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Business EconomyPosted at: Jun 3 2020 3:56PM


New definition and criterion notified; will come into effect from July 1

New Delhi, Jun 3 (UNI) Union Micro, Small and Medium Enterprises Ministry has issued Gazette notification to pave way for implementation of the upward revision in the definition and criteria of MSMEs in the country.
The new definition and criterion will come into effect from July 1.

After 14 years since the MSME Development Act came into existence in 2006, a revision in MSME definition was announced in the Atmnirbhar Bharat package on May 13.
As per this announcement, the definition of Micro manufacturing and services units was increased to Rs 1 crore of investment and Rs 5 crore of turnover. The limit of small unit was increased to Rs 10 crore of investment and Rs 50 crore of turnover. Similarly, the limit of medium unit was increased to Rs 20 crore of investment and Rs 100 crore of turnover.
The Government on June 1 decided for further upward revision of the MSME Definition. For medium Enterprises, now it will be Rs 50 crore of investment and Rs 250 crore of turnover.

The existing criterion of definition of MSMEs is based on the MSMED Act, 2006. It was different for manufacturing and services units. It was also very low in terms of financial limits. Since then, the economy has undergone significant changes.
After the package announced, there were several representations saying that the announced revision is still not in line with market and price conditions and hence it should be further revised upwardly. Keeping in mind these representations, Prime Minister Narendra Modi decided to further increase the limit for medium units.
This has been done in order to be realistic with time and to establish an objective system of classification and to provide ease of doing business.

Also, a new composite formula of classification for manufacturing and service units has been notified.
Now, there will be no difference between manufacturing and service sectors. Also, a new criterion of turnover is added.

Ministry officials said that the new definition will pave way for strengthening and growth of the MSMEs. Particularly, the provision of excluding the exports from counting of turnover will encourage the MSMEs to export more and more without fearing to lose the benefits of a MSME unit.
This is expected to exponentially add to exports from the country leading to more growth and economic activity and creation of jobs.

Detailed Guidelines and Clarifications as regards the classification in pursuance of the changed definition are being issued separately by the MSME Ministry.

The Ministry has reiterated that it has put in place a very strong handholding mechanism for MSMEs and new entrepreneurs in the name of Champions (www.champions.gov.in) which was recently launched by the Prime Minister.
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