In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:
1. Manufacturing Enterprises-The enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and regulation) Act, 1951) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use. The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery.
2. Service Enterprises:- The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.
See below table for easy understanding sector –wise:
| If you are a Manufacturer | |
| Enterprises | Investment in plant & machinery |
| Micro Enterprises | Does not exceed INR 25 Lakh |
| Small Enterprises | More than INR 25 Lakh but does not exceed INR 5 Crore |
| Medium Enterprises | More than INR 5 Crore but does not exceed INR 10 Crore |
| If you are a service provider | |
| Enterprises | Investment in equipments |
| Micro Enterprises | Does not exceed INR 10 Lakh |
| Small Enterprises | More than INR 10 Lakh but does not exceed INR 2 Crore |
| Medium Enterprises | More than INR 2 Crore but does not exceed INR 5 Crore |
Hasn’t this classification method changed from investment based to turnover based method? Open to correct myself if I am wrong. Pl advise.