Can Foreign-Owned MSMEs Get Udyam Registration?

Introduction

India has become one of the most attractive destinations for doing business. From local startups to global giants, companies from around the world are setting up operations in India due to its growing economy, large customer base, and supportive government policies. As a result, many foreign-owned businesses have entered the Indian market with big hopes. However, when it comes to micro, small, and medium enterprises (MSMEs), one question often arises: Can foreign-owned MSMEs apply for Udyam registration in India? This is an important question because Udyam Registration brings several benefits, especially financial and policy-related ones, for businesses categorized as MSMEs.

In this blog, we will break down the answer in the simplest terms. Whether you are a foreign investor planning to start a business in India or already running a small enterprise here, this guide will help you understand whether Udyam Registration is an option for you.

Understanding Udyam Registration

Before jumping into whether foreign-owned MSMEs are eligible or not, let’s first understand what Udyam Registration is. Udyam Registration is a government-issued certificate that officially recognizes your business as a Micro, Small, or Medium Enterprise under the Ministry of Micro, Small, and Medium Enterprises (MSME) in India.

It replaced the old Udyog Aadhaar registration system and made the entire process simpler and completely online. Businesses that register under Udyam are eligible for a range of benefits like easy loans, lower interest rates, subsidies, tax advantages, protection against delayed payments, and preference in government tenders.

Eligibility Criteria for Udyam Registration

To qualify for Udyam Registration, a business must meet specific criteria based on investment in plant and machinery or equipment, and annual turnover. As per the latest classification:

A Micro Enterprise is one where the investment does not exceed ₹1 crore and turnover does not exceed ₹5 crore.

A Small Enterprise is one where the investment does not exceed ₹10 crore and turnover does not exceed ₹50 crore.

A Medium Enterprise is one where the investment does not exceed ₹50 crore and turnover does not exceed ₹250 crore.

These rules apply regardless of the ownership status—whether the business is owned by an Indian citizen or a foreign investor. But there are some important conditions for foreign-owned businesses that want to apply.

Can Foreign-Owned MSMEs Apply?

The short answer is yes; foreign-owned MSMEs can apply for Udyam Registration if the business is legally registered in India and meets the required investment and turnover limits. The Government of India does not restrict foreign ownership when it comes to Udyam Registration, as long as the business entity is properly incorporated in India and operates under Indian laws.

This means that a business set up as a Private Limited Company, Limited Liability Partnership (LLP), or even as an owned subsidiary (WOS) by foreign nationals or companies can apply for Udyam Registration if it qualifies as an MSME based on size and turnover.

However, a foreign company that has no legal presence or registration in India cannot get Udyam Registration. The business must be physically and legally established in India, even if the ownership is foreign.

Types of Foreign-Owned Entities That Can Register

There are different ways a foreign business can be established in India, and most of them are eligible to apply for Udyam Registration:

• A Wholly-Owned Subsidiary of a foreign company incorporated in India under the Companies Act can apply for Udyam if it meets the MSME criteria.
• A Joint Venture between an Indian and a foreign partner can also register, provided the company is based in India.
• A Foreign LLP that is registered with the Ministry of Corporate Affairs (MCA) can be considered eligible.
• These entities must have valid documents such as PAN, GSTIN, and a business address in India to be able to complete the Udyam Registration process.

Documents Required for Registration

Even for foreign-owned MSMEs, the documents required for Udyam Registration are quite straightforward. You need a PAN card, GST number, and details related to investment and turnover. Since Aadhaar is required for proprietorships and Indian individual businesses, companies with foreign directors or partners may need to use the Aadhaar number of the authorized signatory who is an Indian citizen.

For companies, LLPs, or subsidiaries, the registration can be completed using the business PAN and GST details, along with the business bank account and other firm-related documents. The entire process is done through the Udyam Registration portal, which is completely online and requires no physical paperwork.

Why Foreign-Owned MSMEs Should Consider Udyam Registration

Getting Udyam Registration comes with several advantages. For foreign-owned MSMEs operating in India, these benefits can make a huge difference in terms of cost-saving and business growth.

Firstly, financial support becomes more accessible. Udyam-registered businesses are eligible for collateral-free loans, lower interest rates, and faster loan approvals from Indian banks.

Secondly, the government offers subsidies and schemes that help with technology upgrades, marketing, skill development, and more. These schemes are not limited to Indian-owned firms—foreign-owned businesses that are legally operating in India are also eligible.

Thirdly, registered MSMEs get protection against delayed payments. This is a major advantage when dealing with larger clients who tend to delay payments. The MSME Act allows you to claim interest and take legal action if your payments are not cleared within 45 days.

Finally, foreign-owned MSMEs with Udyam Registration can get preference in public procurement, which means they have better chances of winning government contracts.

Challenges Foreign-Owned MSMEs May Face

Even though foreign-owned MSMEs are eligible for Udyam Registration, there may be some practical challenges. One such issue is with Aadhaar verification. The Udyam portal requires Aadhaar authentication, and if the authorized person is a foreign national without an Aadhaar number, the registration process might hit a roadblock.

In such cases, the company may need to authorize an Indian director or representative who has Aadhaar to complete the registration on behalf of the company.

Another challenge is compliance. Foreign businesses often have to follow additional regulatory requirements, such as FEMA (Foreign Exchange Management Act) and RBI guidelines, especially when receiving foreign investments or remitting profits.

So while Udyam Registration is possible, foreign MSMEs need to ensure they comply with all other Indian regulations while operating and applying for benefits.

NOTE: If you want to print your Udyam Certificate, click PRINT UDYAM CERTIFICATE

Concluison

India is opening its doors wider to global businesses, and the MSME sector is a big part of that vision. The government wants to support small businesses—whether Indian or foreign—as long as they contribute to the Indian economy. If you’re a foreign investor or entrepreneur looking to grow your small or medium-sized business in India, Udyam Registration is available to you, provided your company is registered and operating in India under Indian laws. Not only will you gain access to financial schemes and government benefits, but you’ll also get legal protection and better opportunities to expand your business in one of the world’s fastest-growing markets. In simple words, Udyam Registration is not just for Indian-owned companies—it’s for all MSMEs that are working to build and grow their presence in India, including foreign-owned ones. So, if your foreign-owned business qualifies, don’t wait. Register under Udyam and take full advantage of what the Indian business ecosystem has to offer.