MSME Revised Definition
Government of India (Centre Govt) has revised the definition of Micro Small and Medium Enterprises (MSME) during this pandemic period that is COVID 19, so that through their initiative of MSME Revised Definition they may help to grow their confidence and boost them.
While addressing to the nation Finance Minister Nirmala Sitharaman announced the revision in the definition of Micro Small and Medium Enterprises (MSME). Before the revision MSME was termed on the basis of investments that is done or put in, but after the revision turnover of the company has also added in the MSME Revised Definition. Adding on to this the criteria for manufacturing units and service units were different, but now the distinction between them is removed, they will be same or defined similarly.
Revised MSME Classification Criteria
| Types of Enterprises | New Definitions |
|---|---|
| Micro Enterprises | Net investment in plant and machinery or equipment upto Rs. 1 crore and net turnover ≤ Rs. 5 crores |
| Small Enterprises | Net investment in plant and machinery or equipment ≤ Rs. 10 crores and net turnover ≤ Rs. 50 crores |
| Medium Enterprises | Net investment in plant and machinery or equipment ≤ Rs. 50 crores and net turnover ≤ Rs. 250 crores |
MSME से रोजगार
MSME Definition: Old Vs New
| Old Definition of MSME | New Definition of MSME |
|---|---|
| Different threshold limits for manufacturing and service sectors | Uniform threshold limits for manufacturing and service sectors |
| Excluded retail and wholesale sectors | Includes retail and wholesale sectors |
| Threshold limits not adjusted for inflation | Threshold limits adjusted for inflation |
| Cost of equipment not adjusted for depreciation | Cost of equipment adjusted for depreciation |
| Depreciated cost calculated as per commercial rates | Depreciated cost calculated as per IT rules |
| Upward limits of turnovers and investments were too low | Upward limits of turnovers and investments have been raised |
Micro units
A firm that have a investment upto Rs 1 crore and turnover of less than Rs 5 crore will be called as Micro units. Earlier it was defined as investment upto Rs 10 Lakh for service and Rs 25 for manufacturing.
Small units
Manufacturing & Service Enterprise (MSME) will be defined as Small units if there is investment of Rs 10 crore and turnover of Rs 50 crore.
Medium Units
MSME will be defined as Medium Units if there is an investment of Rs 20 crore and turnover of less than Rs 100 crore . Before revision the limit for investment was of Rs 10 crore for manufacturing and Rs 5 crore for service.
With the revision of definition in Manufacturing & Service Enterprise (MSME) they now don’t have to worry about their growth, expansion and the benefits while before the revision in definition there was fear in MSMEs that if they grow or expand they can lose the benefits that are defined to them. So the revision is done in the favor of MSMEs.