National Industrial Classification Code also known as NIC Code, is a standard system prepared by the Government of India through which all types of businesses and economic activities operating in the country are classified systematically. Its main objective is to understand in which field a business is working and what its nature is.
When an entrepreneur does Udyam Registration under the MSME Ministry, it is mandatory to select the code. At the time of registration, the business owner has to choose one or more NIC codes according to their main activity, so that the correct identity of their business can be recorded in the government records.
NIC code is not just a simple number; it is the basis of the identification of your business. Through this, it is decided in which category your business falls, for which schemes it is eligible, and what government benefits it can get. By choosing the right code, the enterprise registration process becomes simple, and there is no problem in availing subsidies, loans, tenders, and other government facilities in the future.
What is the National Industrial Classification Code?
NIC code is the National Industrial Classification Code, which is a standardised numerical classification system prepared by the Ministry of Statistics and Program Implementation (MoSPI), the government of India. It is based on a hierarchical structure, through which all the major economic activities taking place in India are organised into different categories. Its main objective is to properly collect, analyse, and publish data related to the country’s economy, so that the government can make economic policies and plans in a better way.
Where are NIC codes used?
Udyam Registration:
Selecting the correct code is mandatory for registration as an MSME.
GST and income tax filing:
Code helps in identifying the nature and activity of the business.
Eligibility in government schemes and subsidies:
The government uses codes to give benefits of schemes to MSMEs according to their industrial category.
Bank Loans and Financing:
Bank and financial institutions look at NIC codes while providing industry-specific loans, credits, and other financial facilities.
Economic Data and Policy Making:
The government prepares economic policies and a development plan by collecting data on the basis of codes.
Bank Loans and Financing:
Banks and financial institutions look at codes while providing industry-specific loans, credits, and other financial facilities.
Economic Data and Policy Making:
The government prepares economic policies and development plans by collecting data on the basis of NIC codes.
Importance of NIC Code
The code (National Industrial Classification code) is a mandatory 5-digit identification number used to classify the economic activity of any business and to enable it to receive government benefits and recognition.
Key Uses and Benefits of National Industrial Classification Code
Udyam Registration:→The code is essential for registering as an MSME. Without the correct code, Udyam registration is considered incomplete.
Access to Government Schemes and Benefits:
The code determines your industrial category, based on which you can avail of government schemes, subsidies, and loan facilities designed for MSMEs.
Basis for Economic Statistics:
The government collects economic data related to various sectors through the code. This data is then used to formulate robust policies and development programs for the country.
Clear Business Identification:
The NIC code provides your business with a standardised identity, allowing banks, government departments, and other institutions to easily understand your business activities.
Structure and system of the NIC code
The code is designed in such a way that it starts from the broad economic activity of business and reaches the most specific subclass. Typically, the NIC code 2008 or 2018 versions are used. For Udyam Registration, the business owner has to choose a 5-digit code that provides the most accurate details of their business activity.
NIC Code structure & system
Code (National Industrial Classification Code) is a standardised system developed by the government of India, which aims to classify all the economic activities of the country in a systematic framework. It is used in MSME/ enterprise registration, government schemes, statistical analysis, and policy making.
Hierarchical structure of the NIC code
The structure of codes is from top to bottom, that is, from general activity to the most specific activity:
- Section
- A-Agriculture, Forestry, and Fisheries
- C- manufacturing
- Division
- 2-digit numeric code
- Refers to a large industrial group
- Example: 10- Manufacturing of food products
- Group
- 3-digit code
- Sup-category within the division
- Example: 101-Meet processing and preservation
- Class
- 4-digit code
- Makes the activity more obvious
- Example: 1010-Meat processing
- Sub-Class
- 5-digit code
- Most elite level
- Example: 10101-Preservation of meat
How to choose the correct National Industrial Classification Code?
Choosing the correct code is crucial for any business, as this code determines your business’s identity in government records. Selecting the wrong NIC can lead to problems with business registration, subsidies, or other government benefits. Therefore, the NIC should be chosen carefully.
- Determine your primary activity
First, identify the main activity of your business. The activity that generates the most income or occupies most of your time is considered your primary activity.
- Search on the government portal
The Udyam Registration portal offers a NIC code search option. You can easily find the correct 5-digit NIC by entering keywords related to your business activity.
- Follow the NIC structure
First, select the correct section, then the division, followed by the group, and finally choose the most appropriate 5-digit sub-class.
Example:
Software development: Section J → Division 62 →NIC 62011/62012
Grocery Store(Retail): Section G →Division 47 → NIC 47110/47199
Choosing the correct NIC simplifies your registration process and also helps you avail of government schemes.
NIC Code FAQ
What is the NIC Code full form?
- National Industrial Classification Code.
What is the NIC primary purpose?
- To classify businesses in India based on their economic activity (e.g., manufacturing, services, trading) for official use.
Who issues the NIC Code?
- The Ministry of Statistics and Programme Implementation (MoSPI) in India.
Is the NIC mandatory for business registration?
- Yes, it is compulsory for registrations like Udyam (MSME), GST, and Company Registration.
How many digits does the standard NIC have (e.g., NIC 2008)?
- It is a 5-digit or 6-digit hierarchical code.
Can a business have more than one NIC Code?
- Yes, if a business engages in multiple distinct economic activities, it can list multiple codes.
What are the different hierarchical levels of the code?
- Section (2-digit), Division (3-digit), Group (4-digit), Class (5-digit), Sub-Class (6-digit).
Where can I find my NIC Code?
- On the official Udyam Registration portal (MSME website), using a search feature, or by checking the NIC Manual (PDF) on the MoSPI website.
Why is the NIC Code important for MSMEs?
- It determines eligibility for government schemes, subsidies, and loans targeted at specific sectors.
Can I update or change my NIC Code after registration?
Yes, changes can usually be updated through the relevant government portals (like the Udyam portal or ROC) if your primary business activity changes.
