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Modi government has now made it mandatory for budding entrepreneurs to submit their Aadhaar number in order to register their business. This news comes in after Supreme Court passed an order stating that the ‘Aadhaar’ can be used voluntarily for a few social welfare schemes’.

Last month, Ministry for Micro, Small and Medium Enterprises introduced a simplified process for registering new business. This new form called Udyog Aadhaar was issued on September 18, and currently, it has more than 800 new businesses registered on it. With this announcement, now startups will not be able to fill the new form if their Aadhaar credentials are not validated online.

“The Supreme Court has been crystal clear on the Aadhaar number being voluntary for now,” said Supreme Court lawyer Pavan Duggal. “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,” he added.

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Some of the state governments have also voiced apprehension about the need of entrepreneur’s Aadhaar number instead of other identification proofs. One of them is Assam, where the Aadhar enrollment has begun in three districts only.

Last week, the government decided to make some internal changes to the rules and policies that would eventually promote flexibility in hiring norms and faster winding up of failed startups.

The government has been promoting Aadhaar cards in various ways- In February earlier, the government introduced the beta version of ‘digital locker’ in order to promote digital India initiative, wherein Aadhar Card was necessary to access the service. On the other side, recently, the digital wallet company FreeCharge announced that it will adopt Aadhaar as the primary Know Your Customer (KYC) tool for opening and upgrading wallets on their platform. Another android-based mobile payment solution, Novopay, also uses Aadhar number as an authentication tool.

Besides, under the framing of new norms for startup ecosystem, SEBI had planned to facilitate and ease the investing process in the securities markets through measures like e-IPO and Aadhaar-based e-KYC, in a statement issued in March this year.

On the ease of starting a business, India ranks 179th. The World Bank report notes that it takes around 27 days to start a business in India, and there are 12 procedures that need to be completed before one can start a business in India.


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