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Startup Basics

Planning to start a new business in India? Aadhaar Number mandatory for registering a new business!

Planning to start a new business in India? Aadhaar Number mandatory for registering a new business!
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In the recent past, as per the Supreme Court orders, Aadhaar was only used for some of the social welfare schemes; and that too it was dependant on individual choice.

Now every new entrepreneur has to make sure he has an Aadhaar number before he initiates the process of registering his dream venture. Yes, Modi government has made it compulsory!

The new form that every startup needs to fill was introduced last month. The first column of the form requires Aadhaar details of the promoters which are validated online. Unless that is done, one can’t proceed further.

Prime Minister, Narendra Modi had mentioned about making it simple for new entrepreneurs to start a business with an uncomplicated single-page registration form during his popular radio show- ‘Mann ki Baat’. The micro, small and medium enterprises’ ministry was aware about it.

However, experts say that this compulsion of filling the Aadhaar details violates the Supreme Court order of Aadhaar number usage being voluntary.

People who don’t have Aadhaar yet and want to explore the path of entrepreneurship may have to now rush to get it or wait for next move of the centre till the norms are relaxed, which can be hopefully soon or never.

Nonetheless, Aadhaar is an important monitoring tool to check subsidy leakages and benefits from taxpayers’ money and is a one-stop-solution to check various kinds of other details too.

The unique identification program even though quite useful, has not yet covered the entire country. Full enrolment across the country hasn’t been achieved yet.

Therefore, making it mandatory for a startup can create problems for budding entrepreneurs. In some states like Assam, the Aadhaar enrolment has just begun. The government in these states will eventually stress on other identification proofs like PAN card, etc. Therefore, any application from these states in such a scenario will be difficult.

In many states, investors can also register via the state’s own official portal if investment is below 10 crore. Although this data cannot be shared with the centre till it is necessary to share Aadhaar details too.

Supreme Court had recently asked the government to revise all forms so as to comply with the ‘voluntary’ aspect of the unique identification program.

The latest order states that one can voluntarily choose it as an identity proof in case of PDS, NREGA, National Social Assistance programme and EPFO. Hence, there is still hope that the registration form may be changed and all this might just turn out to be a technical fault.

Many experts point out that a large number of entrepreneurs from the micro, small and medium sector are normally unable to register or go ahead with their entrepreneurship dreams due to the tedious and burdensome paper-work. This new additional quandary may only aggravate the problem.

With the pressure building up, the government might just solve the issue by again making it voluntary as per the Supreme Court orders but for that, we have to wait and watch!

Edition: December 2016

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