The Micro, Small & Medium Enterprises (MSMEs) are defined in India under the MSMED Act 2006 on the basis of capital investment made in plant and machinery, excluding investments in land and building.
| BASIS | MICRO | SMALL | MEDIUM |
| Manufacturing Sector | Rs.2.5 Million | Rs.2.5 Million to Rs.50 Million | Rs.50 Million to Rs.100 Million |
| Service Sector | Rs.1.0 Million | Rs.1.0 Million to Rs.20 Million | Rs.20 Million to Rs.50 Million |
There is now a proposal to redefine the MSME according to turnover instead of capital investment; it also does away with the difference between Manufacturing and Service Sector:
| BASIS | MICRO | SMALL | MEDIUM |
| Manufacturing Sector & Service Sector | Rs.50.0 Million | Rs.750.0 Million | Rs.2.50 Billion |
Advantage:
- The limits were set in 2006. After 12 years, adjusting for inflation would have required,
- Modernisation of plants for delivery to certain sector requires large investment but have low turnovers, thus robbing them of MSME benefits,
- Uneven playing field between older players and new entrants,
- Authorities can cross check the turnover through platforms such as GSTN.
This is a welcome change and will need Parliament’s approval.
