The National Industrial Classification (NIC) code is the primary reference code required for MSME registration in India, and is one of the most important steps to take if you wish to register your business as an MSME within the government system. The NIC code allows the government to categorize your business based on the type of activity being conducted for purposes of MSME compliance and benefits. Many traders and entrepreneurs are unsure about which NIC code to use if they are engaged in the retail sale of tools, equipment or machinery, and thus the purpose of this guide is to assist these business owners in determining the correct NIC code for their business's retail activities. The guide will explain where to find the correct NIC code for retail businesses involved in the resale of industrial machines and tools, what resources are available to obtain the NIC code, why selecting the correct NIC code is critical for MSME registration, and the potential outcomes associated with selecting a NIC code that is incorrect. The guide will also outline other resources available to MSMEs and provide the necessary support for every aspect of MSME registration.
What Is an NIC Code? Why Is It Important for MSME Registration?
The NIC Code (National Industrial Classification Code) is an official classification developed by the Government of India to categorize businesses according to the nature of their economic activities.
When you apply for MSME Registration, the portal requires you to choose a NIC code so the government can:
Choosing the wrong NIC code may lead to:
That is why selecting the correct NIC code is essential for a valid MSME registration certificate.
Does Retail Trading of Industrial Equipment Qualify for MSME Registration?
Yes, you can register retail trade of industrial equipment for MSME registration. Previously, traders could not be classified as an MSME, but the Government has updated MSME norms so that both wholesale and retail traders are eligible to register as MSMEs.
The update will allow traders access to:
• Priority Sector Lending
• Credit Guarantee Schemes
• Collateral-Free Loans
• Various types of State & Central Subsidies
Therefore, if your business participates in any retail trading services for industrial equipment (either industrial equipment, industrial parts, tools or industrial machinery), you will qualify for MSME registration in India.
Is Retail Trading Eligible for MSME Registration?
Yes; under the updated MSME guidelines of 2021, wholesale and retail businesses are eligible for MSME Udyam Registration and thus, qualify for the benefits associated with Priority Sector Lending (PSL).
This includes:
• Retail Trade Businesses
• Wholesale Trade Businesses
• The Trading of Commercial or Industrial Equipment
• Online Trading Sites
However, the benefits provided by MSME manufacturing related benefits are not available to trading companies. However, by registering as an MSME, trading businesses will receive access to:
• Cheaper Loan Options
• Government Financial Aid Schemes
• Recognition of Business Identity
• Enhanced Credibility among Suppliers and Buyers
As such, if you operate a retail trading company that sells industrial equipment, you may legitimately apply for MSME registration using the appropriate NIC Code.
Which NIC Code Applies to Retail Trading of Industrial Equipment?
Due to the fact that you are engaged in the sale of (trading) Industrial Equipment rather than actually Manufacturing Industrial Equipment, your activities are classified as Retail Trade (Division 47) under the National Industry Classification (NIC).
The following is a list of NIC codes that would be applicable to Retail Trading of Industrial Equipment.
Recommended NIC Codes for Retail Trading of Industrial Equipment
1.NIC Code 4759 - This code will apply to the Retail Sale of Other Household Appliances, Articles and Equipment and is appropriate where your business is selling the following types of industrial equipment:
2. NIC Code 4659 - This code applies to the Wholesale of Other Machinery, Equipment and Supplies (will only apply where your business has a Wholesale and Retail component) You should use this code if your business will be:
3. NIC Code 4799 - This code applies to Other Retail Sales not in a Store, Stall or Market. You should use this code if you are selling your industrial equipment via:
4. NIC Code 4663 - This code applies to the Wholesale of Construction Machinery and Equipment.
You should use this code if your business is involved in selling Industrial Machinery and Equipment that are related to the Construction Industry.
Which NIC Code Should You Use?
For Retail Trading of General Industrial Equipment, the NIC Code 4759 - Retail Sale of Other Household Appliances, Articles and Equipment will be the most commonly used and safest NIC Code for your Business.
However, if your industrial products are weapon-based tools or machinery-based equipment, you have the option of using NIC Code 4659 or NIC Code 4799 based on the type of Business Model you are operating under.
How to Choose the Correct NIC Code for MSME Registration?
Follow these 3 simple steps:
Step 1. Determine Your Business Activity
Your business activity may include selling:
• Industrial tools
• Machinery
• Spare Parts
• Technical Equipment
• Construction Machinery
Step 2. Finding the Correct Division (47 Retail)
Retail companies belong to Division 47. Division 46 is for wholesale, while divisions 10 to 32 cover manufacturing.
Step 3. Select the Most Appropriate NIC Code
Choose the NIC code that is most closely associated with your retail activities.
Where Can You Obtain the NIC Code for MSME Registration?
You can find the NIC code you need via one of the official sources listed below.
1.Udyam Registration Portal
The Udyam Registration Portal is the official government website where you can search for the full list of NIC codes while completing your MSME registration form.
