Setting Up of Business, Industrial and Labour Laws · Micro, Small and Medium Enterprises

Memorandum and Udyam Registration of MSMEs

Updated 11 October 2026 · Fact-checked

Under Section 8 of the MSMED Act, 2006, a person intending to establish an enterprise files a memorandum with the authority notified by the Government. For micro and small enterprises filing is at the person's discretion. Udyam registration is the online form of this memorandum. Answer by stating who must file, who may, the authority and the procedure.

Understand Memorandum and Registration of MSMEs (Udyam)

Every MSME needs a formal identity so that it can be classified and claim benefits. The MSMED Act, 2006 gives this identity through the memorandum of micro, small or medium enterprise, filed under Section 8. Udyam registration is the online route through which this filing is made in practice.

Start with the who. A person intending to establish a micro or small enterprise may, at his discretion, file the memorandum. A medium enterprise engaged in providing or rendering services may also file at its discretion. But a medium enterprise engaged in manufacture or production of goods pertaining to an industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 is in the third category, and the Act uses the word shall for filing in that case.

Next, the where. The medium enterprise files with the authority specified by the Central Government by notification (Section 8(3)). The micro or small enterprise files with the authority specified by the State Government by notification (Section 8(4)). Both authorities must follow the procedure notified by the Central Government (Section 8(5)).

Then the how. The form of the memorandum, the procedure of filing and incidental matters are as notified by the Central Government after obtaining the recommendations of the Advisory Committee (Section 8(2)). This is why the details of Udyam (online portal, documents, forms) come from notifications, not from the Act itself. Do not attribute them to Section 8 text.

There was also a transitional rule. A person who, before the Act commenced, had a small scale industry with a registration certificate (may, at discretion), or had filed an Industrial Entrepreneur's Memorandum for an industry in the First Schedule with investment in plant and machinery of more than one crore rupees but not exceeding ten crore rupees, was to file the memorandum within one hundred and eighty days from commencement. The Act came into force on 2nd October, 2006. The Udyam details (portal, Aadhaar-based self-declaration, benefits) are administrative practice under notifications; state them in general terms and do not give section numbers for them.

Key rules to remember

Section 8(1)(a): micro or small enterprise: Person intending to establish a micro or small enterprise MAY file the memorandum, at his discretion; Filing is optional, though needed in practice to claim benefits.
Section 8(1)(b): medium enterprise (services): Medium enterprise providing or rendering services MAY file, at his discretion; Services medium enterprises are not compelled to file.
Section 8(1)(c): medium enterprise (manufacturing): Medium enterprise making goods of an industry in the First Schedule to the IDR Act, 1951 SHALL file the memorandum; Only this category is mandatory.
Authority for filing: Medium: authority notified by Central Government (S. 8(3)). Micro or small: authority notified by State Government (S. 8(4)); Both follow the procedure notified by the Centre (S. 8(5)).
Form and procedure: Notified by Central Government after recommendations of the Advisory Committee (S. 8(2)); Udyam portal details come from such notifications.
Transitional filing: Within 180 days from commencement of the Act (proviso to S. 8(1)); Applies to pre-Act small scale industries and certain Industrial Entrepreneur's Memorandum holders (investment above ₹1 crore up to ₹10 crore).
Commencement: 2nd October, 2006 (S. 1, notification S.O. 1154(E)); Date from which the Act came into force.

How to solve Memorandum and Registration of MSMEs (Udyam) questions

Use this order for any question on the memorandum or Udyam registration.

1Identify the enterprise: micro, small, or medium, and whether a medium enterprise is in services or manufacturing.
2Decide if filing is discretionary or mandatory. Only a medium manufacturing enterprise in an industry in the First Schedule to the IDR Act, 1951 must file.
3Name the authority: State-notified for micro and small (S. 8(4)); Central-notified for medium (S. 8(3)).
4State that the form and procedure are notified by the Central Government on the Advisory Committee's recommendation (S. 8(2)), and authorities follow it (S. 8(5)).
5Add the Udyam practice: online filing, self-declaration, and benefits, without inventing section numbers.
6Check for the transitional proviso if the question mentions pre-Act units or the 180 days.
7Close with a one-line conclusion answering exactly what was asked.

Quickest way: Three-question check for Section 8

When to use it: Use when a short-answer or case question asks whether an enterprise must file or where it files.

