Udyam Assist Platform (2023): Promoting The Formalisation Of Informal Micro Enterprises In India – IMPRI Impact And Policy Research Institute

Policy Update
Divya Natarajan

Background

The Udyam Assist Platform (UAP) is a digital registration platform launched by the Ministry of Micro, Small and Medium Enterprises (MoMSME) on January 11, 2023, in association with the Small Industries Development Bank of India (SIDBI). Its purpose is to bring Informal Micro Enterprises (IMEs) into the formal ambit and make them eligible for Priority Sector Lending (PSL) benefits (PIB, 2023b; SIDBI, n.d.). IMEs are enterprises that cannot register on the main Udyam Registration Portal because they lack mandatory documents such as a Permanent Account Number (PAN) or a GST Identification Number (GSTIN) (Business Standard, 2023).

UAP was introduced to address a key gap in Udyam registration: the requirement for PAN or GSTIN excluded many informal micro enterprises from registration, Priority Sector Lending (PSL), and government schemes (Business Standard, 2023). The 2015–16 NSSO survey highlighted this issue, revealing that many MSMEs remained unregistered and missed out on benefits (SIDBI, 2025). UAP offered these enterprises a route to formal recognition without first obtaining PAN or GST registration.  In June 2020, the Ministry notified a composite classification of MSMEs based on investment and turnover (Notification S.O. 2119(E), dated June 26, 2020), and the Udyam Registration Portal (URP) went live on July 1, 2020 as a free, paperless, self-declaration based system (PIB, 2023a). The URP, however, presumes that an enterprise already holds the documents that anchor a formal identity. For the very small, often home-based or street-level units that make up most of India’s MSME universe, that presumption does not hold. The concern behind UAP is also older than the portal: after the NSSO survey of 2015-16, it became clear that a large number of estimated MSMEs were unregistered and were therefore losing out on benefits such as PSL (SIDBI, 2025).

Two regulatory steps gave the platform its operative force. The Government notified that a certificate issued on UAP would be treated at par with an Udyam Registration Certificate for availing PSL (Gazette Notification S.O. 1296(E), dated March 20, 2023), and the Reserve Bank of India, through its circular of May 9, 2023, directed that IMEs holding a Udyam Assist Certificate be classified as micro enterprises for PSL purposes (PIB, 2024). This matters because banks are required to meet a micro-enterprise sub-target of 7.5 percent of Adjusted Net Bank Credit under the PSL framework (RBI, 2025), which can be read as giving lenders a regulatory reason to prefer verified micro borrowers.

Functioning

Three kinds of participants operate on the platform. The first is the IME owner. The second is the Designated Agency (DA), an RBI-regulated entity such as a scheduled commercial bank, an NBFC, or a microfinance institution, or a government department, which assists in registering the IME (SIDBI, n.d.). The third is SIDBI, which the Ministry has authorised as the implementing agency for the platform (PIB, 2024). The Ministry describes the certificate as issued on the basis of verified data submitted by authorised partners such as banks, NBFCs, and other lending institutions (ANI, 2026). In practice, registration on UAP is therefore assisted by, and depends on, a lender or another designated agency, rather than being a purely self-service process.

Table 1: Udyam Registration Portal and Udyam Assist Platform Compared

Source: PIB (2023a, 2024); Business Standard (2023); SIDBI (n.d.); compiled by researcher.

Two features of this design deserve emphasis. First, the notified equivalence with the Udyam Registration Certificate is specific to PSL. Recent Ministry statements say certificate holders can also benefit from government initiatives meant for micro enterprises (ANI, 2026), but the legal equivalence recorded in the notification and the RBI circular concerns priority sector classification. Second, the platform was built with a migration path: once an IME obtains the mandatory documents, it can move from UAP to URP through an interface between the two systems (Business Standard, 2023). The platform is thus framed as a first rung rather than a final destination.

At launch, the Ministry also reported that around 8 lakh informal units who were beneficiaries of the PM SVANidhi scheme for street vendors were brought onto the platform as an initial cohort (IBEF, 2023).

