Business Activities Not Allowed To Obtain Registration As Msmes In India

By Author: Udyog Aadhaar Registration Online
Total Articles: 6
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The Ministry of MSME, through the MSME Act, has laid down a framework to promote micro, small and medium enterprises and provide required support for their sustenance and growth. In order to do so, it has created a National Industrial Classification for all economic activities carried out by businesses across India. This National Industrial Classification which is commonly known as NIC Code was created in partnership with the Central Statistical Organization which operated under the Ministry of Statistics and Programme Implementation. The current version of the National Industrial Classification being used was developed in 2008, whereas this task initially commenced in 1960 various versions have been used till date. The latest version currently used was adopted in 2008.

The structure of the NIC Code is primarily divided into 3 groups:

1
Primary Production

This consists of Agriculture and Mining related activities.

2
Secondary Production

This consists of Manufacturing and Construction related activities.

3
Services

This consists of all services such as commerce, ...
... administration, transport, telecommunication, etc.

In the previous or older system of Udyog Aadhar Registration there were various activities under the NIC code which were included and excluded from the scope of the Scheme to provide benefits or assistance to MSMEs. As per the Office Memorandum numbered UAM/MC/01/2017-SME activities stated below would be excluded from the scope of the Micro, Small, and Medium Enterprise Development Act, 2006. The activities were:

NIC Code Activities NOT Included
01 Activities of Crop, Animal production, hunting, and related activities
02 Forestry and logging
03 Fishing and aquaculture
45 All type of Wholesale and retail trade, repair of motor vehicle or motorcycles
46 All type of Wholesale trade, except of Motor vehicles and motorcycles
47 All type of Retail Trade, except of Motor vehicles and motorcycles
97 Activities of households as employees for domestic personnel
98 Undifferentiated goods and services producing activities of private households for own use
99 Activities of extraterritorial organization and bodies
After siting various drawbacks in the current system the Ministry of MSME, through the new system of Udyam Registration has aimed at creating a better platform for everyone genuinely making an effort to sustain their businesses in India.

The Ministry of MSME, vide Office Memorandum F.No. 5/2(1)/2020/E has stated the following:

1)Activities under NIC Code 92 which include activities of Gambling and betting activities will also not be covered the new scheme.
2)Even though the activities covered under NIC Code 45 are barred from registration as MSMEs, keeping in view the current circumstances the following activities having the respective 5-digit NIC code under section 45 will be allowed to obtain registration as MSMEs:
•NIC Code 45200 – Includes activities of Maintenance and repair of motor vehicles
•NIC Code 45403 – Includes activities of Maintenance and repair of motor cycles, mopeds, scooters, and three wheelers
3)Activities covered under the NIC Code 01 will not be allowed except the following activities which are included in the sub-classes of NIC code 01 and have these respective 5 digit NIC codes:
NIC Code Activities Allowed
01462 Production of eggs
01463 Operation of Poultry hatcheries
01492 Bee-keeping and production of honey and beeswax
01493 Raising of silk-worms, production of silk-worm cocoons
01612 Operation of agriculture irrigation equipment
01620 Support activities for animal production
01631 Preparation of crops of primary markets i.e. cleaning, trimming, grading disinfecting
01632 Cotton ginning, cleaning and bailing
01633 Preparation of tobacco leaves
01639 Other post-harvest crop activities
01640 Seed processing for propagation
The above mentioned activities are allowed to apply for Udyam Registration and get benefits granted by the Ministry of MSME. All other activities covered under NIC Code 01 are not allowed to apply for their Udyam Registration and will not be granted any benefits under the MSME Scheme.

The news was circulated recently that all activities of Retail and Wholesale trade have also been allowed registration as MSME but no such circular or office memorandum from the Ministry of MSME has been issued yet. As retailers and wholesalers across the country express their unhappiness about keeping them out of the new system. Due to this the Ministry of MSME, keeping in mind the current pandemic situation has lend a hand of support by allowing Retailers and Wholesalers to avail Guaranteed Emergency credit which is normally made available to only registered MSMEs. If the government will allow Retailers or Wholesalers to obtain registration is something to watch out for in the coming budgets.