The Micro, Small, and Medium Enterprises Development Act, 2006 was passed to facilitate the promotion and development and enhancing the competitiveness of micro, small and medium enterprises. The definitions of what amounts to a micro/ small/ medium enterprise were notified by Ministry of Small Scale Industries on 30th September, 2006. Separate criteria were prescribed for service and manufacturing industries.
The said limits are revised after 14 years and the different criteria for service and manufacturing industries are merged. Further, the revised limits include both the investment in plant and machinery as well as turnover to decide the category of the enterprise. The revised limits, which came into effect as on 1st July, 2020, are as follows:
| Category | Investment in Plant and Machinery or Equipment | Turnover |
| Micro | Less than INR 1 Crores | Less than INR 5 Crores |
| Small | Less than INR 10 Crores | Less than INR 50 Crores |
| Medium | Less than INR 50 Crores | Less than INR 250 Crores |
The higher limits pave the way for many more enterprises (which includes all business forms) to be recognised as micro/ small/ medium. The benefits of such recognition are many which include benefits under multiple Government schemes, easier finance arrangements from banks, preferred procurements from Government Departments, and quicker realisation of receivables.
One comment
Thirupal Gorige
June 4, 2021 at 7:17 am
Good analysis… Keep it up…