More than 76 lakh registered MSMEs with the government but not in Udyam, remain uncertain about their status as MSMEs. Considering this grave situation, industry bodies are seeking an extension of the Udyam registration process with the Ministry of Micro, Small and Medium Enterprises.
In June last year, the Union government issued a notification for changing the definition of MSMEs and has introduced a new Udyam registration process. “The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31st day of March, 2021,” stated the notification.
Reportedly, while 1.02 crore MSMEs have earlier registered on the Udyog Aadhaar portal (old registration process), only 25.98 lakh MSMEs have migrated and registered on Udyam at the end of March 31.
“The government must extend the deadline for Udyam registration and also must launch an aggressive campaign across the country to encourage small and medium entities to get registered to avail the registration benefits,” said Subash Goyal, Honorary General Secretary of the Federation of Association in Indian Tourism & Hospitality (FAITH).
“Many small and medium enterprises are unaware of the registration benefits. The central government must take initiative to encourage MSMEs to get registered similar to the ongoing campaign for COVID-19 vaccination,” he said.
Earlier, several MSMEs associations have written to the Ministry of Micro, Small and Medium Enterprises to extend the cut off for registration for existing entities. Even as lakhs of MSMEs were not able to get registered in the new process by the end of cut off date of March 31, there has been no clarity on the registration process from the Ministry.
“We have made requests to the government to increase the validity of Udyog Aadhar by six months. While the government claims that it has so far received over 25 lakh registrations, it is significantly low considering there are an estimated seven crore MSMEs in India. One could only say that the awareness of the registration and the benefits that come with it is still very low,” stated Chandrakant Salunkhe, Founder & President, SME Chamber of India.
MSMEs registered with Udyam will be eligible to avail collateral-free credit under the Credit Guarantee fund scheme. Among other benefits there are 50 per cent discount on Trademark and Patent fees, concession on electricity bills and tax exemptions.
In August last year, the Reserve Bank of India notified that lenders may obtain the Udyam certificate from the entrepreneurs for lending purposes. Further, official data points out that a large number of MSMEs are not availing credit schemes launched by the central government.
For instance, in June 2020, Rs 20,000 crore subordinate debt scheme for stressed MSMEs, was announced as part of the Rs 3.7-lakh-crore MSME package by the central government. As of March 4, 2021, only 332 MSMEs availed loans involving an amount of Rs 38.5 crore, according to the data shared by MSME Minister Nitin Gadkari to a question in Rajya Sabha.
“Udyam Portal is a database for the government to track the MSMEs,” said KE Raghunathan, former President of All India Manufacturers Organisation. “Many small MSMEs find no specific benefits with the registration. That is one of the main reasons for low registration with the portal,” he said.
According to a survey conducted by FICCI (Federation of Indian Chambers of Commerce and Industry) and the Indian Banks’ Association, it was found that the Non Performing Assets (NPA) are more likely to increase in the MSME sector.