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

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Ishita is a young woman entrepreneur and currently the Operations Director at ebizfiling India Private Limited. In her entire career so far, she has led a team of 50+ professionals like CA, CS, MBAs and retired bankers. Apart from her individual experience on almost every facet of Indian Statutory View Full Profile

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One response to “Micro, Small & Medium Enterprises explained in easy language”

  1. Bankim Master says:

    Hasn’t this classification method changed from investment based to turnover based method? Open to correct myself if I am wrong. Pl advise.

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