Sunday 15th June 2025
How Udyam Registration Complements Other Business Licenses
By FTR-Azhar

How Udyam Registration Complements Other Business Licenses

Introduction

Starting and running a business in India involves following certain legal procedures. Among them, getting the right licenses is one of the most important steps. One such important license is Udyam Registration, which is specifically for micro, small, and medium enterprises (MSMEs). Many entrepreneurs often wonder if getting Udyam Registration is necessary when they already have other business licenses like GST, FSSAI, Shop Act, or Trade License.

In this blog, we’ll break down how Udyam Registration complements these licenses and adds value to your business. We will also explain everything in simple language, so even if you’re new to the business world, you’ll understand the purpose and importance of this registration.

Understanding Udyam Registration in Simple Words

Udyam Registration is a government-issued certificate given to MSMEs in India. It is managed by the Ministry of Micro, Small, and Medium Enterprises and can be applied for online without any paperwork. This registration helps businesses get recognized officially as small businesses. Once registered, you receive a unique Udyam number and a certificate that proves your status as a micro, small, or medium enterprise.

The main aim behind Udyam Registration is to support small businesses in India by offering them benefits such as easier bank loans, subsidies, and eligibility for various government schemes.

Udyam Registration Is Not a Replacement But an Addition

Many people think that Udyam Registration can replace other licenses like GST, FSSAI, or the Shop Act. That’s not true. Each license serves a different purpose. Udyam Registration does not replace these but complements them by helping your business grow and become more trusted in the market.

Think of Udyam Registration as a badge that tells the government and financial institutions that your business is part of the MSME sector. This can work in your favor when you apply for loans, subsidies, or government tenders.

How Udyam Registration Complements GST Registration

GST (Goods and Services Tax) registration is necessary if your business turnover crosses a certain limit or if you’re involved in inter-state sales. GST helps in smooth taxation and makes your business legally compliant in the eyes of tax authorities.

When you also have Udyam Registration along with your GST certificate, you may become eligible for additional benefits. For example, the government sometimes offers GST concessions or waivers for MSMEs. But you can only claim those if you have a valid Udyam Registration. Moreover, banks and NBFCs often give preference to businesses that have both GST and Udyam certificates when approving loans.

How Udyam Registration Supports FSSAI License Holders

FSSAI (Food Safety and Standards Authority of India) license is mandatory for businesses in the food sector. Whether you’re running a cloud kitchen, food processing unit, or bakery, you must have an FSSAI license.

Now, here’s where Udyam Registration complements your FSSAI license: when you’re recognized as an MSME through Udyam, you can avail of financial support for upgrading your food safety standards, packaging, and machinery. Udyam-registered food businesses can also get faster approvals and be considered more reliable by suppliers, customers, and delivery platforms.

So, if you already have an FSSAI license, getting Udyam Registration gives you an extra advantage in branding and funding.

Udyam Registration and Shop Act License: Working Together

A Shop and Establishment license (commonly known as the Shop Act license) is usually required for physical stores, offices, and commercial establishments. It gives you the legal right to operate your shop in a particular city or state.

While this license is issued by local municipal authorities, Udyam Registration is issued by the central government. Together, these licenses strengthen your business identity. A Shop Act license gives you local legal recognition, while Udyam Registration gives you national recognition as an MSME. Having both improves your credibility with lenders, customers, and vendors.

How Trade License Complements Udyam Registration

A Trade License is issued by municipal corporations to allow you to carry out certain types of business within a municipal limit. It ensures that your business practices are safe and legal from a local point of view.

When you also register under Udyam, it enhances your business profile further. This combination shows that not only is your business legal in your city or town but also officially recognized by the central government as a small or medium enterprise. This dual recognition becomes very helpful when applying for government schemes, subsidies, and marketing your business to a larger audience.

Government Schemes That Prefer Udyam-Registered Businesses

The government of India has several financial assistance programs for MSMEs. Some of them include:

  • Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE)
  • Prime Minister’s Employment Generation Programme (PMEGP)
  • Subsidies for technology upgradation
  • Collateral-free loans under the Emergency Credit Line Guarantee Scheme (ECLGS)

To be eligible for these schemes, Udyam Registration is often a must. Even if you have all other licenses, you may not qualify unless you’re registered under Udyam. That’s why this registration is crucial and works side-by-side with other licenses to help you grow your business.

Udyam Registration Helps in Getting Bank Loans Faster

Banks and NBFCs trust businesses that have Udyam Registration. It shows that your business is recognized by the government, and therefore, less risky to lend to. While a GST certificate or Shop Act license confirms your business’s existence and legal operations, Udyam Registration tells the bank about your business size and classification (micro, small, or medium).

This is important because many loan schemes and subsidies are designed specifically for MSMEs. With Udyam Registration, your business is eligible to apply for those.

Udyam Registration Adds Value to Your Brand

Let’s say you run a food delivery business with an FSSAI license. You deliver great food, and your packaging is safe and hygienic. But when you also display that you are a Udyam-registered MSME, it gives your customers more confidence. It tells them that you are officially recognized by the Indian government and that you may follow ethical and professional business practices.

In short, Udyam Registration can improve how your brand is seen by customers, partners, and investors. It may not be legally required in all cases, but it adds value when combined with other licenses.

NOTE:  If you want to update your Udyam Certificate, click Update Udyam Registration Certificate

Conclusion

To sum it up, Udyam Registration is not a replacement for other business licenses like GST, FSSAI, Shop Act, or Trade License. Instead, it complements them beautifully by giving your business more power, recognition, and access to government support. If you already have your basic business licenses in place, Udyam Registration is the next smart step to take. It’s simple, free of cost, and can be done online. Once you have it, your business becomes eligible for several benefits that could make a real difference in your growth journey. Whether you’re running a food outlet, a small store, a service business, or a startup, Udyam Registration is your gateway to becoming a trusted, recognized, and well-supported business in India.

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  • April 5, 2025

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