2. Ministry of Statistics and Programme Implementation (MOSPI) on their website
The Ministry of Statistics and Programme Implementation publish the official NIC Classification as a PDF document and contains all NIC codes in use in India (as per the 2008 classification).
3. MSME Registration Service Provider
Most of the MSME registration services utilize an MSME registration service to select the appropriate NIC code; working with a service provider will save you from:
• The incorrect selection of NIC codes
• Application rejection
• Incorrect activity classification
4. Chartered Accountants (CA) and Business Consultants
If your business activity is complicated or belongs to more than one category, it may be worthwhile to get assistance from a CA or business consultant when determining your NIC code.
MSME Registration Process for Retail Trading of Industrial Equipment
Here is a simple step-by-step guide to apply for MSME Registration in India:
Step 1: Visit the Udyam Registration Portal
This is the only official platform for MSME registration.
Step 2: Enter Aadhaar Number of the Proprietor/Partner/Director
Aadhaar authentication is compulsory.
Step 3: Enter Business Details
Fill in information such as:
Step 4: Select the Correct NIC Code
Search and select the appropriate NIC code from the list. For retail trading of industrial equipment, you may use 47594, 47190, or 47599 depending on your exact product category.
Step 5: Submit the Application
After submission, verification is done automatically through government APIs.
Step 6: Download Your MSME Registration Certificate
Once approved, you will receive a digitally signed certificate on your registered email.
This certificate is essential for accessing government schemes, subsidies, tender benefits, and more.
Consequences of Selecting the Wrong NIC Code
The following issues may arise from not selecting the correct NIC code:
1.Rejection of MSME Application
Your application for MSME registration could be denied/put on hold.
2. Non-Compliant
You may have issues with business classification during future audits.
3. Missing Out on Government Benefits
Misclassification of your activity will impact whether you can be considered eligible for schemes.
4. Difficulty Updating Registration
When you change your business activity, it must go through the re-verification process and may require additional documents to be submitted.
5. Loan Application Problems
In many cases, banks will use your NIC code to determine a match with your loan application type. If there is a mismatch between the code and your loan type, your application may be denied
Benefits of Obtaining an MSME Registration Certificate for Retail Trading Businesses
There are numerous advantages associated with acquiring an MSME registration certificate including: 1. Access to Government Programs.
Financing, subsidies and various Government Incentives.
2. First Preference in Government Tenders and Contracts.
The first opportunity for MSME’s to procure Tenders and for Tenders to be assigned to MSME’s.
3. Lower Rates of Interest & Loan Benefits.
MSME certified businesses are likely to receive preferential rates of interest compared to those available from regular banks through exclusive lending programs.
4. Protection from Delayed Payment.
The MSME Act stipulates that payments from buyers to MSME’s are due within 45 days after being invoiced.
5. Easiness to Access Credit.
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) offer MSME's a mechanism for obtaining unsecured loans.
6. Improved Company Credibility.
Supplier and customer confidence levels in registered MSME’s are much greater than the confidence placed in non-registered firms.
7. Electricity & Taxes.
Many state governments provide additional support (financial incentives) for MSME businesses.
Through acquiring a MSME Registration Certificate, your retail enterprise can potentially experience significant improvement to both its Financials and Operations.
Common Mistakes to Avoid When Selecting NIC Code for MSME
Choosing a Manufacturing NIC code when you are a trader
This creates compliance issues during audits.
Choosing wholesale code instead of retail
Your business activity must match your actual operations.
Using a general code when a specific one exists
Specific codes always work better for future business documentation.
Selecting NIC codes without understanding descriptions
Always read the full description before selecting.
Conclusion
When applying for MSME registration in India, selecting the appropriate NIC Code is crucial for any business, but particularly if your primary line of business is retailing industrial machinery. Selecting the correct NIC Code means that your MSME certificate will reflect the true nature of your business and allow you to take advantage of various forms of financial assistance, participate in various types of government programs and other opportunities for the long-term growth of your business. Depending on the type of business you operate, you may choose NIC 4759, 4659 or some other appropriate NIC category; therefore, it is very important that you accurately classify your business so that you can manifest compliance and get the benefit of such businesses. To ensure that you are going to experience an easy and error-free process in securing your MSME certificate, consider utilizing professional MSME registration services.
(FAQ)
1. What is the NIC code for retail trading of industrial equipment?
The most suitable code is NIC 4759, but industrial machinery traders may also use 4659 or 4799 depending on the model of business.
2. Can retail traders apply for MSME Registration?
Yes. Retail and wholesale traders are now eligible for MSME Registration in India, primarily for priority sector lending benefits.
3. Where can I find the NIC code list?
You can find NIC codes on the Udyam Portal, MOSPI website, or through MSME service providers.
4. Can I add multiple NIC codes for my business?
Yes. MSME registration allows multiple NIC codes if your business deals in different types of industrial equipment.
5. Can I change my NIC code after MSME Registration?
Yes. You can update or modify NIC codes anytime by logging into the Udyam portal.
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