What is the definition of MSME?
What is the definition of MSME?
As per Government of India the definition (refer GOI notification) of micro, small and medium enterprises is as under:
(i) A micro enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹1 crore and turnover does not exceed ₹5 crore;
(ii) A small enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹10 crore and turnover does not exceed ₹50 crore; and
(iii) A medium enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed ₹50 crore and turnover does not exceed ₹250 crore.
All enterprises are required to register online on Udyam Registration Portal and obtain ‘Udyam Registration Certificate’. (Refer circulars FIDD.MSME & NFS.BC.No.3/06.02.31/2020-21 dated July 2, 2020, FIDD.MSME & NFS. BC. No.4/06.02.31/2020-21 dated August 21, 2020 FIDD.MSME & NFS.BC.No.13/06.02.31/2021-22 dated July 07, 2021)
As effective from 1st July 2020, a new definition of MSMEs has been drawn on the basis of their net turnover, and their net investments in plants, machineries, and other equipment required for the proper functioning of their business. The definition is applicable for both goods-based and service-based MSMEs. For the purpose of defining MSMEs, net investment means the investment is the difference of investments in pollution control, research and development, and the installation of safety devices, from the total investment in plant and machinery, while net turnover is the difference of the export turnover from the total turnover of the MSME.
Difference between micro, small and medium enterprises
There are different business enterprises and companies, starting from small neighbourhood outlets or stores to the bigger grocery store chains or franchise stores. These firms employ several people depending on their manpower requirements. To start such business ventures, there is a minimum capital requirement.
The government has recently redefined MSMEs by raising the investment limit cap, adding an additional turnover criterion, and removing existing differences between the manufacturing and services enterprises.
As effective from 1st July 2020, all those units or businesses with an investment of over Rs 10 crore but less than Rs 50 crore and a turnover of Rs 50 crore to Rs 250 crore are categorised as medium enterprises. Those firms with up to Rs 1 crore-Rs 10 crore investment and a turnover of over Rs 5 crore, but under Rs 50 crore are termed small enterprises. Lastly, those companies with up to Rs 1 crore investment and a turnover of less than Rs 5 crore are defined as micro-enterprises.
Key differences: Micro, small and medium enterprises | |||
Composite Criteria: Investment in Plant & Machinery/equipment and Annual Turnover [1] | |||
Classification | Micro | Small | Medium |
Manufacturing Enterprises and Enterprises rendering Services | Investment in Plant and Machinery or Equipment: | Investment in Plant and Machinery or Equipment: | Investment in Plant and Machinery or Equipment: |
The Ministry of Micro, Small and Medium Enterprises vide Office Memorandum (OM) No. 5/2(2)/2021-E/P & G/Policy dated July 2, 2021 has allowed Udyam registration for retail and wholesale trade. Detailed guidelines are available in our circular FIDD.MSME & NFS.BC.No.13/06.02.31/2021-22 dated July 07, 2021
