The COVID-19 pandemic has badly damaged the Indian economy, and every sector has suffered losses, especially the MSME sector. Micro, small, and medium enterprises, the backbone of the Indian economy, are facing many challenges associated with supply chain issues, financial stability, and lack of demand from consumers. To support MSMEs and bring their business back on track, the Government of India has taken many steps, one of which is the Udyam Registration System.
In this article, we will understand how Udyam registration has played an important role in recovering and strengthening the Indian economy post-pandemic.
What is Udyam Registration?
Udyam Registration is an online process started by the government in which MSMEs can register their business on an Udyam registration online portal and get the Udyam registration number. Its sole purpose is to uplift small businesses and provide benefits of several things, such as financial aid, subsidies, and priority in government tenders. Entrepreneurs can also apply for Udyam registration by simply filling out a Udyam registration form and getting the MSME certificate.
How Udyam registration helped in strengthening and revoring economy?
Any business that falls under the classification of Micro, Small, and Medium Enterprises can register its business online and get access to several government benefits. Udyam registration has helped MSMEs revive their businesses post-pandemic. Here is some analysis of this:
1. It encourages formalisation of MSMEs
Informality is one of the main issues that small enterprises in India confront since it keeps them from obtaining loans, government subsidies, or access to organised marketplaces. MSMEs' operations have grown more formalized as a result of Udyam registration as, upon obtaining a Udyam registration number, they are granted a digital MSME certificate. This also enables them to operate their businesses legally and to benefit from several incentives.
2. Easy access to credit
Post-pandemic, MSMEs needed the most financial support to recover and to overcome this problem. With the introduction of Udyam registration, the government made the largest move for MSMEs. The Credit Guarantee Fund Trust for Micro and Small Enterprises provides MSMEs with collateral-free business loans upon registration. In addition, they can obtain loans with cheap interest rates, guaranteeing that they will never run out of money and that they can expand their company.
3. Being qualified for government programs and financial aid
MSMEs registered under the Udyam system are eligible to avail of several government schemes, including:
- Subsidies in patent registration and industrial promotion
- Reimbursements on ISO certification costs
- Discount on electricity bills
- Priority lending under MSME-focused initiatives
These incentives help businesses reduce their operational costs and invest more in productivity and expansion.
4. Promoting market opportunities through government tenders
Udyam registration enables MSMEs to participate in government tenders and many government tenders that are exclusively reserved for small businesses. This enables MSMEs to get large scale projects, increasing their revenue and strengthening their market presence.
5. Increasing export potential
There is also a focus on boosting exports to improve the economic activities of MSMEs after the pandemic. Udyam registered businesses get the benefit of many export promotion schemes such as Market Development Assistance and Reduced Custom Duties. Due to this, MSMEs are able to access the international market and sell their products and also contribute to India's export sector as well as contribute to India's foreign exchange reserves.
6. Generation of new employment and growth in the economy
MSMEs bring the largest portion of the popular population into formal employment because MSMEs are the largest employment generator in India, which is not limited to just one particular sector. Udyam registration indirectly contributes to job creation because after getting Udyam registration done, MSMEs get many government scheme benefits as well as financial assistance due to which their lack of finance is removed, and they remain growth-oriented focused. New appointments are also generated to increase the supply. New employment will be generated, which will cause consumer spending to increase, and due to all this, the economy will grow.
Challenge and Way Forward:
Even after so many benefits of Udyam registration, the Udyam registration system faces some challenges, such as
- Many MSMEs, which are especially located in rural areas, are still not aware of the benefits of Udyam registration.
- Some small business owners face difficulties in the online registration process.
- Due to a lack of financial literacy, the benefit of access of credit is limited for many MSME owners.
To further increase the impact of Udyam registration, the government should launch an awareness campaign, simplify the registration process, and provide financial literacy programs as well.
Conclusion:
Udyam registration has emerged as a very important tool in India to improve the Indian economy post-pandemic. A very good initiative has been taken to formalize the business, get credit easily, expand the market, and boost the export sector, due to which the MSME sector will become even stronger. The more small businesses embrace Udyam registration and are able to take advantage of its benefits, the more India's economy will be strengthened and grow, as well as continuously improve.
Hence, MSMEs should take advantage of Udyam Registration and get their MSME Certificate as soon as possible to unlock numerous opportunities and evolve the economic landscape.
