The NIC Code, or National Industrial Classification Code, is a unique numeric identifier assigned to businesses in India. It is a system developed by the Central Statistical Organisation (CSO) of India to categorize and classify various business activities. Each unique activity is assigned a specific code, enabling the government and businesses to track, analyze, and manage information about different sectors of the economy.
The NIC code is essential when you’re registering your business under government schemes like Udyam – MSME or applying for licences and approvals. It ensures that your company is grouped under the correct category, which is especially helpful for taxation, data collection, and policy-making purposes.
On 26th June 2014, the Department of Policy & Promotion, in their Press Note 4 (2014 series), decided to switch over to 2008 from 1987 Version. Since then, all Indian companies have been advised to follow 2008. 2008 is more compatible & well-suited for the International System of Classification, and this enables the compliance processes for Registration to follow smoothly.
What is the NIC Code in Udyam Registration
The NIC Code for Udyam refers to the National Industrial Classification code required during the Udyam registration process. It categorizes the type of business activities undertaken by MSMEs. Choosing the correct MSME NIC Code list is essential for registering and obtaining the Udyam register certificate, as it defines the industry under which the business operates. This code ensures businesses are accurately classified for government schemes, benefits, and compliance. To complete Udyam Registration, applicants need to select one or more NIC codes that reflect their business activities, ensuring eligibility for MSME benefits and initiatives.
Where is the NIC code used?
The National Industrial Classification code represents the “nature of your business’- the government uses this code to identify your business activity.
MSME (Udyam) Registration: Choosing the correct NIC code makes your business eligible for the government schemes, subsidies, and benefits.
Company Registration (MCA): When registering a company, the National Industrial Classification is used to specify the types of business activity.
GST Registration: The NIC code helps in determining the correct tax category and regulations under GST.
Import-Export code (IFC): Businesses involved in international trade must provide an National Industrial Classification code to indicate their business activity.
Government data and policies: The government uses NIC codes to understand industry growth and formulate new policies.
Why is the NIC code important?
The National Industrial Classification code is important because it helps classify a business according to its exact economic activity. It ensures smooth MSME (Udyam) registration, proper GST, and legal compliance, and eligibility for government schemes and subsidies. A correct NIC code also improves official reporting, reduces errors in documentation, and increases the credibility of a business with authorities, banks, and clients
Main Sectors of NIC Code
The NIC code system is broadly divided into three sectors:
- Manufacturing sector National Industrial Classification
The manufacturing sector includes businesses that process raw materials to create new products.
- Food manufacturing
- Garment manufacturing
- Furniture manufacturing
- Plastic, steel, and cement products
- Machincey manufacturing
- Trading sector NIC code
A trading business involves buying and selling goods, but not manufacturing them.
- Wholesale treaders
- Retail shop owners
- Distributors
- Online sellers
- Import-export businesses
- Service Sector NIC Code
The service sector includes business that provides services, not products.
- IT services
- Digital marketing services
- Consultancy services
- Transport & logistics
- Repair & maintenance services
- Education, training, and coaching
What is the structure of the NIC code?
The National Industrial Classification consists of numbers and has a step-by-step structure:
- 2-digit code–Broad industry
- 3-digit code–sub-sector
- 4-digit code–Group of activities
- 5-digit code–Exact business activity
Benefits of having the correct NIC code
Having the right NIC code offers multiple advantages for businesses in India. Here’s why it matters:
Easy MSME (Enterprises) Registration:- Choosing the correct one from the Enterprise NIC code list makes MSME registration quick and hassle-free.
Help with GST and license compliance:- Having the correct NIC code reduces the risk of errors in GST registration, taxes, and other legal procedures.
Access to government schemes and subsidies:- Many government schemes are industry-specific, and having a valid NIC code makes you eligible for these schemes.
Correct classification of your business:- Through the official NIC code search, your business is correctly categorised in the service or manufacturing sector
Accurate government records and documentation:- With the correct NIC code, your business appears accurately and clearly in all government reports and records.
Increases business credibility:- The correct NIC code demonstrates a professional approach, which builds trust with clients, banks, and government departments.
Step to apply the NIC code for MSME registration
Applying for an NIC code for MSME registration involves several steps to ensure accurate classification and compliance.
- Access Udyam Portal: Visit the Udyam Registration portal.
- Fill in business information: provide the necessary business details and the owner’s Aadhaar number.
- Select NIC code: Choose the NIC code that best describes the business activity.
- Submit and pay the fee: Apply and pay the registration fee online.
- Verification: await verification by the authorities.
- Receive registration: Once verified, receive the Udyam Registration Certificate.
