

7. Simple registration on portals such as GeM (Government e-Marketplace).

Transparency and Reliability of the Udyam Portal

The Udyam Registration Portal has an inbuilt data regime as well as a user-friendly portal. It is the authentic portal run by the Ministry of MSME, providing the reliability of data.

It not only accelerates the registration process but also ensures a guaranteed digital identity system for the MSME sector.

Why was the transition from UAM to Udyam required

The government of India desires to organize and formalize the MSME sector.

Irregularity in data and transparency within the UAM system were hindering the actual benefits of MSME schemes.

The gap has been covered by the Udyam Portal—now all MSMEs' information is connected with GST, and ITR is also connected, making the government aware of real-time MSME information.

This alteration brought the MSME sector on par with the Digital India Mission.

You Can Apply for Print Udyam Certificate Through Udyam Portal

Conclusion

Udyam Registration has totally changed the identification of MSMEs.

While UAM was one step ahead, Udyam brought the MSME registration to the present-day, open, and secure age.

Today, any entrepreneur can have their MSME registered in a matter of minutes, without any form of paperwork.

This system not only gives formal identification to the firms, but also facilitates easy access to government schemes as well as financial benefits for entrepreneurs.

As such, Udyam Registration has indeed streamlined, credibly, and effectively enabled MSME identification, a great leap towards the economic development of India.