MSMEs New definition by Government – The government of India has changed the much awaiting classification of the existing MSMEs with new one. The new definition of MSME is given by the finance minister where, the government has decided to remove the difference between the definition of manufacturing-based MSMEs and service-based MSMEs.
Addition to Investment limit, the criteria of turnover also being introduced. Every MSME will be linked with turnover. The new definition of MSMEs does not differentiate between a manufacturing enterprise and a service sector enterprise. FM said that the the new classification is introduced to favour the MSMEs.
From now onwards, a company with an investment of up to Rs 1 crore and turnover of Rs 5 crore will be a micro company. Earlier, a service sector company with investment of up to Rs 10 lakh and a manufacturing company with investment of Rs 25 lakh was defined as a micro company.
Likewise, a company with an investment of up to Rs 10 crore and turnover of Rs 50 crore has been defined as a small company and a company with investment of up to Rs 20 crore and turnover of Rs 100 crore has been defined as a medium company.