Ministry of MSME shows the way to make MSMEs break their Barriers and become Champions

Circular No. ES/ 226/2020-21                                                        28th June, 2020   

To : Members of the Council

Sub.: Ministry of MSME shows the way to make MSMEs break their Barriers and become Champions

Dear Member,

The Ministry of Micro, Small and Medium Enterprises (MSME) has issued a consolidated notification dated 26th June, 2020 notifying guidelines for classification and registration of MSMEs on 26th June, 2020. In this regard, the Ministry had earlier published a Notification on 1st June, 2020 notifying new criterias for classification of MSMEs based on Investment and Turnover which will be effective from 1st July, 2020. The Press Release issued by the Ministry of MSME on 26th June, 2020 gives the details of the same.

Accordingly, the MSME Ministry has implemented the new norms which have been undertaken in consultation with various stakeholders including the advisory committee, officials of Income Tax, GST, State Governments and MSME Associations which were held in the month of June.

Features of Notification dated 26th June, 2020-

• Detailed criteria for classification of MSMEs and the procedure for registration and the arrangements made by the Ministry for facilitation in this process.

• Supersedes all earlier notifications issued with regard to classification or registration of MSMEs. Now, the entrepreneurs, enterprises and the MSMEs have to refer to just this notification for matters relating with classification or registration. 

• Hereafter, an MSME will be known as Udyam, as this is more closer to the word Enterprise. Accordingly, the registration process will be known Udyam Registration.

• Udyam Registration can be filed online based on self-declaration with no requirement to upload documents, papers, certificates or proof. This is possible because the Udyam Registration process has been fully integrated with the Systems of Income Tax and GST and the details filled in can be verified on the basis of PAN number or GSTIN details.  

Highlights of the Notification includes:

• An enterprise can be registered just on the basis of Aadhaar number. Other details can be given on self-declaration basis without any requirement of uploading or submitting any  papers-thus it is a paperless exercise in true sense;

• Investment in ‘Plant and Machinery or Equipment’ and ‘Turnover’ are the basic criteria for classification of MSMEs now;

• Exports of goods or services or both shall be excluded while calculating the turnover of any enterprise whether Micro, Small or Medium;

• The process of registration can be done online through the portal which will be made known to the public before 1st July, 2020, the date from which this new arrangement is going to be effective.

• The Ministry of MSME has established a strong facilitation mechanism for the MSMEs. This process is in the form of Single Window Systems at the district level and regional level.  It will help those entrepreneurs who are not able to file the Udyam Registration for any reason. 

• At the district level, the District Industry Centres have been made responsible for facilitating the entrepreneurs. Similarly, Ministry’s recent initiative of Champions Control Rooms across the country have been made legally responsible for facilitating such Entrepreneurs in registration and even thereafter.

• Those people who do not have a valid Aadhaar Number can also approach the Single Window Systems for facilitation alongwith adhaar enrollment request or identity, bank photo passbook, voter ID card, passport or driving license and the Single Window Systems will facilitate them in registering after getting the adhaar number.

The new guidelines issued on the new system of classification, registration and Facilitation of MSMEs will be an extremely simple and yet fast-track, seamless and globally benchmarked process and a revolutionary step towards Ease of Doing Business. These steps and strategies will help MSMEs grow and suceed during this challenging time.

These developments will be a step towards making Indian MSMEs National and International Champions and will enable them to break their barriers and capture global markets.