Thousands of MSMEs Cancel Udyam Registration Amidst Business Shutdown


Since the inception of the Udyam registration portal on July 1, 2020, a staggering 32,298 micro, small, and medium enterprises (MSMEs) have opted to cancel their Udyam registration due to business closures, according to data disclosed in the Lok Sabha. Minister of State in the MSME Ministry, Bhanu Pratap Singh Verma, shared these insights in a written response to a parliamentary inquiry.

The data revealed that, as of December 8, 2023, a total of 12,611 MSMEs withdrew their Udyam registration in the current fiscal year alone, inching closer to the FY23 count of 13,290. In the preceding fiscal years, 6,222 MSMEs in FY22 and 175 MSMEs in FY21 had similarly canceled their registrations due to business shutdowns.

In response to inquiries about the reasons behind Udyam registration cancellations, Verma stated that such decisions could stem from various factors, including changes in location or business operations, in addition to outright closures.

Between July 2021 and March 2023, a total of 19,248 MSMEs shuttered their operations, resulting in the displacement of 1,32,205 employees as of July 13, 2023. However, amidst these closures, the Udyam portal witnessed the incorporation and registration of an impressive 45,99,944 new MSMEs during the same period, providing employment opportunities for 2,89,35,351 individuals, as reported by FE Aspire.

As of December 15, the total closures represented 0.10 percent of the 3.20 crore MSMEs registered on the Udyam portal. Maharashtra reported the highest number of cancellations due to business shutdowns at 8,168, followed by Tamil Nadu (4,221), Gujarat (2,818), Uttar Pradesh (2,807), and other states, according to the data shared by Verma.

Earlier government data consolidated from the Udyam registration portal and the erstwhile Udyog Aadhaar Memorandum indicated that 10,067 MSMEs had closed between 2016 and 2022, including the Covid period. Out of these closures, 400 MSMEs, constituting 4 percent of the total closures, occurred during the 2016-2019 period based on UAM data. The remaining 96 percent, amounting to 9,667 units, shut down between 2019 and 2022, as per both UAM and Udyam portal data.

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