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Definition of MSME revised

June 5, 2020

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On 13th May, the Finance Minister made the first set of announcements, on the economic package. The measures focused on providing much needed liquidity infusion, esp for the MSME sector.

As a part of these announcements, definition of MSMEs was changed. India, till then, defined MSMEs based on investment in plant and machinery. Also, the limit was seen too low. with many small companies being left out of the definition. The change in definition was to address this.

The new definition announced is based on investment in plant/machinery and Turnover.  Further,  No distinction in definition for manufacturing and service enterprises. The new definition announced is below.

    • Micro – Investment below 1 crore & turnover upto 5 crores
    • Small – Investment below 10 crores & turnover upto 50 crores
    • Medium – Investment below 20 crores & turnover upto 100 crores

A second revision of the turnover limit was announced on 1st June. The new definition is below.

  • Micro enterprise: Investment in Plant and Machinery or Equipment below 1 crore and turnover below 5 crore
  • Small enterprise: Investment in Plant and Machinery or Equipment below 10 crore and turnover below 50 crore
  • Medium enterprise: Investment in Plant and Machinery or Equipment below 50 crore and turnover below 250 crore.

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