Micro, Small and Medium Enterprises (MSME) is one of the most distressed sector during Covid-19. It employs a huge number of people and contributes to around 30% of Indian GDP. There are severe supply chain disruptions especially in the businesses that provide essential services. It is difficult for them to continue paying workers during the lockdown.
To overcome these struggles, Government of India announced various relief packages and relaxations for MSME Sector on 13th May 2020.
One of the major change introduced is the change in the definition of MSME. The newly adopted definition comprises of an additional criteria of turnover.
The new limits based on Investment & Annual turnover for both Mannufacturing and Service sector are as follow:
A. Any enterprise with investment up to Rs 1 crore and turnover under Rs 5 crore will be classified as “Micro“.
B. Any enterprise with investment up to Rs 10 crore and turnover up to Rs 50 crore will be classified as “Small“
C. Any enterprise with investment up to Rs 20 crore and turnover under Rs 100 crore will be classified as “Medium“.
Earlier MSMEs were classified into 2 categories:- Manufacturing and Services sector
(Based on investment in plant and machinery )
1. Micro enterprises – investment does not exceed 25 lakhs
2. Small enterprises -Investment more than twentyfive lakh rupees but not exceeding five crore rupees.
3. Medium enterprises- Investment more than five crore rupees but does exceeding ten crore rupees
Service sector: ( Based on investment in equipments)
1. Micro enterprises – Investment does not exceed ten lakh rupees
2. Small enterprises – Investment more than ten lakh rupees but not exceeding two crore rupees
3. Medium enterprises -Investment more than two crore rupees but not exceeding five core rupees