Performance

Registration growth is an important indicator of the Udyam Assist Platform’s reach, showing how far it has succeeded in bringing informal micro enterprises (IMEs) into formal recognition. Tracking cumulative registrations over time helps assess the pace of onboarding and whether the platform continues to reach previously excluded enterprises. However, registration figures indicate coverage, not necessarily the extent to which registered enterprises access credit or government benefits.

Table 2: Cumulative Registrations on the Udyam Assist Platform

Source: As listed in the table; compiled by researcher. Figures are rounded as published, so the additions are approximate.

The table shows a platform that onboarded most of its first crore of registrations within about eleven months of launch, then added roughly a further crore in the following year, and then slowed. On the rounded figures published, annual additions fell from about 1.1 crore in the year to March 2025 to about 61 lakh in the year to March 2026. This is the pattern one would expect as the pool of easily reachable units is covered, but it also means that the early growth rates should not be extrapolated.

The registrants are not evenly spread across the country or across owner groups.

Table 3: Profile of Registrants on the Udyam Assist Platform

Source: SIDBI (2025); the share for the North East is calculated by researcher from the published figures.

Two points follow from this profile. UAP is reaching women-owned micro units on a far larger scale than the main portal does, which is a genuine achievement of the platform’s assisted design. At the same time, registrations are concentrated in a small number of large states, with the North East accounting for a very small share.

Combined registrations on the two Udyam platforms have also now moved past the survey-based estimate of how many MSMEs exist.

Table 4: Registrations Compared with the Estimated Size of the MSME Sector

Source: SIDBI (2025); compiled by researcher.

These figures are not strictly like-for-like. The ASUSE estimate covers unincorporated establishments, while the Udyam register also includes incorporated enterprises, so some gap is expected. Even so, registrations of 8.9 crore against an estimated sector of about 7.4 to 7.5 crore indicate that the register can no longer be read simply as a count of distinct, active micro enterprises. The same release trail contains a sharp step-up that is not explained: the combined total stood at 7.83 crore on February 28, 2026 (IBEF, 2026) and exceeded 8.9 crore by mid-July 2026 (PIB, 2026), an addition of more than a crore in under five months, compared with about 1.7 crore across the whole of the previous year.

Impact

The platform’s clearest impact is on identity and recognition. Several crore units that had no formal enterprise identity now hold a certificate that banks are directed to honour for PSL classification (PIB, 2024; RBI, 2025). For a lender, a certificate backed by verified data submitted by an authorised partner is a more usable record of an enterprise than an informal relationship with a shopkeeper or artisan.

The case for this recognition is visible in the credit data on the segment UAP is aimed at. SIDBI’s survey of 2,097 MSMEs, prepared with Crisil Intelligence, found that about 12 percent of micro enterprises borrow from informal sources, compared with 3 percent of small and 2 percent of medium enterprises, and that about 20 percent of micro enterprises had not availed any credit (SIDBI, 2025). The same report estimates an addressable MSME credit gap of about 30 lakh crore rupees, which is higher in rural areas (about 32 percent) than in urban areas (about 20 percent), and higher for women-owned enterprises (about 35 percent) than for men-owned ones (about 20 percent) (SIDBI, 2025). These figures describe the problem UAP targets. They are not evidence that UAP has solved it, since they come from a general MSME survey rather than from a study of certificate holders.

This distinction matters for the women’s finding in particular. A 70 percent share of women-owned units among registrations shows that the platform reaches women entrepreneurs, but the credit gap for women-owned enterprises remains about 15 percentage points wider than for men-owned ones in the same report (SIDBI, 2025). Registration has widened the door; whether it has widened access to credit is a separate question the available data do not answer.

The Ministry also reports that the enterprises registered across the two platforms provide employment to more than 38 crore people (PIB, 2026). This figure describes the employment of registered enterprises and should not be read as employment created by UAP, since the platform records enterprises that already existed.

