How can integrating registries such as Udyam with the statistical system help formalise the MSME sector? What challenges remain?

In September 2026, the Ministry of MSME and MoSPI signed an MoU. It shares unit-wise Udyam data through a two-way API to build a National Statistical Business Register (NSBR), a central and regularly updated database of economic units [1]. Linking an administrative registry to official statistics can make small firms visible. This only works if the register stays accurate.

How integration aids formalisation

• Visibility of informal units: about 2.92 crore of 7.30 crore Udyam registrations came through the Udyam Assist Platform (UAP), which is meant for informal micro enterprises [2].
• Credit linkage: UAP registration lets informal micro units get Priority Sector Lending [3]. Recording these units statistically helps target credit and schemes.
• Better surveys: a reliable list of firms lets surveys sample firms directly by size and industry, which improves estimates and grossing-up [4].
• Business demography: tracking enterprise births, deaths and survival helps shape MSME policy [1].
• Global practice: the UN Guidelines on SBRs (2019) say registers should be built mainly from administrative sources [4].
• Institutionalised sharing: the MoU replaces one-off data requests with a regular API link [1].

Challenges that remain

• Self-declared data: Udyam relies on self-declaration and needs no uploaded documents. Checks depend on PAN and GST links [5], so they are weak for tiny units that have no GSTIN.
• No reason to report closure: firms register to get benefits, but nothing prompts them to report a closure. Closed units may stay on the list and inflate counts.
• Break in the definition: from 1 April 2025, the investment limit rose 2.5 times and the turnover limit 2 times [6]. Size-class trends before and after this date cannot be compared unless raw figures are stored.
• Coverage gaps: Udyam covers only MSMEs that choose to register. Large firms and non-registrants are left out. The Economic Census remains the full frame for organised and unorganised establishments [7].
• Legal footing: data use is limited to statistical purposes, but an MoU is not a statute [1]. Confidentiality depends on administrative goodwill.

Integration can turn Udyam from a benefits portal into a building block of India's statistical system. Four steps would make the NSBR credible:

• yearly "still active" checks using tax and GST links
• linking more registries
• checking NSBR counts against the Economic Census
• publishing the data-sharing rules

With these, the NSBR can drive real formalisation and support inclusive growth under SDG 8.