Quick Reads
- NIC stands for National Industrial Classification and tells the government what your business does.
- Udyam registration cannot be completed without selecting one.
- Search by keyword, then drill down to the 5-digit code that matches your main activity.
- A wrong code does not change your MSME status but can block sector-specific schemes.
You’ve taken the leap into business, and your next step is getting it officially recognised through the MSME Udyam registration portal. Halfway through the form, you hit a field asking for a “NIC Code.” What is it, and which one fits your business?
The NIC code is simpler than it sounds. In this blog, we explain what it means, how to find the right code for your business, and why those few digits matter for the benefits you can access.
What is an NIC Code?
NIC stands for National Industrial Classification. Just as Aadhaar identifies you as a citizen and PAN identifies your business as a taxpayer, an NIC code identifies your business activity. It tells the government precisely what your business does.
It is a standard system used by government departments across India to classify different types of business activities. Instead of thousands of different descriptions, the government uses this code to sort them neatly. For example, a “Creative Food Studio” could be a bakery, a catering service, or a food processing unit, and the NIC code makes that clear.
Why is the NIC Code Important for Your Business?
Getting your NIC code right is one of the first steps in formalising your business. Here is why it matters:
- Udyam registration: The portal requires a NIC code, without which one cannot obtain an MSME certificate.
- Government schemes and subsidies: There are many government schemes that are applicable to industries, and having the right code ensures eligibility for subsidies pertinent to a particular field.
- Licences and approvals: Various departments like factories, pollution control boards, FSSAI, etc. use NIC code for the ease of identifying your industry.
- Business loans: The code helps the bank to understand your line of business and its risk factor, and hence, your loan application can be processed faster.
Understanding the Structure of an NIC Code
The NIC code has a simple structure. It’s like a filing system that starts broad and gets more specific. It has a five-level hierarchy, but for your Udyam registration, you’ll be focused on finding the final 5-digit code.
For a business that manufactures healthy snack bars, let’s break it down with the following example:
- Section (Alphabet): C – Manufacturing
- Division (2-digit code): 10 – Manufacture of Food Products
- Group (3-digit code): 107 – Manufacture of Other Food Products
- Class (4-digit code): 1079 – Manufacture of Other Food Products n.e.c. (not elsewhere classified)
- Sub-class (5-digit code): 10795 – Manufacture of dietary food, food supplements.
How to Find Your Perfect NIC Code?
Finding your code on the Udyam portal is easier than you think. The system is designed to help you. Here’s how you do it:
Step 1: Start Your Udyam Registration
Go to the official Udyam Registration portal and begin the application process. After you’ve filled in your personal and business details, you will reach the section for adding your business activities.
Step 2: Think in Keywords
The portal offers a straightforward search function. Instead of guessing, simply enter keywords that describe your business. For example, if you are in the clothing business, you should enter ‘clothing’, ‘t-shirt’, or ‘garment’. If you’re a software developer, try “software’ or ‘IT’.
Step 3: Choose ‘Manufacturing’ or ‘Services’
You’ll first need to select whether your primary activity is manufacturing or services. This will help narrow down the options.
Step 4: Explore the Options
The portal will show you a list of 2-digit, 3-digit, and 5-digit codes based on your keyword. Click through the categories. Start broad and drill down until you find the 5-digit description that is the perfect fit for what you do.
Step 5: Add Multiple Codes if Needed
If you do more than one thing, for example, you manufacture handmade soaps and also sell them through your own retail shop, the Udyam portal allows you to add multiple NIC codes to represent all your activities. Just make sure you list your primary business activity first.
Your Next Step for Your Business’s Growth
Understanding your NIC code is the first step in formalising your business and setting it on the right path. It’s the foundational piece that tells the world, and the government, what you do. Once that’s done, the real journey begins: the journey of growth. As your business finds its footing and starts to expand, you will need the right financial support to fuel your ambition.
That’s where a partner like Lendingkart can make all the difference. We specialise in providing quick, accessible, and hassle-free business loans for MSMEs, just like yours. Our process is fully digital, meaning you can apply from anywhere without the mountains of paperwork and long queues associated with traditional lenders. We offer collateral-free loans to ensure that you get the capital you need to buy new equipment, increase your inventory, or invest in marketing, all based on your business’s potential. Explore Lendingkart’s business loan options today and take your MSME to the next level!
Frequently Asked Questions
1. What is an NIC code in simple terms?
An NIC code (National Industrial Classification Code) is a unique code that identifies and classifies your business activity. The code is a government-issued designation for your business’s nature and serves as an important document for schemes, licences, and MSME Udyam registration.
2. Can I have more than one NIC code for Udyam registration?
Yes. If your business has multiple activities, you can add more than one NIC code. The portal allows you to list all your business activities, but you should always put your main source of revenue as the primary activity.
3. Where can I find a complete list of all NIC codes?
The Ministry of Statistics and Programme Implementation has the complete list of National Industrial Classification Codes. However, for the purpose of registration, it is easier to make use of the search function provided on the Udyam portal.
4. Will the wrong National Industrial Classification Code affect my MSME Udyam status?
No, the status of your MSME is not dependent on the NIC code. However, the incorrect NIC code may make you ineligible for the benefits and subsidies that your particular industry may be entitled to. It is always worth checking and correcting.
5. Is the NIC code the same as the HSN code?
No. An NIC code classifies your business activity, whereas an HSN (Harmonised System of Nomenclature) code classifies goods for the purpose of GST. You might need both of them, but for different reasons.
