Udyam Registration, formerly known as the Udyog Aadhaar, has been one of the greatest contributions of the Government of India in formalising Micro, Small and Medium Enterprises (MSMEs). Registering with this scheme, entrepreneurs receive recognition, financial aid and government subsidies.

But as far as engaging in traders Udyog Aadhaar is concerned there is usually some confusion. Lots of wholesale and retail enterprises would like to know about their eligibility. Udyog Aadhaar eligibility is clarified in this blog about the traders such as wholesale and retail companies.

Understanding Udyog Aadhaar for Traders

Udyog Aadhaar to traders is a process through which individuals or bodies taking to the business of buying and selling goods (either wholesale or retail), should register. Unlike manufacturers and service providers, traders may not enjoy the benefits of MSME and this creates uncertainty.

The schemes targeted initially were only manufacturers and service providers. But due to industry demands and government revisions some types of the trading activities were also chosen to benefit under MSME.

Wholesale Traders Udyog Aadhaar -Are They Qualified?

Wholesale traders are companies that buy products wholesale, and sell them to retail companies, resellers or other companies.

Wholesale traders eligibility under Udyog Aadhaar:

• • Previously, wholesale trade was not part of the MSME registration.
• • In a policy change, traders between wholesale goods in agricultural produce, raw materials, and essential commodities may be eligible.
• • Yet, wholesale trading which is devoid of any value addition is more of an exception.

This is restricted to wholesale traders who are associated with the supply- chain upgrade or key services.

Retailer MSME Registration:Can Retailers Apply

Retailers market directly to the final consumers. There are small kirana shops and modern retail stores; India has millions of retail businesses that have a contribution to the economy.

Eligibility to retailers under the Yog Aadhaar:

• • Any retailers that offer extended services or value added-functions (including packaging, customisation services or online retailing platforms) may apply.
• • Pure retail selling with no processing and/or service work will not generally be covered
• • Proprietorship or small businesses registered e-commerce sellers are also eligible in this category provided they meet the MSME turnover and investment requirements.

Thus, the registration of retailer MSMEs is based on the question of whether their activities are limited to buying and selling.

Who is Eligible to Udyog Aadhaar?

This is a simplified list of businesses that may qualify under the Udyog Aadhaar eligibility:

• • Production Facilities - Enterprises that make goods and products.
• • Service Providers - Computer services, repair services and consulting, etc.
• • Value addition traders - Wholesalers/ retailers who engage in using packaging, processing or distribution facilities.
• • E-commerce Sellers - Main markets include-Online sellers that offer a platform, or maintain small inventory.
• • Export-Linked Traders - Smaller traders who also operate in exports, who directly contribute to the foreign trade of India.

Who is Not Eligible to Apply for Udyog Aadhaar?

• • Pure Trading Businesses - Only buying and then selling without incurring any value addition.
• • Middlemen/Agents - Companies that do nothing but act as an intermediary between the product or service being offered.
• • Large Commercial Traders - Large trading houses that are not included in the MSME investment/turn over sectors.
• • Unregistered Informal Sellers - Hawkers or street vendors, who are not formally registered

Homegenousity The Answer Why Some Traders Are Not Allowed

The prime factor to exclude pure trading groups in Udyog Aadhaar eligibility is that the benefits of becoming an MSME center around increasing production and value addition. Traders are often excluded in the benefits offered to MSMEs because they tend to concentrate more on buying and reselling than manufacturing or taking part in services.

The objective of the government is to make sure that subsidies and incentives are confined to fully used industries which promote the generation of employment, create infrastructure and enhance exports.

Advantages to Qualified Traders

To traders who qualify, Udyog Aadhaar trader is beneficial:

• • Collateral Free Lending - Lending at priority sector under MSME schemes.
• • Subsidies & Discounts - Concessions to electricity, fees on patents and certifications.
• • Government Tenders - Procurement and Bidding preferences.
• • Legal Protection - Protection against late payment which exists under MSME laws
• • Market Expansion - Proposes opportunities to get involved in direct trade fairs and export programs.

Final Thoughts

The Udyog Aadhaar eligibility issue as applicable to traders is dependent on the nature of the trading business. Wholesale traders Udyog Aadhaar and retailer MSME registration are permitted in a few cases but they are not allowed in case of any business engaged in pure trading activities.

As a trader, it is possible to check Udyog Aadhaar eligibility and plan the course of action going forward. Udyog Aadhaar (currently Udyam Registration) is the source of business finance, subsidies and growth opportunities to businesses; it is an important step towards formalisation of Micro, Small and Medium Enterprises (MSMEs). The entrepreneurs who sign in this scheme are recognized, provided with some financial support and can avail governmental subsidies.

Yet, in the case of Udyog Aadhaar of the traders the confusion sets in. According to many wholesale and retail enterprises, there is a desire to know whether they are eligible or not. This blog dispels the confusion by clarifying Udyog Aadhaar eligibility by traders including Wholesale and Retail business.