Central vs. State Government Schemes: The Advantage of Udyam Registration

India is a vast country with a large population and a diverse economy. To support various sectors and promote development, both the Central Government and State Governments introduce several schemes. One important sector that receives a lot of support is the Micro, Small, and Medium Enterprises (MSME) sector. These small businesses play a big role in providing jobs, boosting exports, and encouraging entrepreneurship. To help these businesses grow and succeed, the government has introduced many benefits under different schemes — but to take full advantage of these, registration under MSME Registration is often required.
Let’s understand the difference between Central and State Government schemes and how Udyam Registration can help businesses get the best of both worlds.
What is Udyam Registration?
Udyam Registration is a government registration process for MSMEs. It replaced the earlier system of Udyog Aadhaar registration. It was introduced by the Ministry of Micro, Small and Medium Enterprises on 1st July 2020 to simplify the registration process and make it fully digital.
Any business that qualifies as a Micro, Small, or Medium Enterprise can register on the Udyam portal using basic information such as Aadhaar, PAN, and business details. There is no fee for registration, and it can be completed online within minutes.
Who is Eligible for Udyam Registration?
The eligibility for Udyam Registration is based on investment in plant & machinery or equipment and annual turnover. The classification is:
- Micro Enterprises: Investment up to Rs. 2.5 crore and turnover up to Rs 10 crore.
- Small Enterprises: Investment up to Rs. 25 crore and turnover up to Rs. 100 crore.
- Medium Enterprises: Investment up to Rs 125 crore and turnover up to Rs 500 crore.
Both manufacturing and service-based businesses can register as MSMEs under Udyam.
Why is Udyam Registration Important?
Udyam Registration helps small businesses gain formal recognition from the government. Once registered, a business becomes eligible for various benefits under different schemes offered by both the Central and State Governments. These benefits include:
- Easier access to loans
- Lower interest rates
- Government subsidies
- Protection against delayed payments
- Support for exports
- Participation in government tenders
- And many other incentives
Let’s explore these in more detail by comparing Central and State Government schemes.
Central Government Schemes for MSMEs
The Central Government runs many schemes aimed at supporting small businesses across India. These schemes apply to all eligible businesses regardless of the state they are in. Some key Central Government schemes include:
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Prime Minister’s Employment Generation Programme (PMEGP)
This scheme provides financial assistance to people who want to start a new business. It is implemented by the Ministry of MSME through Khadi and Village Industries Commission (KVIC). Registered Udyam businesses can apply for subsidies under this scheme.
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Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
This scheme provides collateral-free loans to MSMEs. It reduces the risk for banks and NBFCs while lending to small businesses. Udyam Registration is often required to access this benefit.
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Interest Subsidy on Loans
The government offers interest subsidies to MSMEs to lower their cost of credit. Businesses with Udyam Registration are eligible for these subsidies under various central loan schemes.
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Public Procurement Policy
Under this policy, the government mandates that 25% of its total annual procurement should be from registered MSMEs. Out of this, 4% is reserved for SC/ST entrepreneurs, and 3% for women entrepreneurs. Udyam-registered businesses can participate in these tenders.
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MSME Samadhan
This initiative helps MSMEs resolve delayed payments from buyers. With Udyam Registration, businesses can file complaints and get their dues cleared through legal channels.
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Technology and Quality Upgradation Schemes
Central schemes also help MSMEs adopt new technologies, improve production processes, and enhance product quality. Subsidies and assistance are available to Udyam-registered units for adopting energy-efficient technologies.
State Government Schemes for MSMEs
Each state government in India also introduces its own schemes based on local needs, industries, and economic goals. These are aimed at encouraging businesses to grow in that particular state. Some popular state schemes include:
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Capital Subsidy Schemes
States like Maharashtra, Gujarat, Tamil Nadu, and Karnataka offer capital investment subsidies for setting up or expanding industries. These subsidies are offered on land, building, plant, and machinery costs. Udyam Registration is often a requirement to qualify.