Emerging Issues

First, registration is not the same as formalisation. By definition, an IME lacks PAN or GSTIN (Business Standard, 2023), and the notified equivalence of the Udyam Assist Certificate is limited to PSL (PIB, 2024). A certificate holder can therefore remain outside the tax and compliance net while being counted in official statements as brought into the formal economy. The migration interface to the main portal is designed to address this, but no figure on how many certificate holders have actually migrated was located in the official releases reviewed.

Second, published outcome data stop at registration. The Ministry’s releases report the number of certificates issued and the number of enterprises employed, but none of the official material reviewed gave a consolidated figure for the number or value of loans sanctioned to Udyam Assist Certificate holders. Since the platform’s stated purpose is to enable PSL benefits, the absence of this figure means that its central objective cannot be independently assessed.

Third, onboarding that runs through lenders is likely to follow the lenders’ existing footprint. Registration is assisted by banks, NBFCs, and other designated agencies (ANI, 2026), and registrations are concentrated, with ten states accounting for 68 percent and the seven North Eastern states for about 2 percent (SIDBI, 2025). It is a reasonable inference, though not one the available data can confirm, that units with no prior relationship with any lender are the hardest to reach through this design, and that these are the units with the greatest need for formal recognition.

Fourth, the register is becoming hard to interpret as a measure of enterprises. Combined registrations of more than 8.9 crore exceed the estimated size of the sector (PIB, 2026; SIDBI, 2025), and official data show that only 0.17 percent of registered MSMEs have deregistered because of business closure since the Udyam portal began (KNN India, 2026). The Ministry reads this as evidence of resilience. In a sector dominated by very small units, a figure this low is also consistent with a register that is not being actively updated, and the published data cannot distinguish between the two. SIDBI’s own platform page refers to unique IMEs, while other statements refer to registrations, so the unit of count is not applied consistently (SIDBI, n.d.).

Finally, demand-side hesitation persists. In SIDBI’s survey, about 35 percent of respondents remained unregistered on the Udyam platforms, which the report attributes to lack of awareness of the benefits of registration and anticipation of regulatory scrutiny (SIDBI, 2025). This suggests that removing the documentation barrier, which is what UAP does, does not by itself remove the reluctance of small operators to enter any official record.

Way Forward

First, the Ministry and SIDBI should publish credit outcomes for certificate holders. Banks already report priority sector lending to the RBI, and a regular disclosure of the number and value of loans sanctioned to Udyam Assist Certificate holders, broken down by lender type, state, and loan size, would allow the platform to be judged against its own stated purpose.

Second, registration data should be reported in terms of unique, active enterprises. This would involve distinguishing registrations from unique units, reporting how many have migrated to the main portal, and periodically reconciling the register so that closed or duplicate entries are removed. Such reporting would also resolve the apparent mismatch between registrations and the estimated size of the sector.

Third, the pathway from UAP to the main portal should be made explicit and attractive. A published, time-bound route that explains what an IME gains by obtaining PAN and GSTIN and migrating, together with proportionate support for doing so, would help the platform function as a first rung rather than a permanent holding category.

Fourth, onboarding channels should be widened beyond conventional lenders. The partnership announced between PhonePe and SIDBI in September 2025 to use the platform for formalising IMEs shows that digital payment platforms can serve as designated channels (IBEF, n.d.). Extending this approach to community-level channels would help reach units that have no lender relationship, and targeted outreach in the North Eastern and other under-represented states would address the geographic concentration in the data.

Finally, communication on what registration does and does not involve should be strengthened. With about 35 percent of surveyed enterprises citing awareness gaps and fear of scrutiny as reasons for staying unregistered (SIDBI, 2025), clear public information on how enterprise data are used and what obligations registration creates would address a barrier that the platform’s design alone cannot remove.

