Udyam or MSME: Which is Better for Export Promotion?

Introduction

In the dynamic world of international trade and commerce, Small and Medium-sized Enterprises (SMEs) play a pivotal role in driving economic growth, creating jobs, and fostering innovation. In India, SMEs are often referred to as Micro, Small, and Medium Enterprises (MSMEs), and they have been the backbone of the country’s industrial landscape for decades. However, recent changes in government policies have introduced a new term – Udyam, which has left many entrepreneurs and business owners wondering whether it is better for export promotion compared to the traditional MSME classification. In this article, we will delve into the key differences between Udyam and MSME and assess which one might be more advantageous for export-oriented businesses.

Understanding Udyam and MSME

Before we compare the two, let’s first clarify what Udyam and MSME represent:

Udyam Registration:

• Udyam registration is a new system introduced by the Indian government in July 2020 to replace the earlier MSME registration process.
• It is based on self-declaration, where business owners classify their enterprises as micro, small, or medium based on their investment in plant and machinery or equipment, along with turnover criteria.
• Udyam registration aims to streamline the process and reduce red tape, making it easier for small businesses to avail benefits and incentives.

MSME Classification:

• MSMEs, on the other hand, have been around for a long time and are defined based on investment in plant and machinery for manufacturing units or investment in equipment for service enterprises, along with turnover criteria.
• MSMEs have enjoyed various benefits and incentives from the government for decades, including priority lending, credit-linked capital subsidies, and reduced rates of interest.

Export Promotion: Which is More Favorable?

Now, let’s evaluate which of these classifications – Udyam or MSME – is better for export promotion:

Udyam’s Streamlined Registration Process:

• Udyam offers a simplified registration process that can be completed online, reducing the bureaucratic hurdles associated with traditional MSME registration.
• This ease of registration can be especially beneficial for export-oriented businesses, as it allows them to quickly access government schemes and benefits, saving time and resources.

Eligibility Criteria:

• Udyam and MSME have similar eligibility criteria based on investment and turnover. Therefore, neither one holds a significant advantage in terms of eligibility for export promotion benefits.

Government Initiatives:

• Both Udyam and MSMEs enjoy various government incentives and support programs aimed at promoting exports. These include subsidies, tax benefits, and access to credit.
• Export Promotion Councils and Commodity Boards provide specific schemes for both Udyam and MSMEs, ensuring a level playing field.

Credit Access:

• Both Udyam and MSMEs benefit from priority sector lending by banks. This facilitates easier access to credit, which is crucial for export-oriented businesses looking to expand their operations.

Global Recognition:

• MSMEs have a long-standing reputation in international trade, and foreign buyers often prefer dealing with well-established MSMEs. However, Udyam’s simplified registration process has the potential to attract foreign clients looking for agile and innovative partners.

Note: You Can Apply For Update Udyam Certificate

Conclusion

In the battle of Udyam vs. MSME for export promotion, there is no clear winner. Both classifications offer similar benefits and incentives, making them attractive options for businesses looking to expand into the global market. The choice between Udyam and MSME ultimately depends on individual circumstances, preferences, and the specific needs of the business.

Entrepreneurs and business owners should carefully assess their eligibility criteria, registration preferences, and long-term goals before making a decision. Whichever path they choose, it is essential to leverage the available government schemes, focus on quality, innovation, and global competitiveness to thrive in the international marketplace. Ultimately, the success of export promotion efforts will depend on the dedication and commitment of the business itself, regardless of whether it operates under the Udyam or MSME banner.