The current situation has created an intense economic crisis in the country and government has launched a new scheme to help the MSMEs. This also called for a new definition of micro, small and medium enterprises (MSMEs) to make the government schemes more inclusive. It has reevaluated the raising investment threshold for all categories and added annual turnover as another eligibility criteria.
Finance Minister, Nirmala Sitharaman acknowledged the need to change the definition to upscale the growth of MSMEs. In the series of changes, the government also removed the distinction between manufacturing and services sector. The changes will allow the MSMEs to avail the benefits they deserve.
According to the new definition, a company with investment up to Rs 1 crore and annual turnover of up to Rs 5 crore comes under micro unit which earlier had an investment limit of Rs 25 lakh. Small enterprises are expected to have an investment up to Rs 10 crore and annual turnover greater than Rs 50 crore. The definition of medium enterprises includes investment up to Rs 20 crore and annual turnover up to Rs 100 crore.