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Power Tariff Concessions
Many state governments provide discounted electricity rates to MSMEs to lower their operating costs. Only registered MSMEs under Udyam are usually eligible.
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Stamp Duty and Registration Fee Exemptions
Some states waive or reduce stamp duty and registration charges for Udyam-registered businesses that purchase land or property for setting up industries.
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Skill Development and Training Programs
States conduct entrepreneurship development and skill training programs for MSME workers and entrepreneurs. Udyam Registration is often required to join these government-supported training sessions.
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Export Promotion Schemes
States like Tamil Nadu, Punjab, and West Bengal offer incentives to small exporters. These include freight subsidies, participation in trade fairs, and export awards. Udyam Registration is necessary to avail these benefits.
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Subsidy on Testing and Certification
State governments offer support to MSMEs for product testing, certification, and quality marking from recognized labs. This is to help them compete in national and international markets. Udyam-registered businesses are prioritized.
Advantages of Udyam Registration in Accessing These Schemes
Let’s now look at why Udyam Registration is so important when it comes to actually benefitting from these Central and State schemes.
1. Official Recognition
Without Udyam Registration, your business may not be officially counted as an MSME. Most schemes, both central and state, clearly mention that only “registered MSMEs” can apply. Udyam provides this recognition.
2. Faster Loan Processing
Many schemes offer collateral-free loans or interest subsidies, but banks often require proof of Udyam Registration to process these applications quickly and smoothly.
3. Eligibility for Tenders
Government procurement tends to favor MSMEs, but only those with valid Udyam Registration. Without it, you may not be able to apply for special MSME tenders or get exemptions from earnest money deposits.
4. Simplified Documentation
Once your business is registered on the Udyam portal, all major details are already available to the government. This reduces the paperwork needed to apply for schemes, as departments can verify data directly.
5. Access to MSME Databases and Platforms
Udyam-registered businesses get access to MSME portals like the MSME Samadhan, MSME Champions, GeM portal, and others where they can promote their products, raise grievances, or seek mentorship.
6. Priority Support
Governments, during times of crisis (like COVID-19), often announce relief packages or special funding for Udyam-registered MSMEs. These businesses are the first to be supported.
Common Challenges Without Udyam Registration
Businesses that fail to register may face the following issues:
- Cannot apply for government subsidies or loans
- Rejected from tender opportunities
- Higher borrowing costs from banks
- No support in delayed payment disputes
- Miss out on export or training support
- Limited access to networks and knowledge hubs
In short, Udyam Registration is like a passport that opens doors to countless opportunities from both Central and State governments.
How to Register on the Udyam Portal
The registration process is simple:
- Visit Udyam Portal: Go to the official Udyam Registration website.
- Enter Business Details: Provide business name, type, address, and bank info.
- Review and Submit: Double-check the details and submit the form.
- Pay Registration Fee: Choose a payment method and complete the payment.
- Receive OTP: An OTP will be sent to your Aadhaar-linked mobile number.
- Enter OTP: Verify your identity by entering the OTP.
- Complete Registration: After verification, your registration is complete.
- Get Udyam Certificate: The certificate will be emailed to you once verified.
Note: Now easily Print Udyam Certificate through the Udyam portal
Conclusion
India’s economy depends a lot on the performance of its MSME sector. Both the Central and State Governments are aware of this and offer various schemes to encourage small businesses to grow. However, to take advantage of these schemes, it is essential for businesses to formally register under the Udyam system.
Udyam Registration not only gives your business a legal identity as an MSME but also unlocks a range of benefits across finance, infrastructure, marketing, and more. It ensures your enterprise can participate in tenders, receive subsidies, apply for collateral-free loans, and get faster grievance redressal. Whether the scheme is from the Centre or your state government, Udyam Registration is the key to access them.
If you are running or planning to start a small business in India, getting your Udyam Registration done is one of the most important first steps you can take toward sustainable growth and success.