MSME Verification: Process, Benefits and Importance in India

MSME verification refers to the process of checking and confirming the status (Micro, Small or Medium enterprise) of a business with the Udaym portal. India runs on small businesses. From local manufacturers and service providers to startups and traders, MSMEs have become the backbone of the economy.

Additionally, to make the most of government benefits, loans, subsidies, tenders and protection, this verification of your business is essential.

Think of MSME verification as a proof of identity for your business. It tells the government and financial institutions that your MSME (business) is real, compliant and eligible for getting benefits. Sounds like an opportunity to scale your business, right? Let's dive deep into this!

What do MSMEs stand for?

Before explaining the MSME verification process, let me break down the term MSME for you. The letters in ‘M’ ‘S’ ‘M’ ‘E’ stand for Micro, Small and Medium enterprises. The Government of India uses this classification for businesses. A central idea behind this is to support businesses, considering their size, investments and turnover.

If you own any type of small or micro-level business, this verification gives a structure to your business, so that you have the necessary support and recognition you strive for.

Do you know that MSMEs play a significant role in India’s economic development? MSMEs contribute to  30.1% of India’s GDP, and 35.4% of its manufacturing. Alongside, MSMEs account for 45.73% exports in India.

Hence, an MSME verification is not just an opportunity foryou to scale, but you are becoming a part of a community. A community that fuels India’s economy.

What is MSME Registration?

If you are probably thinking, what is the relevance of MSME registration in the MSME verification process: Let me tell you?

While the MSME Development Act was introduced in 2006, the current MSME registration system—known as Udyam Registration—was launched in 2020, which supports small and medium-sized businesses in India in scaling up.

You don’t have to worry if your business comes under the small and medium-sized category, but you don’t have the MSME registration. MSME registration is not mandatory for every SME (Small and Medium-sized businesses).

However, having an MSME registration can be crucially beneficial for you. Without an MSME registration, you cannot opt for MSME verification. Having an MSME verification can give you a lot of benefits in terms of funding, taxation and credit.

What does MSME verification mean?

An MSME verification refers to the process of confirming that a business is officially registered as a micro, small or medium enterprise.

This registration must be conducted under the government of India’s MSME Development Act.

This helps your business to prove its eligibility for various benefits and support from the government.

Here is a list of benefits you can get after MSME verification:

• Easier access to loans and subsidies means you will not face issues related to funding
• An MSME verification shields you against delayed payments
• Thinking of applying for government tenders for financial assistance?

A simple MSME verification makes it easy for you by bringing credibility to your business.

Who needs an MSME verification in India?

Are you a:

• Private or public limited company?
• Partnership firm?
• Individual business, startup or an entrepreneur?
• Co-operative society?
• Sole proprietorship?
• Self-help group?
• Limited liability Partnership?

Or you are operating in manufacturing or service industries, or wholesale and retail trade, then you must opt for an MSME verification. 

Getting this in India will be advantageous for you. The trust and transparency associated with your business will be enhanced.

This verification is further favorable for getting future investments. 

How is MSME verification conducted in India?

Confused about the process of MSME verification in India? Here are the steps simplified for you:

 1: Get the Udyam registration number to check the authenticity of an MSME

2: After this, you have to visit the Udyam registration portal at https://udyamregistration.gov.in.

3: Now you have to enter the Udyam registration portal and search in the verification section.

4: Here, you need to enter the Udyam registration number and the MSME you wish to confirm.

5 (If needed): Sign in to the portal, using OTP (if applicable), OTP authentication is required only for business owners while updating or modifying Udyam details, not for public verification.

(added guidance: The OTP is delivered to your registered phone number used for MSME registration or to an email associated with the MSME account).

If you are the proprietor of the business or have the power to do so, you may opt for this.

6: Once the MSME number is confirmed, enter the number, and the portal will display MSME categories such as:

• Name of the business
• Udyam Registration Number
• Type of Enterprise (Micro, Small or Medium)
• Address of the Business
• Date of Registration
• NIC code and activities

If your provided information is correct and matches the information supplied through verification, then the process is proven positive.

Is there any alternative method for MSME verification?

Yes, various alternative methods confirm the MSME verification. Here are the simplified ways to help you:

Option 1: You can check the GST registration, as MSMEs are recognised as a part of the GST.

You can verify the GST details for verification by visiting the GST portal: https://www.gst.gov.in and entering the GSTIN number of the registration.

Option 2: Don’t have much knowledge about GST, and still, you want to conduct an MSME verification? Check with the professional associations.

Oftentimes, MSMEs are registered with various industry associations such as

• CII (Confederation of Indian Industry)
• ASSOCHAM (Associated Chambers of Commerce and Industry of India)
• FICCI (Federation of Indian Chambers of Commerce and Industry)

Through verifying the status of MSME’s membership, the verification can be conducted.

Option 3: MSMEs work in specific sectors, and they may be recognised with certifications or licenses. For MSME verification, you can check with the business licenses and certificates.

• FSSAI License for food business
• ISO certification for the best high-quality standards
• IEC or Import Export Cod for export-oriented firms

For MSME verification, these certifications are valid and give the guarantee of authenticity related to that MSME.

Option 4: This can also be done through financial and compliance documents. For instance, you, as a business owner, are signing a contract or financial agreements. The firms can check the accounting statements, tax return and other forms of documentation for MSME verification.

Why does an MSME verification matter in India

If you are having a second thought as to why you require this verification, here is how it benefits you:

1. Ensuring legitimacy to your business means a 360-degree protection from fraudulent transactions
2. Is your business not experiencing growth? Do you feel stuck because of a lack of resources?

An MSME verification can give you access to potential government loans and schemes.

3. An MSME verification gives credibility to your business.

As a genuine MSME with a verification, you can gain more trust among the consumers

The documents required for MSME Verification

Thinking of opting for an MSME verification process? The following documents you require:

(i) Aadhaar Number (for verifying the identity and address)

(ii) PAN number (to verify the tax details)

(iii) Address of the business (essential to validate the location of the business)

(iv) Bank account number (for verifying the financial transactions of the business)

(v) A description of your business activities

(vi) NIC 2-digit code

(vii) Investment details (for examining the infrastructure of the business)

(Viii) Turnover details (As mandated in MSME definition)

(ix) Partnership deed (If applicable)

(x) Copies of sales and purchase bills (if applicable)

Fees to pay for MSME verification

If you are thinking that the verification process requires a different budget, you are absolutely wrong! No government fees are required for the MSME registration or verification. Yes, you heard it right! This is completely an online process, free of any cost.

Final Thoughts

So, to end our discussion about MSME verification, I would like to tell you that it is a golden opportunity for your small or medium-sized business. Whether you want to scale or gain more recognition, this process brings various benefits for you.

Also, MSME verification is free of cost and online. Time-saving, pocket-friendly and hassle-free! So, what is stopping you from getting an MSME verification? Do your part now and see the magic unfold through your revenue?

FAQs

1. Is MSME verification mandatory for businesses in India?

No, MSME Verification is not mandatory for businesses in India

2. What are the benefits of having an MSME verification in India?

By getting an MSME verification, you can have access to various government schemes and loans for scaling your business.

3. What is the cost I need to pay for this verification in India?

You don't have to pay any cost for MSME verification. It is free for MSMEs and 100% online process.

Disclaimer

This article is for informational purposes only and does not constitute legal advice. Online Legal India is a digital platform. If you require legal assistance, we strongly recommend consulting a qualified lawyer or law firm.