The Micro Small & Medium Enterprises (MSMEs) are defined in India under the MSMED Act 2006 on the basis of capital investment made in plant and machinery, excluding investments in land and building. For Manufacturing Sector Investment upto Rs.2.5 Million is considered Micro, Rs.2.5 Million to Rs.50 Million as Small and Rs.50 Million to Rs.100 Million, as Medium. For Service Sector, Rs.1.0 Million is considered to be Micro, from Rs.1.0 Million to Rs.20 Million as Small and Rs.20 Million to Rs.50 Million as Medium. There is now a proposal to redefine the MSME according to turnover instead of capital investment; it also does away with the difference between Manufacturing and Service Sector: Thus, Turnover up to Rs.50.0 Million is Micro, up to Rs.750.0 Million is Small and up to Rs.2.50 Billion is Medium. Advantage: • The limits were set in 2006. After 12 years, adjusting for inflation would have be required, • Modernization of plants for delivery to certain sector requires large investment but have low turnovers, thus robbing them of MSME benefits, • Uneven playing field between older players and new entrants, • Authorities can cross check the turnover through platforms such as GSTN. This is a welcome change! #MSME #compliance