References

Press Information Bureau (PIB), Ministry of Micro, Small and Medium Enterprises, Government of India. (2023a, March 23). Udyam Assist Platform launched on 11.01.2023 to bring Informal Micro Enterprises under the formal ambit for availing benefits under Priority Sector Lending. https://www.pib.gov.in/Pressreleaseshare.aspx?PRID=1909929&reg=3&lang=2

Press Information Bureau (PIB), Ministry of Micro, Small and Medium Enterprises, Government of India. (2023b, December). Year End Review 2023, Ministry of Micro, Small and Medium Enterprises. https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=1992842&reg=48&lang=2

Press Information Bureau (PIB), Ministry of Micro, Small and Medium Enterprises, Government of India. (2024, March 4). Registrations of Informal Micro Enterprises on Udyam Assist Platform cross 1.50 crore. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2011262&reg=3&lang=2

Press Information Bureau (PIB), Ministry of Micro, Small and Medium Enterprises, Government of India. (2026, July 14). Udyam Registration Portal and the Udyam Assist Platform, two landmark digital initiatives of the Ministry of Micro, Small and Medium Enterprises are formalizing enterprises, expanding access to Government support and strengthening the MSME ecosystem. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2284414&reg=48&lang=1

Reserve Bank of India. (2025). Frequently asked questions: Master Direction on lending to the MSME sector and Priority Sector Lending. https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=966

Small Industries Development Bank of India (SIDBI). (n.d.). MSME Formalisation Project: Udyam Assist Platform (UAP). https://www.sidbi.in/udyam-assist-platform

Small Industries Development Bank of India (SIDBI). (2025, May 13). Understanding Indian MSME Sector: Progress and Challenges (prepared with Crisil Intelligence). https://www.sidbi.in/uploads/Understanding_Indian_MSME_sector_Progress_and_Challenges_13_05_25_Final.pdf

Business Standard. (2023, May 9). IME with Udyam Assist Certificate to be treated as micro units for PSL: RBI. https://www.business-standard.com/india-news/ime-with-udyam-assist-certificate-to-be-treated-as-micro-units-for-psl-rbi-123050901053_1.html

ANI. (2026, July 14). Udyam platforms to expand formal MSME ecosystem, improve access to government support: Ministry. https://aninews.in/news/business/udyam-platforms-to-expand-formal-msme-ecosystem-improve-access-to-government-support-ministry20260714162627/

DD India. (2026, May). Empowering India’s grassroots economy: How MSMEs are driving growth across rural and semi-urban India. https://ddindia.co.in/2026/05/empowering-indias-grassroots-economy-how-msmes-are-driving-growth-across-rural-and-semi-urban-india/

IANS. (2026, May 14). Over 7.9 crore enterprises register through Udyam platforms. The Hawk. https://www.thehawk.in/news/economy-and-business/over-79-crore-enterprises-register-through-udyam-platforms

India Brand Equity Foundation (IBEF). (2023, August). Over 37 lakh informal micro-enterprises have registered on the Udyam Assist Platform in seven months. https://www.ibef.org/news/over-37-lakh-informal-micro-enterprises-have-registered-on-the-udyam-assist-platform-in-seven-months

India Brand Equity Foundation (IBEF). (2026). Over 7.83 crore enterprises registered on Udyam platforms, indicating strong MSME formalisation growth. https://www.ibef.org/news/over-7-83-crore-enterprises-registered-on-udyam-platforms-indicating-strong-msme-formalisation-growth

India Brand Equity Foundation (IBEF). (n.d.). MSME industry in India. https://www.ibef.org/industry/msme

KNN India. (2026, February 3). More than 7.57 crore MSMEs, IMEs registered on Udyam portal: Govt. https://knnindia.co.in/news/newsdetails/msme/more-than-757-crore-msmes-imes-registered-on-udyam-portal-govt

About the Contributor

Divya Natarajan is a Research and Editorial Intern at IMPRI and a recent Economics graduate from Stella Maris College, Chennai. She has experience in public policy research, editorial writing, and policy analysis through internships with think tanks and research organisations. Her interests include public policy, governance and development economics.

Acknowledgements

I would like to extend my gratitude to IMPRI for this opportunity, constructive reviews and editorial support.

Reviewers

Lahari and Shruti

Disclaimer

All views expressed in the article belong solely to the author and not necessarily to the organisation.

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