The old MSME definition
According to the old MSME definition, investment in the plant and machinery in Microenterprises is less than 25 lakh. Small enterprises’ investments range from 25 lakh to 5 crores. The investment in medium enterprises ranges from 5 crores to 10 crores.
The government proposed to invest less than 10 lakh in the equipment of the micro-enterprises. It proposed to invest an amount in the range of 10 lakh to 2 crores in the small enterprises. It also proposed to invest a range of 2 crores to 5 crores in medium enterprises.
The new definition of MSME
Recently the ministry of small, micro and medium enterprises had called a meeting of various industry associations across the country. This MSME has been defined under an act which is called Micro, Small and Medium Enterprises Development Act 2006. The micro, small and medium enterprises are well defined under this act.
Under this act, MSME has been classified first under two categories. The first one is, manufacturing sector and the other is the service sector. Before 2006, when this act was not in existence, we used to call this industry a small-scale industry that is SSI. But after a net amount of this MSME, the word Enterprise was introduced. It means that now the MSME covers both the manufacturing and service sector. But, the trading activities are not covered under MSME.
So, there are two categories, the first one is the manufacturing sector and the other one is the service sector. The definitions of MSME under the manufacturing sector and service sector are different. The base is the same even though the definitions for the sectors are different. The definition is based on the investment in plant and machinery in the case of the manufacturing sector. In the case of the service sector, the definition is based on investment in equipment
New MSME policy 2020
- A micro-enterprise, where the investment in Plant and Machinery or Equipment does not exceed one crore rupee. And, the turnover does not exceed five crore rupees.
- A small enterprise, where the investment in Plant and Machinery or equipment does not exceed ten crore rupees. And, the turnover does not exceed fifty crore rupees.
- A medium enterprise, where the investment in Plant and Machinery or Equipment does not exceed fifty crore rupees. And, the turnover does not exceed two hundred and fifty crore rupees.