Govt further extends Udyog Aadhaar validity; MSMEs now have time till March-end to move to Udyam portal

Ease of Doing Business for MSMEs: Ministry of Micro, Small and Medium Enterprises (MSME) has given MSMEs registered under the Udyog Aadhaar Memorandum (UAM) system another three-month extension to migrate to the new Udyam registration that was launched on July 1, 2020. In a notification, the ministry announced the extension of the validity of UAM registration till March 31, 2022, from December 31, 2021. Financial Express Online had exclusively reported last month that the UAM registrations would continue to remain valid for some time for MSMEs to switch to the Udyam portal.

Earlier, Entrepreneur Memorandum – II and/or UAM registrations obtained by MSMEs before June 30, 2020, were valid till March 31, 2021. The validity was extended till the end of 2021 by the government for MSMEs to continue avail benefits of the provisions under various existing schemes and incentives including priority sector lending. The notification dated January 19, 2022, regarding the extension of UAM registration till March end was published on the website of the MSME Ministry on January 27, 2022.

EM-II and UAM were replaced by Udyam Registration in July 2020 following the revised definition of MSME by the government. The Reserve Bank of India (RBI) had clarified in 2020 that existing EMs II and/or UAMs of MSMEs obtained before June 30, 2020, will remain valid till March 31, 2021, even as MSMEs had to register on the Udyam Registration portal before March last year.

“It (validity extension) will not be around for too long. Maybe to streamline the system of registration, there was a need for this to benefit MSMEs who want to come onto the Udyam portal. But UAM and Udyam Registration cannot exist in parallel and it is supposedly not in the benefit of MSMEs as well…Udyam Registration is advisory for micro and small enterprises as per the MSME Development Act, 2006 if they want to avail the benefit of government schemes offered to MSMEs. But for medium enterprises, it is mandatory,” a government official had told Financial Express Online last month on anonymity.

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During the 2007-2015 period, 21,96,902 EM-II filings were recorded while from September 2015 till June 30 2020, the government saw 1,02,32,451 (1.02 crore) UAM registrations, according to the MSME Ministry’s annual report 2020-21. As of February 7, 2022, over 70 lakhs existing/new MSMEs had already registered on the new Udyam portal in around 19 months, as per MSME Dashboard data, in comparison to 1 crore MSMEs on UAM registration that took nearly 5 years.

“The pandemic has underscored the need to move to a digital platform. This move hasn’t been easy and a lot of adjustment has been required. For some MSMEs, this has become the only mode of surviving. We are getting a good response on the Udyam portal,” MSME Secretary BB Swain had said at a virtual event by CII in November last year. 

However, data on how many of these 70 lakh MSMEs had migrated from UAM/EM-II registrations and how many have been new business registrations weren’t known. Among the existing benefits offered to MSMEs for Udyam registration was freedom from renewal of registration, multiple activities including manufacturing or service could be added to one registration, MSMEs could register themselves on Government e-Marketplace (GeM), and also simultaneously onboard TReDS platform. Credit Guarantee Scheme, Public Procurement Policy, etc.