The Udyam registration is essential for every entrepreneur in India. The Udyam registration process is simple and easy online. In the Udyam registrations, the “National Industrial Classification” (NIC) code plays a major role. In the registration process, entrepreneurs are selecting the NIC code based on those business activities. The NIC code represents the classification of economic activities. The NIC code supports the maintenance of the collection of data, processing, and presentation. These classifications are used in policy formation and policy analysis, population counts, and statistical surveys in India.
The NIC code choice is very simple. Because the entrepreneurs are having the list of NIC. Only selecting the NIC code based on those business activities. You can make a change in your business activity after updating the Udyam registration certificate and also updating the NIC code.
What is Udyam registration?
Udyam registration is a government-issued certificate granted to eligible businesses as Micro, Small, or Medium Enterprises (MSMEs) under the MSME Development Act, 2006. In July 2020 it was introduced as a replacement for the Udyog Aadhaar. The process of Udyam registration is made easy online with a paperless process. After successfully completing your registration process, you get 16 digits of the Udyam registration number FSSAI. The Udyam Registration ID is very important to log in to your Udyam portal. Udyam registration helps to grow your business. And accessing the various government benefits.
Types of businesses eligible for Udyam registration:
- Proprietorships.
- Partnership firm.
- Hindu undivided family (HUF).
- One-person companies (OPC).
- Private limited companies.
- Public limited companies.
- Limited liability partnership.
- Co-operative society.
- Any other legal entity.
What is an NIC code?
The NIC code means National Industrial Classification Code. A numerical identifier used in India to categorise industries and assign businesses to categories based on their commercial functions. The latest version is NIC-2008, developed by the Central Statistical Office (CSO), Ministry of Statistics and Programme Implementation. The NIC Code enables authorities and data agencies to consistently monitor and evaluate business activities. It is often applied in the following:
- Company registration (e.g., with the Ministry of Corporate Affairs - MCA)
- Udyam registration (for MSMEs).
- Filing tax returns (e.g., GST, income tax).
- Statistical surveys and data collection.
How to select the correct NIC code in Udyam Registration
Step 1: Understand the Business Activity
- First, you have to have clarity about your business's primary activity; for example, is your business activity manufacturing, trading, or services?
- In case you run multiple business activities, identify the primary and secondary ones.
Step 2: Access the NIC Code Index:
- Visit the official Udyam registration portal.
- Go to the “Add plant” section and enter your business type to display the relevant NIC codes.
Step 3: Check the standard NIC code index.
- You can download the NIC code list.
- The NIC code number contains a 2-to-5-digit number.
Step 4: Select the NIC codes:
- In yours, which runs various activities, Udyam registration allows you to choose up to 10 NIC codes.
- Be careful to choose the NIC code based on your primary and secondary business activities.
Step 5: Cross-check the GST registration or other business licenses.
- Use the NIC code aligned with your GST or other regulatory filings.
How NIC Code Impacts Government Schemes Under Udyam Registration
The NIC code plays the crucial role in the eligibility of government schemes under the Udyam registration:
Checks eligibility for the scheme:
This scheme will determine whether your business is eligible (based on NIC code):
- Choosing a business sector that suits the project objectives
- Supporting only businesses that meet eligibility criteria.
- Mechanising the process and implementing it according to standards.
- Moreover, whether your business is eligible for the scheme or not is determined based on the NIC code.
Impact on the subsidy and incentives process:
Government agencies will check your NIC code before approving:
- Capital subsidies
- Interest subsidies
- Export incentives
NOTE: Incorrect or mismatched NIC codes may result in delayed or denied subsidies.
Effects on financial and loan assistance:
Banks and financial institutions rely on NIC codes under Udyam Registration to:
- Assess your sectoral risk.
- Offer loans under schemes like MUDRA or CGTMSE.
NIC codes help them determine if you fall under priority lending sectors.
Assists in policy formulation and data tracking:
The government uses NIC codes to:
- Track MSME growth in various industries.
- Develop new schemes targeted at underdeveloped or priority sectors.
Your correct NIC code ensures your business is counted for such developments.
You Can Apply for Print Udyam Certificate Through Udyam Portal
Conclusion:
The NIC code is a key factor in the registration process that directly impacts an organisation's access to government schemes, subsidies, and incentives. Selecting the correct NIC code ensures that your business is accurately classified in the relevant category, which is essential for eligibility determination and smooth implementation of benefits. An error in the NIC code or the use of an outdated code can lead to missed opportunities, delays, and rejection of applications for government support. Therefore, it is essential for MSMEs to choose their NIC codes carefully and update them frequently to fully enjoy the benefits of government programs, which will help them grow.
