Planning to register your business/startup in India? Make sure you have your Aadhaar card handy. According to a new directive by the Indian government, Aadhaar card is now compulsory to have for any budding entrepreneur in order to register his/her new business venture.
Notably, this is nothing to do with UEN (Unique Entrepreneurship Number) that government introduced last week for entrepreneurs in India, which government officials says - can be used in completing their various statutory registrations and report compliance with tax and labour laws.
Apart from UEN which is yet to implemented on ground level, an entrepreneur will now be required to submit his Aadhaar number during the registration process. In fact, startups can't even 'fill' the new online form for registration unless the Aadhaar credentials of their promoters are duly filled and validated online.
Taking a cue from prime minister Narendra Modi's monthly radio broadcast, Mann Ki Baat, where he had talked at length about the need to simplify procedures to start a business with the help of a single-page registration form, the Minister for micro, small and medium enterprises had only last month notified Udyog Aadhaar.
According to the Supreme Court, the Aadhaar card is only allowed to be used by the government 'voluntarily' for a few social welfare schemes. Hence, the recent move by the government regarding the usage of Aadhaar card for business registration purposes can be considered as a gross violation of the SC order.
"The Supreme Court has been crystal clear on the Aadhaar number being voluntary for now," said Pavan Duggal, a Supreme Court lawyer in a statement to a national daily. "So this would be a violation of the apex court's order and could be a fit case for contempt of court. This would also infringe on citizens' right to equality, as it would discriminate against people who don't have Aadhaar numbers yet."
Some state government have already voiced their unhappiness and apprehensions about this recent move of the center to ask only for an aspiring entrepreneur's Aadhaar card number rather than other identification proofs in order to register their businesses.
According to MV Ahmed, additional director of industries and commerce in the Assam government, "In our state, Aadhar enrolment has only begun in three districts. We had advised the central government to consider allowing PAN cards or other identity documents as well." "But with Aadhaar linkage being mandatory in the form, we will not be able to submit any applications from our state," said Ahmed in a statement to a national economic daily.
Though investors are allowed to set up units using the state's own portal for registering investment under Rs 10 crore, but the data cannot be shared with the Centre because of the above mentioned 'technical fault'.
Keeping their point of view on its action, an official associated with the project said, "A large chunk of enterprises in India are simply not registered due to the cumbersome paperwork involved in the process and, therefore, can't tap the government schemes for them. The KV Kamath panel on financing the MSME sector, that has been the biggest job creator in recent years, had recommended that the registration should be universalized."
Whether this move by the government makes the path easier for aspiring entrepreneurs or adds to the problems of the government, is a thing that we will have to wait and watch.
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