Ask: manufacturing medium enterprise in a First Schedule industry? If yes, must file. If no, may file.
Ask: medium or micro/small? Medium: Central authority. Micro/small: State authority.
Ask: where does the procedure come from? Central notification under S. 8(2), after Advisory Committee recommendations.

Common mistakes in Memorandum and Registration of MSMEs (Udyam)

Saying all MSMEs must file the memorandum.
Students mix up the Act with the common practice of registering on the portal.
Fix: Remember the word may for micro, small and medium services; shall only for the manufacturing medium category in the First Schedule.
Giving the same authority for all enterprises.
Students recall only one sub-section.
Fix: Link S. 8(3) with medium (Central) and S. 8(4) with micro and small (State).
Quoting a section number for the Udyam portal or its documents.
Students assume the Act details the online process.
Fix: Say the form and procedure are as notified under S. 8(2); Udyam is the notified online process.
Treating the 180-day proviso as a general deadline.
The number is easy to remember and gets applied everywhere.
Fix: It applies only to pre-Act units described in the proviso, counted from commencement.
Confusing Section 8 with Section 25 (closure scheme) or Section 3 (National Board).
Section numbers across the chapter blur together.
Fix: Tag them: S. 8 memorandum, S. 3 Board, S. 18 reference to Council, S. 20-21 Council, S. 25 closure scheme.

Worked examples

Example 1

Sunrise Foods, a medium enterprise, provides catering services in Pune. Is it bound to file the memorandum under the MSMED Act, 2006? With whom would it file?

Show the solution

Provision: S. 8(1)(b) says a medium enterprise providing or rendering services may file at its discretion.
Analysis: Sunrise Foods is a medium services enterprise, so it falls under clause (b), not the mandatory clause (c).
Authority: for a medium enterprise, the authority is the one specified by the Central Government by notification under S. 8(3).
Procedure: the form and procedure are as notified by the Central Government under S. 8(2), and the authority follows it under S. 8(5).

Answer: Sunrise Foods is not bound to file; filing is at its discretion. If it files, it does so with the authority notified by the Central Government under Section 8(3).

Example 2

Kaveri Tools Ltd, a new medium enterprise, will manufacture goods of an industry in the First Schedule to the Industries (Development and Regulation) Act, 1951. Must it file a memorandum, and who decides the procedure?

Show the solution

Provision: S. 8(1)(c) applies to a medium enterprise engaged in manufacture or production of goods pertaining to an industry in that First Schedule, and says such a person shall file the memorandum.
Analysis: Kaveri Tools is medium and in manufacturing of a First Schedule industry, so clause (c) applies and filing is mandatory.
Authority: it files with the authority specified by the Central Government under S. 8(3).
Procedure: the form and filing procedure are notified by the Central Government after obtaining the recommendations of the Advisory Committee (S. 8(2)).

Answer: Yes, Kaveri Tools must file the memorandum under Section 8(1)(c), with the Central-notified authority, following the procedure notified by the Central Government.

Exam tips

Write the exact word: may or shall. Marks are often lost on this single word.
Always split the answer by enterprise type: micro or small, medium services, and medium manufacturing.
Cite S. 8(2), (3), (4) and (5) separately; examiners look for the correct sub-section.
For Udyam, describe the online process in general terms and call it a notified procedure.
Keep the answer in ICSI order: provision, application to the facts, then a clear conclusion.

Practice questions from Micro, Small and Medium Enterprises

Memorandum and Registration of MSMEs (Udyam): frequently asked questions

Is filing the memorandum under Section 8 compulsory?

For micro and small enterprises it is at the person's discretion. For medium enterprises in services it is also discretionary. It is mandatory only for a medium enterprise manufacturing goods of an industry in the First Schedule to the IDR Act, 1951.

Who specifies the authority for filing the memorandum?

The Central Government specifies the authority for medium enterprises under Section 8(3). The State Government specifies the authority for micro and small enterprises under Section 8(4).

Where does the Udyam procedure come from?

Section 8(2) says the form, procedure and incidental matters are as notified by the Central Government after the Advisory Committee's recommendations. Udyam registration is the online process under such notifications, so details like portal steps are not in the Act text.

When did the MSMED Act, 2006 come into force?

It came into force on 2nd October, 2006, under notification S.O. 1154(E) dated 18th July, 2006, as noted under Section 1.