Understanding Small Scale Industries: The Backbone Of Indian Economy

SSI registration is done under the MSME Ministry. To register a small-scale industry, the Udyog Aadhar online platform is utilized. In this article, we understand what MSME is and how do you register an SSI with Udyog Aadhar.

• What is MSME?

Micro, small and medium enterprises make MSME.  They are formed within the purview of the Micro, Small & Medium Enterprises Development (MSMED) Act of 2006. The act classifies all MSME under two categories:

1. a)   Service Enterprises are those which either provide or render a service. They are defined according to investment done in equipment.
2. b)  Manufacturing Enterprises are those which produce or create goods. The products can be for an industry that is mentioned in the 1st Schedule of industries i.e., Development and Regulation Act, 1951. They can also be those plants that add value to a final product that already has a distinct use, name, or character. Manufacturing enterprises are defined according to investment done in plant and machinery.

In India, they are the very backbone of the economy because the majority of the population runs one of these kinds of businesses. When MSMEs are promoted, development occurs all over the country, which is why GoI has launched several incentives and schemes to support them. If any micro, small or medium-sized business wants to avail these benefits, they need to be registered under the MSME Act.

• Who can register under MSME?

While registration is not mandatory, it does bring a lot of benefits to the business in the forms of subsidies in power tariff, capital investment, and tax. An MSME is also eligible for lower interest rates. To register within the manufacturing sector, the enterprise requires investment lower than Rs. 10 Crore in plant and machinery. To register within the service sector, the enterprise requires investment lower than Rs. 5 Crore in equipment.  Depending upon the amount, with each sector, an enterprise is classified as:

1. a)   Micro Enterprise:
2. Manufacturing: Investment is lower than Rs. 25 lakhs
3. Service: Investment is lower than Rs. 10 lakhs
4. b)  Small Enterprise: 
5. Manufacturing: Investment is over Rs. 25 lakhs but lower than Rs. 5 crores
6. Service: Investment is over Rs. 10 lakhs but lower than Rs. 2 crores
7. c)   Medium Enterprise:
8. Manufacturing: Investment is over Rs. 5 Crores but lower than Rs. 10 crores
9. Service: Investment is over Rs. 2 Crores but lower than Rs. 5 crores

• How is Udyog Aadhar Registration done?

The process of registering an MSME or SSI is called Udyog Aadhaar Registration. It is done entirely online and requires filling a single page form. The person registering the SSI self-certifies the details asked in the form. It requires no expense on the part of the company. The information or documents you will need to register within Udyog Aadhaar are:

1. a)   Name of the owner of the SSI as mentioned in the Aadhar card.
2. b)  The 12-digit unique Aadhar number of the applicant.
3. c)   The social category of the applicant. Proof of OBC, ST and SC caste may be asked on a later date by the concerned authority.
4. d)  Name of the enterprise. This is the legal name under which all business is conducted.
5. e)   Address of the entity along with an email address and a contact number.
6. f)    The start date of the enterprise.
7. g)   Any previous MSME registration details.
8. h)  Complete bank account details of the enterprise.
9. i)    Type of business entity which may include self-help group, HUF, PLC, Private firm, etc.
10. j)     The activity of the business, i.e., service or manufacturing.
11. k)  The correct NIC code which can be found in the NIC code handbook.
12. l)     The number of employees in the enterprise.
13. m)  Total amount invested in the equipment, plant, and machinery of the enterprise.

One applicant can register for one or more enterprises using the same Aadhar Number, but each MSME has to be registered with a separate Udyog Aadhaar form.

The government of the country has made the process of setting up a small, micro, or medium-sized business extremely straightforward. With a few details and an internet connection, anyone can register an SSI under Udyog Aadhar and reap the many benefits the platform offers.